A decade or so ago, India was being hailed as the “new economic tiger“ alongside China and other countries in the East. The same was also said about India’s aviation industry, in particular, air cargo. But, what has happened these last years to slow the expected growth down?
Will the AAICLAS set-up work?
One has to admit that the air passenger growth has not suffered that much. Despite Air India’s precarious financial situation, the passenger business has grown and new regional carriers have been successful, contributing to what some say has be-en a year-on-year 20% growth rate.
But, is this the case for air cargo?
It was in 2016 that the Indian government, after having to admit that air cargo development was lacking way behind, had the idea to form a new subsidiary company under the Airports Authority of India (AAI). This was aptly named the AAI Cargo Logistics and Allied Services Company (AAICLAS). This new set-up with the rather long name, was formed in order to take care of air cargo business development at over 30 Indian airports as well as other Indian airports which might show cargo potential for the future. The new organisation which started by looking at setting up so called Common User Domestic Cargo Terminals (CUDCTs) at various Indian airports, has set itself a hard task for the coming years.
Bureaucracy is commonplace in many countries, but India’s bureaucracy, handed down from British colonial days, beats them all. Many in India would agree that if bureaucracy were to be cut down by at least 20-30 percent, then the economic machine would turn faster.
However, India is still a country with a huge population and still holds much potential for both the import and export air cargo business. This includes the country’s future involvement in the e-commerce trade.
It was reported lately in India journals that GDP growth in India is expected to exceed that of China this year and internal experts are telling us that air cargo will grow by 10-15 percent in 2018 and reach a 20 percent growth per annum in the next years. Hard to believe when considering that both countries have populations of around 1.3 billion and that already China’s economic machine is five to six times higher that that of India. Although, on the face of it, why not?
Infrastructure and slow processes are putting the brakes on
All very well being so positive - but how can this come about with the present airport handling and customs procedures. It’s no secret that larger airports such as Mumbai and Delhi have cargo infrastructures which are almost falling apart. Long truck waiting times, masses of paperwork and customs officials who live in their own world. This, and much more puts the brakes on future development. In all fairness, we see that Indian officials are trying to put more emphasis on moving international cargo volumes through other airports which are being developed for this purpose. But, are things not moving far too slowly considering the continued boom in air freight as well as the importance of e-commerce business for the Indian nation?
China has been fast to react on planning and developing the necessary airport handling infrastructures in order to push e-commerce traffic up front. They have seen the necessity of the supply chain factor which dictates flawless service from start to finish.
How will or can Indian airports, old or new, be in a position to do all of this if they are continually to be hampered by their lack of infrastructure and civil servant type of working.
Big clean-up is needed
In this sense, the AAICLAS has one hell of a job in front of it. One can only hope that they will not get themselves bogged down by the above mentioned and really clean out and modernize the Indian air cargo scene.
It’s a strange dilemma that the Indian airports are in. The country has so much young business potential, many of whom are IT orientated and come up with many new processes which in the meantime are used around the globe. Where are they in the air cargo scene? Or, are they not that interested when they see the many official hurdles they have to overcome?
One interesting example - India has 21,000 miles of roads which have been resurfaced by using the massive amounts of discarded plastic bottles and containers. After having been collected these are recycled in special containers which are financed by the government and a new road surfacing material is produced which is said to be better and cheaper than tarmac and last much longer.
The guys at AAICLAS have some bridges to cross and their emphasis must also be on the country’s pharmaceutical industry which accounts for almost 80% of India’s air cargo exports. This could be seriously endangered if processes are not brought up to scratch and do not work in the supply chain as shippers demand.
John Mc Donagh