The Urgent Need to Strengthen India’s Air Cargo Capacity
In a recent meeting of air cargo CEOs in Chennai, a pharma exporter highlighted a critical issue plaguing Indian freight forwarders. He pointed out that unlike their counterparts in other export markets, Indian freight forwarders could not provide guaranteed rates for a specific period. This lack of stability in air freight rates puts Indian exporters at a significant disadvantage compared to their competitors.
In a recent meeting of air cargo CEOs in Chennai, a pharma exporter highlighted a critical issue plaguing Indian freight forwarders. He pointed out that unlike their counterparts in other export markets, Indian freight forwarders could not provide guaranteed rates for a specific period. This lack of stability in air freight rates puts Indian exporters at a significant disadvantage compared to their competitors.
The defence put forth by the freight forwarders was that they have limited control over the rates as they are determined by foreign airlines. These airlines, in turn, make decisions based on available capacity and often resort to fluctuating rates to maximize their profits. This rate volatility poses a major challenge for Indian exporters and impacts their competitiveness in the global market.
Unrealistic Goals and Challenges
During a gathering in Bengaluru, industry experts discussed the idea of transforming India's major airports into transshipment cargo hubs. While this vision is ambitious and promising, the reality presents significant challenges. For a country to establish itself as a transshipment hub, it requires at least one 'anchor' airline with a global presence.
Foreign airlines like Emirates, Qatar Airways, Turkish Airlines, and Cathay Pacific dominate the Indian market with their extensive fleet and capacity. They leverage the sixth freedom traffic right to their advantage, allowing them to carry cargo between foreign countries with stopovers in their home country. In contrast, India lacks a comparable airline with the scale and reach of these foreign carriers.
Lost Opportunities and Capacity Building
India's failure to build its air cargo capacity has allowed foreign airlines to capitalize on the market. Despite adopting an open sky policy for cargo in the early 1990s to boost exports and domestic capacity, India did not focus on developing its own capabilities. This oversight has led to a situation where Indian operators struggle to compete with the freighter capacities of foreign airlines.
In response to the challenges posed by the Covid-19 pandemic, the government restricted the open sky policy to six gateway airports. However, this measure has since been relaxed to address the capacity constraints faced by the industry. While some Indian operators have placed significant orders for aircraft, the belly capacity of passenger airlines falls short of meeting the demand for air cargo transportation.
Building a Self-Reliant Air Cargo Infrastructure
The proverbial Tamil saying 'Yanaipasikku cholapori' (offering popcorn to a hungry elephant) aptly describes the reliance on passenger airlines' belly capacity to transport the anticipated 10-million-tonne air cargo generated by India's projected $5-trillion economy by 2030. The global trend towards freighter aircraft and passenger-to-freight operations underscores the urgent need for India to enhance its freighter cargo capacity.
With a growing demand for air cargo services worldwide, India must prioritize self-reliance and reduce its dependence on foreign airlines for cargo transportation. Strengthening the country's freighter capacity to meet at least 50-60% of the required demand is crucial for ensuring a robust and competitive air cargo industry.
In conclusion, the time is ripe for India to invest in building its air cargo infrastructure and enhancing its capabilities to meet the evolving demands of the global market. By prioritizing self-reliance and strategic planning, India can establish itself as a key player in the air cargo industry and secure its position as a leading exporter in the international trade landscape.
Hey there, I'm Mohamed Rahat, your go-to writer for all things business and economy. Originally from Mumbai, now rocking it in Navi Mumbai. With a past life at Tata Power Co. Ltd., I'm here to unravel the mysteries of the economic world, one article at a time. Stick around for some mind-bending insights! Connect With Me