1. Study on Future Prospects of Air Freight
/ Cargo Industry in India & Required
Policy Intervention
Guide: Prof. G. Raghuram
(Public Systems Group)
Members:
Peeush Kumar (PGP-2)
Samdish Chumber (PGP-2)
(Term IV)
A Term Course Project On

2. Logistics sector has failed to keep pace with the growth
India ranks 54 among 160 countries in LPI index
Average logistics costs as
a percentage of GDP in India as
compared to other countries
(Source: Report of the Indian Foundation of
Transport Research and Training)
0
1
2
3
4
5
Customs
Infrastructure
International
Shipments
Logistics
Quality and
competence
Tracking and
tracing
Timeliness
S Africa China India Germany
Comparison of India on individual LPI
components
(Source: World Bank LPI Survey 2014)
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3. RailandRoadcarryabout87%oftotalfreighttrafficin2007
Rail,
36.07%
Road,
50.13%
Coastal
Shipping,
6.08%
Inland
Water
Transport,
0.24%
Pipelines,
7.49%
Airways,
0.02%
Modal Share of originating
freight traffic in Net Tonne-
Kilometre (NTKMS)
(Source: Planning Commission)
•Air cargo at present constitutes around 1% of total cargo volume but carries
around 29 % of total trade value.
•Air cargo involves high costs with typical costs in the range of 4-5 times of road
transport and 12-16 times of sea transport
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4. AirCargomarketgenerallyconsistsofinternationaland
domesticcargo
Air Cargo Market
Domestic Cargo
Market
Regular Service Express Service
International Cargo
Market
Regular Service Express Service
Market Segmentation of Air Cargo Market (Source: Frost &Sullivan)
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5. AirCargomovementinvolvesseveralintermediaries
Complexinteractionbetweendifferentplayersaddstodwelltimeat
airports
Various Stakeholders Involved in the Value Chain (Source: Frost & Sullivan)
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6. AirCargoinIndia:OpenSkyPolicyEconomicGrowth
1995-96 2000-01 2004-05 2006-07 2010-11
Domestic Cargo 0.22 0.33 0.49 0.57 0.89
International Cargo 0.46 0.57 0.83 1.03 1.5
Total Cargo 0.68 0.9 1.32 1.6 2.39
0.22
0.33
0.49 0.57
0.89
0.46
0.57
0.83
1.03
1.5
0.68
0.9
1.32
1.6
2.39
Cargohandledinmillionmetrictonnes
The Open Sky policy of government of India adopted in 1990s has led to
tremendous growth in air cargo segment
Cargo handled at Indian Airports (Source: AAI)
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7. Majorityofdomesticandinternationaltradeiscarriedby6
majorairports
6,44,826
6,05,699
2,92,079
2,42,391
1,28,523
86,670
Mumbai Delhi Chennai Bangalore Kolkata Hyderabad
Freight handled at Metro airports in tonnes in 2013-14. (Source: CRISIL)
Mumbai carries the majority of cargo among six major airports. Out of total
freight carried by major airports, Mumbai carried about 32% closely
followed by Delhi with 30%
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GAP

8. Mumbai,Delhi,Chennai,Bangalorehandlemajorlytointernational
freights
28% 36%
25%
38%
64%
43%
72% 64%
75%
62%
36%
57%
Mumbai Delhi Chennai Bangalore Kolkata Hyderabad
Domestic Freight International Freight
Percentage of Domestic and International Freight handled at Metro airports in
Tonnes in 2013-14 (Source: CRISIL)
Hence, establishment of cargo hubs at these locations for the transshipment cargo
has to be expedited
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9. Amongnon-metroairports,manyairportsareemergingascargo
centres
0
10,000
20,000
30,000
40,000
50,000
60,000
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Freightintonnes
Total Freight Handled
AHMEDABAD TRIVANDRUM CALICUT JAIPUR COCHIN
PUNE LUCKNOW PATNA GUWAHATI
Total freight (domestic & international) in tonnes. (Source: CRISIL)
Airports handling total freight (domestic and international in tonnes) more than
15000 tonnes per annum OR with a CAGR of more than 10% over 2006-07 to 2013-
14 have been shown here
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10. Theamountofdedicatedcargoservicesascomparedtobelly
cargohasbeenontheriseduetogrowthofaircargobusiness
Year Scheduled Belly Cargo (%) Scheduled Dedicated Cargo Operator (%)
2000-01 88.7 11.3
2004-05 85.8 14.1
2009-10 82.8 17.2
(Source: DGCA)
Data reveals that foreign players have been steadily increasing their market
share in international freight reaching 83.9% in 2009-10
(Data Source: DGCA)
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11. Outboundcargohasbeenmorethaninboundcargoinvolume
butinboundcargohasbeengrowingatafasterrate
Year Outbound Cargo Inbound Cargo Total
1995-96 296 163 459
2003-04 435 266 701
2010-11 842 661 1503
CAGR
1995-96 to 2003-04 7.22% 9.78% 8.23%
India’s Outbound and Inbound Cargo Traffic in ‘000 Metric Tonnes
(Source: MoCA, 2012 Report)
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12. Incaseofexportsbyvalue:
USA,UAEandChinaarethemajorexportdestinations,
WhileChina,SaudiArabiaandUAEarethemajorsourcesfrom
whereairfreightoriginatesandreachesIndia
Middle East,
43%
Asia Pacific ,
23%
South and
Central
Europe, 14%
UK, 10%
Rest of the
world, 6% US, 2%
Canada, 1% Latin
America, 1%
In case of air cargo by volume
• Middle East (43%) and Asia
Pacific (23%) are the major
destination countries from India.
• The major destinations in
Middle East include Dubai, UAE,
Saudi Arabia.
• The major destination from Asia
pacific include Hongkong, China,
Singapore.Country-wise Distribution of International
Cargo (Exports) by Volume in FY 2013.
(Source: Frost &Sullivan)
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13. Shareofaircargoisminisculeintermsoffreightbyvolumebut
intermsofvalueitisquiteappreciable
Cargo Business Value v/s
Volume Comparison.
(Source: DGCI&S, MoCA, 2012 Report)
Air Cargo is responsible for carrying high
value but low volume and time constraint
goods. It is imperative to contain any
pilferage in transit and storage
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14. Theairliftedcommoditiesrepresentedabout30%ofthetotaltrade
inFY2013reaching$US233.69billion
410.39 361.09 425.32 498.84 542.77
136.42 167.98
196.2
239.58 233.69
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
CommoditiesTradeValue
($Billions)
Commodities Potentially Non-Airlifted Commodities Potentially Airlifted
31.7% 31.6% 32.4% 30.1%
(Source:
Frost & Sullivan)
Potentially airlifted
Potentially not
airlifted
Precious metals and jewelry, textile and
textile articles, perishable goods,
pharma and medical products,
electronics and engineering goods,
leather goods and handicrafts.
Mineral products, metals and articles of
metals, transport equipment etc.
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25%

15. Airliftedcommoditiesareexpectedtoreach$US315.42billion
byFY2018(Forecast)
136.42
167.98
196.2
239.58
233.69
240.7
252.73
272.95
294.79
315.42
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
Value($Billions)
Commodities Potentially Airlifted
(Source: Frost & Sullivan)
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16. 52%
8%
13%
11%
4% 7%
5%
Break up of airlifted commodities FY
2013 Precious metals and
jewellery
Pharma and medical
products
Animal and vegetable
products
Prepared food stuff
and beverages
Textile and textile
articles
Electronics and
engineering goods
Others
Online Retail
Order Goods,
20%
Courier
Documents,
20%
Perishable
Goods , 10%
Pharma &
Healthcare, 9%
Electronics &
Electrical
Goods, 8%
Auto
Components &
Spares, 8%
Gifts &
Stationary, 6%
Jewellery,
Fashion
Accessories
& Luxury
Goods, 5%
Textile &
Garments, 5%
Trade Samples,
4%
Micellaneous,
5%
CurrentScenario
Precious Metals constitute of
the majority of airlifted
commodities. This share is
expected to decline as animal
& vegetable products and
pharma categories expand
In domestic cargo, online retail
goods have emerged as a major
segment over the past few years
and mainly consist of electronics
and electrical goods, jewelry,
fashion accessories and luxury
goods, and textile and garments.
(Source: Frost & Sullivan)
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17. AirCargosectorisexpectedtogrowataCAGRof11.2%over
next20years
0
5
10
15
20
25
30
35
40
2010-11 2015-16 (E) 2020-21 (E) 2025-26 (E) 2030-31 (E)
CargoHandledinMillionMetricTonnes(MMT)
Forecast of Air freight Traffic throughput at Indian Airports
Domestic Cargo International Cargo Total Cargo
(Source: MoCA, 2012 Report)
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18. Thegrowthofcapacityislaggingbehindtheaircargotrafficgrowthin
absolutetermsinthenearfuture.
Thiscallsforincreaseininvestmentsinthecapacitybuildingfront
5.1
5.7
5.9
6.1 6.2
6.4
FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
CargoHandlingCapacity(Million
Tonnes)
Cargo Handling Capacity of Indian Airports (Forecast) (Source: Frost & Sullivan)
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19. Airport
Cargo
Handling
Capacity
(Tonnes)
Area for
Cargo
Operation
s (sq.
meter)
Area for
Perishabl
e Cargo
(Sq.
meter)
Internationa
l Cargo
(Million
Tonnes) in
FY 2013
Domesti
c Cargo
(Million
Tonnes)
in FY
2013
Total
Tonnage
Handled
(Million
Tonnes)
in FY 13
*Throughpu
t Efficiency
(Tonnes /
Sqm)
%
Utilizatio
n of
capacity
CSIA-
Mumbai
1,000,000 108,684 2,482 0.45 0.18 0.63 5.7 63.0
IGIA-
New
Delhi
2,200,000 73,643 1,127 0.36 0.19 0.55 7.3 25.0
Chennai 1,102,373 33,100 - 0.24 0.08 0.32 9.7 29.0
RGIA-
Hyderaba
d
150,00 14,330 - 0.04 0.03 0.07 4.9 46.7
BIA-
Bengaluru
360,000 29,540 - 0.14 0.08 0.22 7.4 61.1
Kolkata 303,293 21,096 742.5 0.04 0.08 0.12 5.5 39.5
*Throughput efficiency is calculated without taking area for perishable cargo into account
Comparison of Indian Metro Airport on Throughput Efficiency and Capacity Utilization.in
FY 2013 (Source: MoCA, 2012 Report, Frost & Sullivan)
Basedontheannualthroughput,Chennaihasthehighest
throughputefficiency(asperWBBenchmarks)
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20. DwellTime:Animportantparameterforefficientair
freightlogistics
Airport Dwell Time-
Exports (Hours)
Dwell Time-
Imports (Hours)
Sharjah 4 4 to 8
Singapore 6 3 to 6
Frankfurt 6 NA
Incheon 2 to 3 2 to 7.5
Dubai 2 to 3 2 to 6
HongKong 3 to 6 4 to 8
Delhi 36 119
Mumbai 48 96
Chennai 48 72
Hyderabad 12 36
Kolkata 48 72
Bengaluru 36 48
Global benchmarks of dwell times as
compared to Indian Airports (Source:
MoCA, 2012 Report)
Several factors which contribute towards the
high dwell time at Indian airports include:
•Lack of adequate facilities and trained
manpower
•Complicated custom procedures
•No automation
•Congestion created due to free period (72
hours) policy
•Less availability of processing space due to
multiple agencies occupying lot of spaces in
cargo terminal
•No standardization of process
•No synchronization among the multiple
agencies
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21. Key Issues
Infrastructural
Bottlenecks
Possible Reasons
Inadequate and
Overloaded facilities
• warehousing, parking bay, cold storages, truck parking terminals, connecting roads,
etc
• inappropriately planning for express & normal cargo operations, volume & mix of
cargo, nature of cargo-palletized or loose
Lack of adequate
screening facilities
and trained
manpower
• Old machines, problems of breakdowns, unable to process heavy and palletized
cargo
• Unavailability of on-site service engineers & trained manpower in dangerous goods
case
Lack of off-site
facilities for cargo
processing
• AFS (Air Freight Station): lack of custom procedures, legal frameworks, conflicting
views: delays due to congestion replaced by delays due to extra operational steps
• Existing ones (ICD mulund, virugambakkam) are non operational due to technical
issues
Lack of special cargo
facilities
• Not all airports operating possess cold storages- integration of cargo difficult
Air side and Land
side infrastructure
• allotment in unused old buildings near the airport, EDS companies required to
invest, short-term tenure, low commitment & service levels
Other Important Issues:
• Delays due to examinations- not moving shipments until all are marked
• Documentation process- cumbersome documentation & duplication across various agencies
• Congestion - due to practice of cargo tendering during peak hours 40% (0800-1400 Hrs), 60% (after 1400 hrs)
• Unavailability of offices of multiple agencies at the site- Drug controller, Port Health Officer, Quarantine dept
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22. Case: SardarVallabhbhaiPatelAirport ,Ahmedabad
• Key Facts:
• 8th busiest airport in terms of passenger traffic
• 4 terminals : domestic, international, one back up and cargo
• GSECL (Gujarat State Export Corporation Ltd.) maintains and operates the cargo terminal of SVP
airport
• 45000 square feet area
• 3 level stacker on mezzanine floor
• Major Cargo: Pharmaceutical & Engineering goods
• Facilities: up-to-date & approved by EU as RA3 complaint warehouse
• Pile up Issue:
• Airlines having issues with hubs/destinations
• Customs holding up the cargo for queries
• Documentation problems
• Typical Cargo Documentation Process:
• Filling of shipping bill by custom agents
• Processing by GSECL, data transferred to EDI servers
• Challan generated & printed, handed to agent to offload goods
• Cross verification of goods against details mentioned in the challan
• Examination by cutoms
• After clearance from customs, agents handover the documents for processing it to airlines
• Airlines manifest’s the cargo for onward shipment towards the destination
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23. KeyRecommendations
Integrated approach for
aviation industry infrastructure
• Considering overall supply chain while planning, long term investments,
multi-agency dependent industry, common platform & transparent processes
Creating of central systems • Central systems, verification of various agency vendors, simplification
customs procedures, database creation for cargo facilities
Creation of cargo hubs • Increase in transshipments, boost in trade & economy, location advantage
• Establish major & minor hubs (Exhibit)
Dedicated facilities for different
types of cargo
• Minimum mandatory requirements to be established for all airports- first
step in integration of cargo across country
• Creating additional facilities in accordance with the economics of the region
(hyd-pharma, mum-sea)
Process standardization &
accountability
• standardization of process and procedures across all airports & across
complete supply chain
• Clear standards of performance,
Education & training
infrastructure
• Inadequate manpower, un-attractive for talented people
• Establishing Nat. Avi. Council of India for skill dev. Programs
Technological upgradation &
easy financing
• Cargo operation is investment intensive- availability of easy financing for
technical investments , modernization & upgradation
Offsite facilities • Globally in operation, successfully implemented for ports in India
Regular audit & use of unused
spaces
• For adequately utilizing the unused spaces as in Ahmedabad & Chennai
Synchronizing Working hours
or 24X7 operation
• unsynchronized working hours among various agencies created problems of
pile up during peak time of the day
Reducing free period • reducing the free period from existing 3 days to further below & changing
the tariff structure (revenue + push for clearance)
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24. PotentialMajor&MinorCargo Hubs
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Major- Delhi, Mumbai, Chennai,
Bangalore, Nagpur;
Minor- Lucknow, Guwahati, Kochi,
Ahmedabad
The yellow circle indicates the
potential cargo network in India.
*White dots indicate the cargo hubs
(Source: www.mapsofindia.com)

25. Thank You
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