carotalk acaai october 13

CargotalkSouth ASiA’S LeAding CArgo MonthLy

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ACAAISPECIAL2013

Stop ConfuSion

CCI begins investigation: ACAAI

Role of

new pReSident of ACAAi aim is to acquire industry status

PLUS AgentS for greAter coordinAtion Among vArioUS ASSociAtionS

AirCargo

40th ACAAi ConVentionoCtober 24-27, 2013, JAipur

Postal Reg. No.: DL (ND)-11/6002/2013-14-15. WPP No.: U (C)-272/2013-15RNI No.: DELENG/2003/10642

A Quest for Supply Chain Link

WWW.CaRGotaLk.IN4 i CaRGotaLk i aCaaI sPECIaL 2013

contents/ACAAI 2013

eXcLUSive intervieW

6 The aim is to acquire full industry status: ACAAI President

vieWPoint: AcAAi AgentS

8 Concerted efforts to establish air cargo as vital link

16 Associations should talk each other to fight for common issues

cHAPter initiAtiveS

18 In sync with all air cargo partners

cArgo terminAL oPerAtorS

20 New features at IGIA, courtesy Celebi

24 CSC all set to open Terminal 1B at IGIA

internAtionAL AirPort

22 IGIA receives Formula 1 for India Grand Prix

AirLineS neWS

26 The Cargo market will grow: Jet Airways

Etihad to increase capacity effective November 1

ACAAI Special

34

cHArter ServiceS

28 Chapman Freeborn explores new trade beyond Delhi

AcAAi APPeAL

30 Stop Confusion: CCI begins investigation on IATA Cargo Activities

eXPert vieWS

34 Lack of air cargo infrastructure: major stumbling block

8

22

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Cargotalk


One-on-OneExclusive Interview

n RAtAn KR PAuL

‘the aim is to acquire full industry status’the 40th Annual Convention of the Air Cargo Agents’ Association of India (ACAAI), which is being held from October 24 to 27 in Jaipur with the theme of ‘Air Cargo in Aviation Industry—A Vital Link’, is discussing the critical role of air-cargo in a complete and integrated supply chain system and logistics industry. Speaking to Cargotalk, in the very first interview after being elected as President, ACAAI; SL Sharma said the convention will also discuss the vital issues including industry status for air cargo and logistics sector.

According to Sharma, in view of the fact that India is poised to be a manufacturing hub and indications of huge logistics demand for

operating international air cargo, the participants will highlight issues that hinder seamless operations by air cargo logistics players, and freight forwarders in particular. The convention will also ponder on the recognition of logistics sector, evolving market needs, changing trends of the logistics environment, customers’ demands, infrastructure, rules & regulations, the role of IT and the trends of consolidations through mergers and acquisitions.

“Never before has the importance of air cargo logistics industry in India been as crucial. Because of the tremendous pace, growth, rapidly-changing profile and volatility of the environment demand fullest participation, the close association

of all industry players is required to establish the link in the entire global logistics chain,” Sharma highlighted.

In his opinion, Jaipur as a convention venue is a perfect choice in view of the importance of the destination from international trade’s point of view. “Rajasthan is famous for a number of exports items viz gems, jewels and handicrafts. The Jaipur Airport is also developing as very viable international airport,” he pointed out. Sharma informed that a number of freight-forwarders are taking part in this convention to explore business opportunities. ACAAI is also planning to open its Jaipur Chapter in the near future. “India is becoming a lucrative destination for manufacturers and logistics companies. We need to expand our business from freight-forwarding to logistics services, and from local to global. We will have to compete with global players by offering world-class services. And for this, we need adequate support from the facilitators and policy-makers,” emphasised Sharma.

Sharma also emphasised on greater integration among the industry stakeholders. “All players should come on one platform and common issues should be placed before the Air Cargo Logistics Promotion Board of the Government of India. One of the major objectives of ACAAI is also to bring all the industry players on a common platform,” he added.

Sharma is upbeat about the future of Indian freight forwarders and logistics companies. “There is a great hope for Indian logistics companies. Though the present market is witnessing a slowdown, it would definitely grow in the months to come. We should be prepared to fulfill the demand from the international customers for world-class services,” he concluded.

Because of the pace, growth, rapidly-changing profile

and volatility of the environment demand, the close association

of all industry players is required to establish the link in the entire global logistics chain

SL Sharma President, acaai


ACAAI Agents Viewpoint

Concerted efforts to eStAbliSh AiR CARgo AS vitAl linkIn this special issue of Cargotalk for the 40th Annual Convention of the Air Cargo Agents Association of India (ACAAI), we are presenting views of some leading air cargo professionals and industry leaders on present market scenario, challenges, the expected future role of ACAAI and multiple associations, and appeal to the facilitators and policy makers. the objective is to highlight the importance of air-cargo sector for the growth of the country’s economy, which have been hitherto unrecognised.

market ScenarioAccording to J Krishnan, Past President, ACAAI, the market situation is under extreme stress as the economies of India’s traditional markets of the west have not witnessed any appreciable demand surge. On the other hand, developing of alternate markets still remains a distant goal to replace the scale and size of the country’s traditional markets.

“In my opinion, 2012/13 has been the most challenging year in the air cargo business. The economic slowdown during the recession in 2008/09 was not as harsh as what current times are. As far as trends go, unfortunately one does not see the local situation changing soon, perhaps more because of the current political situation prevalent in India,” said Keshav Tanna, Director, Links Forwarders and Past President, ACAAI.

“Volumes are shrinking partly due to the global slowdown and party due to our deficiencies including inherent logistics shortcomings.

J KrishnanPast President, ACAAI

Keshav Tanna Director, Links Forwarders

n RAtAn KR PAuL


Sector specific improvement (phrama is an example) would not suffice and we are lagging behind in overall growth. Exploring untapped global markets have just begun and may take time to penetrate,” added G Raghu Sankar, Executive Director, International Clearing and Shipping Agency.

Firdos Fanibanda, MD, Modern Cargo, was of the opinion that the most relevant factor that has affected the trade to / from India is the currency devaluation. This has shaken up the markets and will have an effect over the long term period. “In my opinion, Indian trade had settled into a complacent mode with the feeling that we were the force to reckon with second only to China. However, this sudden devaluation and constant fluctuation has an indirect positive effect. The trade will be more alert, ready and adapt to changes in the future more quickly,” he said.

N Sivasubramaniam, Director, Air Connection, maintained that the exim scenario has been on a decline in the last two years both by Air and Sea. If the statistics of both imports and exports by air from Chennai for the last three years are

accounted, it will be evident that there is a steady decline. What used to be around 13 to 14 thousand tonne of exports per month, today the average is around 9 thousand tonne— a drop of almost 40 per cent. “I except this trend to continue for a year at least,” he said.

Ravinder Katyal, Director, UTi Worldwide, however appeared to be quite optimistic. “The market has already started improving, especially the pharma and fashion sectors. We are expecting a 15-20 per cent growth in fashion and 5-7 per cent growth in pharma exports this year,” he said. He also maintained that the company is now getting good responses for US market, where the inventory is almost dry. At the same time, Africa and Latin America is also growing simultaneously.

Ashwini Sharma, Vice President, Perfect Cargo Movers also expressed the same sentiment. “Both the US and Europe markets are improving now and the same will continue. Presently, India’s exporters are in advantageous position because of some issues in Bangladesh and China, where labour costs are on the higher side now,” he explained.

issues and challenges Tanna maintained that air cargo and logistics has always been a challenging business in India, more so because of infrastructure issues. “One would have thought that privatisation of certain airports like Hyderabad, Bengaluru, Delhi, Mumbai etc would have brought in efficiencies. Unfortunately, this has not

been so. Mumbai for instance, still has to see any significant investment for the cargo sector. We still operate from the same age old hangar facility which has been here since 4 centuries perhaps, inspite of cargo increasing at rapid paces in the economic capital,” he added.

Fanibanda supplemented, “On one side we see a grand show piece coming up at Mumbai airport. However on the other there is no development at the cargo facility. It remains the way it has been for decades and we are trying to squeeze out whatever we can out of it. I do not think that anywhere in the world there would be so many agencies involved in the processes,” he said.

According to Raghu Sankar, challenges


G Raghu SankarED, International Clearing and

Shipping Agency

Firdos FanibandaMD, Modern Cargo

N SivasubramaniamDirector, Air Connection

Ravinder KatyalDirector, uti Worldwide

In my opinion, Indian trade had settled into a complacent mode with the feeling that we were the force to reckon

with second only to China

Firdos Fanibanda md, modern cargo

We are expecting a 15-20 per

cent growth in fashion and 5-7 per

cent growth in pharma exports this year

Ravinder Katyal director, uti worldwide

Sector specific improvement

would not suffice and we are lagging

behind in overall growth

G Raghu Sankar ed, international clearing and

Shipping agency


are increasing day by day and surprisingly the steep decline in volume has not enhanced the efficiency. Be it Customs systems or manpower resources or the availability of equipments has not shown visible or appreciable improvement while dwell time has steadily increased.

“Chennai airport, in particular, is facing acute short supply of trained manpower,” Katyal pointed out.

Sunil Kohli, MD, Rahat Cargo, observed that logistics at several airports are found to be wanting in many aspects which hinder a less time-consuming, agents-friendly clearance and expeditious process of export activities. “All the participating agencies apart from the stakeholders must hold an open session at the airport concerned at least once in a fortnight to resolve the roadblocks,” he urged.


Ashwini Sharma Vice President, Perfect Cargo

Movers

Sunil Kohli MD, Rahat Cargo

All the participating agencies apart

from the stakeholders must hold an open

session at the airport concerned at least once

in a fortnight Sunil Kohli

md, Rahat cargo

Both the United States of America

and Europe markets are improving now and the same will

continueAshwini Sharma

vice President Perfect cargo movers


Taking cue from Kohli, Ronald Goveas, Chairman, ACAAI Western Region said, “Shippers want fast delivery with less cost and transit time. The cost and transit time play a key role behind the success of the customers. Unfortunately, majority of our airports are not in a position to fulfill the customers’ demand. Our airports have to increase the speed of cargo handling and processing to remove congestion.”

“Operational hazards have not changed much over the years be it from the government agencies or from the airport handling agencies. Customs system ICEGATE still has a lot of glitches, breakdown of the system is a frequent occurrence. We have still not reached the paperless transaction mode. The current operational condition needs a lot of improvement in terms of equipment, procedures and security,” Sivasubramaniam underlined.

Appeal to the Policy makers and Stakeholders“It is imperative that the vision of India emerging as a super power in the next

decade is deeply etched in the ethos of every facilitator, regulator and policy makers. This will ensure that robust, dependable and transparent processes are in place,” said Krishnan. He also feels that the trade needs to reciprocate with better compliance and transparency.

According to Tanna, times are difficult for the air cargo trade and the appeal would be to focus on infrastructure (including automation). Indian infrastructure has not been able to keep pace with the numbers. “Our growth story would have been much different, if the policy makers had delivered their promises.

It is difficult to understand why the facilitators would not provide facilities when the trade is willing to pay for the same? By nature we are very patient I think, but I fear one day this will run out the way things are going,” he expressed.

Kohli forwarderd some concrete recommendations that include containing rising Aviation Turbine Fuel (ATF) prices without causing increase in the fuel surcharges; eliminating growing congestion at airports; reducing delays in cargo handling & clearance, development of transportation system, exploring single window clearance for exporters, and an enhanced logistical infrastructural support at cargo warehouses.

“Create adequate infrastructure that would facilitate seamless flow, reduce

transactional cost and time and bring in process / system driven procedures by diminishing human intervention. There should also be bench mark and stakeholders to be made accountable for a good beginning,” added Raghu Sankar.

He was of the opinion that, what is lacking today is “unity in diversity”. Protection of each ones turf is hampering the overall progress though no

individual stakeholder can be blamed for self preservation.

All discussions / vision statements of inclusive and comprehensive growth or thrust diminishes in value due to disjointed efforts of stakeholders. There should be a Ministry for Logistics. Such a Ministry would become a nodal agency for the entire supply chain and the present system of disconnected and divided power ( Shipping, Aviation, Finance, Commerce, Roadways, Highways, Transport, Railways) can only stall the stagnate growth.


Ronald GoveasChairman, ACAAI-WR

Shippers want fast delivery with less cost and transit time.

The cost and transit time play a key role behind

the success of the customers

Ronald GoveasChairman, ACAAI-WR


in Ahmedabad, international air cargo volume has not shown any increase in import or export volumes in tonnage

terms over the last 2-3 years and the changes is insignificant. Speaking to Cargotalk, Samir Shah, Partner, JBS Group of Companies said that the number of operating agents has multiplied making competition very unhealthy and detrimental for the agents. “We have been advocating a study to understand the causes for no growth. We have our views, but need an all-round view to be able to work on increasing volumes. However, the readiness expected from other stakeholders is not forthcoming,” Shah said.

In his opinion, the industry is becoming very dynamic and changes are occurring even before agents get used to them. ACAAI has been playing a leadership role over the past few

decades. However, it will have to be adaptable - fast in understanding and responding to changes and most importantly keep all agents together and on the same page. “The issues are enormous - taxation; competition; privatisation of other services; manpower; certification; receivables, etc. The role is difficult in view of the provisions of the Competition Act,” he pointed out.

Asked about the need of a greater platform where all agents and other industry stakeholders can work together for common issues, Shah observed, “In fact, there is a very large majority of agents who have commenced operations in the last 10 years. They have made a success

of their businesses. The way they function is very different than how the older agents do. However, the entry-barriers to the older associations have not been adaptable to these changes. Hence, multiple associations were inevitable,” he underlined. In his opinion, the need of the hour is for the associations to talk to each other; cooperate with each other rather than have

reservations about the other. “The issues are common, but the approaches may be different. It would be essential that all other talk to each other, before talking to the authorities or the airlines, custodians, policy makers, etc and present solutions which are universally accepted,” he urged.

ASSoCiAtionS Should unite foR Common iSSueS

Samir Shah Partner, JBS Group


ACAAI has been playing a leadership role over the past few decades. However, it will have to be adaptable - fast in understanding and responding to changes, and most importantly, keep all agents together and on the same page


Chapter InitiativesNorthern Region

in Northern India, if the figures of DIAL are any indication, the situation has not only been steady, but has improved as well.

However, there are plenty of challenges that the air-cargo industry stakeholders have to struggle in the days to come. “The challenges are many, but infrastructure is the major problem. The air-cargo agents have no access to any world-class warehousing solutions in and around the Delhi Airport. The NR is becoming one of the major export-hubs for pharma shipments, but faces systems and infrastructure issues in its growth. Unfortunately, the temperature-sensitive pharma products get examined in either normal temperature or 15-25 Degrees temperature area, and the shipment’s quality is potentially compromised,” said Trikha.

Moreover, the synchronisation between various authorities, especially for Wildlife, Customs, Drug Control, etc needs serious review. Further, dwell-time for exports and imports shipments are way high than international standards.

“24x7 has been implemented in this Region as well; but the response level to such a wonderful scheme is so lukewarm that it may be withdrawn too. It is a challenge to convince all authorities involved including shippers to come to one platform and make it success,” he said.

According to him, the answer to some of these issues and problems is ‘The Cargo / Freight Village’. “We hope concerned

authorities pay full attention to expedite the same to meet the challenges by December 2015, if not earlier,” he maintained.

new initiativesFor the first time in the history of ACAAI-NR, that in order to discuss the various problems of importers and exporters relating to 24x7 Clearance, Drawback Problems, frequent dislocation of EDI System and delay in examination of cargo, it held a joint seminar in the form of an Open House in co-ordination with FIEO under the Chairmanship of the Chief Commissioner of Customs (DZ).

At this seminar, all industry stakeholders had an opportunity to discuss and clarify their doubts. A large number of custom-brokers, importers, exporters, airlines/carriers were present at the seminar.

in the Wings“We are in process of setting up various committees to look in to, on regular basis, the issues and problems brought to our notice by members,” Trikha emphasised.

“ACAAI-NR is also planning to invite speakers from Customs, Directorate of Systems, Custodians, carriers and other Export/Import Promotion Councils in order to enlighten our problems before them and to get their assistance in resolving the same. We are also looking forward to conducting courses on DGR, Marketing and Financial Management in the next 2-3 months,” Trikha informed.

ACAAI-NR has set up a target of 10 per cent growth of its membership by this year.

24x7 customs clearance has been implemented in Northern Region as well; but the response

level to such a wonderful scheme

is so lukewarm, that this facility may be

withdrawn tooMahesh Trikha

Chairman ACAAI-NR

In sync with all AiR CARgo pARtneRSDespite a gloomy air cargo industry scenario, the northern Region of India is doing reasonably well in terms of traffic performance at the Delhi International Airport for the last couple of months. Mahesh Trikha, Chair-man ACAAI-nR spoke to Cargotalk on current developments in this region and challenges ahead.


Cargo Terminal OperatorsInfrastructure

this year fluctuating rupee has also added to declining tonnage specially imports. The negative economic sentiments in Europe is

having a downwards trend on exports, as many orders are either being cancelled or delayed indefinitely. “However measures taken by government have positive impact and we do hope to see a positive trend in both imports and exports in the coming months,” said Goel.

Currently Celebi Delhi Cargo Terminal is able to handle all sorts of commodities including textiles & readymade garments, leather & leather products, machine spares, electronic equipment/computer hardware, various perishable and hazardous commodities and pharma shipments

“Europe and Americas used to be the largest regions for exports but the situation is not the same due to recessionary trends in both Europe and Americas. At the same time some of Asian and GCC countries

are showing positive growth and business continues to expand in those markets,” Goel pointed out.

Some important initiatives by celebin Celebi Delhi

Cargo Terminal has become the 1st Terminal in India to become E-freight/E-AWB Compliant recognised by IATA

n Celebi has installed multiple TLX machines with automatic weight and volume scanners which have reduced human intervention to a minimal level

n As an extension of the Centre for Perishable Cargo (CPC) a newly developed state-of-the art Pharma Logistics Centre with temperature controlled Chambers for pharmaceutical shipments with a

storage capacity of 27 ULDs and loose cargo to process pharma shipments more efficiently

n Cool Dollies which are refrigerated unit on wheels, and can carry one complete aircraft pallet/container at a pre-defined temperature, adjustable to the requirements of the perishable products have been introduced

n TSA Complaint ETD desktop was introduced to ensure highest level of security in the terminal

n Celebi has started a new facility of printing IATA Standard Barcode Labels in its Export PTL

n Implemented Queue Management System for the benefit of the trade

n Expedited export/import corridorn Battery operated equipments were

introduced as part of Green Initiative “The modernisation of the terminal is at final stage and Celebi has increased the capacity by more than 100 per cent and the current capacity of our terminal is close to a million tonne per annum,” said Goel.

Goel maintained that Celebi is able to offer world-class services thanks to cooperation from industry stakeholders. “We have received good support from all the stakeholders, right from regulatory bodies, the airport operator, freight forwarder associations and all other members. It is with their support that we have been able to make this transformation,” he claimed.

new features at igiA, courtesy CelebiDue to the global downturn, the market is depressed and this can be clearly seen through the falling tonnages. Rajesh Goel, CEO, Celebi Delhi Cargo terminal Management India, provides details about the performance of the brown-field terminal at the IGI Airport in Delhi.

The modernisation of the terminal is at

final stage and Celebi has increased the

capacity by more than 100 per cent. The

current capacity of our terminal is close

to a million tonnes per annum

Rajesh Goelceo, celebi delhi cargo terminal

management india


International AirportNews Update

iGI Airport, Delhi received 700 metric tonnes of palletised cargo (78 pallets) of Formula 1, on October 15 and 16 which

arrived from Japan’s Nagoya airport. The cars are taking part in the India Grand Prix at the Buddh International Circuit on October 25 and 26, 2013, at Noida in UP. The cars were shipped on B-747 freighters

of British Airways, Emirates, Nippon Cargo and Atlas Air Cargo.

IGI Airport has earmarked dedicated parking space for 100 trucks and two aircraft. According to I Prabhakara Rao, CEO, DIAL; the state-of-the-art cargo infrastructure spread on an area of 1.28 lakh sq metres has complete in-house competency to handle events such as this. He pointed out that F1 cargo involves high level of coordination with multiple agencies on time-bound deadlines.

With time, safety and security in view, special permissions, proximity cards and driver identification cards have also been sought.

“More than the volume, it is the time factor that is the key in making logistics support successful. Post this race, all equipment will have to be shifted to the next race, hence it is extremely time-critical. In fact, we are capable of handling many such events simultaneously without any effect on our normal operations,” Rao added.

igiA CARgo reCeIves FOrmulA 1 FOr IndIA GrAnd PrIx


expectations from the shippers/freight forwardersn Bring cargo only if booked by the

airlines.n Don’t dump the cargo at the

facility as the airport facility is not a storage area – it is more of a transit location, a short-term storage facility.

n The storage time is being utilised for processing activities like custom examination, completion of export or import documentations, palletisation, etc.

n Inform in advance if there are unexpected peaks in export/import volume, so that we can plan the resources in advance.

on 24x7 customs clearance“let’s be realistic about 24x7. this proposal needs to be implemented in spirit and there has to be belief amongst all trade partners that this will lead to increase in volume. unless that is there, no impact will be felt. Yet the fact remains, as cargo terminal operators we need flexibility especially on the export cargo side, where we would like to have our facility opened 24x7 to receive cargo continuously, even if no custom examination is done on 24x7 basis. this will allow us to plan our operations well.”

the ongoing market trend is not different from the world over. The continuing global economic recession is hurting air cargo

growth. However, Cargo Service Center is upbeat about the future prospect of the air cargo industry in India. The terminal operator is continuously investing in its new facilities at IGI Airport, Delhi and CSI Airport, Mumbai.

CSC has designed, developed and is operating and managing the Perishable Cargo Terminal at Mumbai Airport. “Though the facility is just 2,000 sqmt, we are trying to process as much

perishable and temperature-sensitive cargo like pharma as we possibly can. We are currently averaging around 17MT per sqmt per annum from this facility, compared to just 6 to 7MT per sq met per annum average of other terminals,” said Panicker. “We are thankful to Mumbai Customs for helping us in that regard, but the volume of such cargo is growing and we are not able to keep pace with it,” he pointed out.

In Delhi, CSC will soon operationalise T-1B at its Integrated Air Cargo Terminal – ‘Cargo Terminal 2’. CSC has already got all the security clearances for the same. This will add another 5,000 sqmt of export handling area increasing capacity for export cargo by 75,000 MT per annum. “We have already added an additional 3,000 sqmt area for Import handling on the first floor. Soon, a second 10MT hoist will be installed which will increase the efficiency of cargo movement,” Panicker informed.

In addition; after initial problems, the company has now resolved almost all issues. Thus, it is able to process information electronically and be connected with its clients through EDI.

“We have ensured that the average dwell time in our facility has come down. More importantly, we proactively engage with our clients- airlines as well as forwarders/shippers/CHA on a continuous basis. We are transparent in our dealings and we ensure that there are no hidden costs in our service offerings at any of our facilities,” he further asserted.

“Our terminals at Mumbai and Delhi have been awarded the ‘Best Air Cargo Terminals in India’ at the recently-concluded ELSC Awards.,” Panicker pointed out.

Cargo Terminal OperatorsInfrastructure

According to Radharamanan Panicker, CEO, CSC India, the overall air cargo market is not doing well. Imports are down and even exports are not doing well. If it was not good for perishables and pharmaceuticals, India would have to see negative trend this year too.

We have ensured that average dwell time in our facility has come down.

Also, we proactively engage with our

clients-airlines as well as forwarders/shippers/CHA on a continuous basis.”

Radharamanan Panicker ceo, cSc india

CSC All Set to open TermInAl 1B AT IGI AIrPOrT, delhI


e tihad Airways plans to increase capacity on Abu Dhabi–Mumbai and Abu Dhabi–New Delhi routes

in view of the growing importance of the Indian market for the airline. The expanded schedules will have more connection opportunities between Etihad’s global network and Indian services, via the airline’s Abu Dhabi hub.

From its hub at Abu Dhabi International Airport, Etihad Airways offers flights to 94 passenger and cargo destinations in the Middle East, Africa, Europe, Asia, Australia and the Americas, with a fleet of over 80 Airbus and Boeing aircraft, and large orders for additional aircraft including 41 Boeing 787-9 Dreamliners and 10 Airbus A380s aircraft.

Now, Etihad will increase from daily to double-daily its Abu Dhabi-Mumbai and Abu Dhabi-New Delhi flights; use wide-bodied Airbus A340-600 aircraft on one of the daily Abu Dhabi – Mumbai flights; use wide-bodied Airbus A330-200 aircraft on one of the daily Abu Dhabi - New Delhi flights and upgrade daily Abu Dhabi – Chennai flights from Airbus A320s to new Airbus A321s.

“Following the recent air-services agreement between India and the UAE, we have the opportunity to add capacity between the two countries. The big winners will be our passengers and freight customers and the economies of India and Abu Dhabi,” said James Hogan, President and CEO, Etihad Airways.

Airlines newsNew Initiatives

Etihad Airways has decided to increase capacity to and from India by introducing more flights and wide-bodied jets by the end of this year; and further increases and new routes next year, subject to regulatory approval.

The big winners will be our passengers and freight customers and the economies of India

and Abu DhabiJames Hogan

President and Chief Executive Officer, etihad airways

etihad to increase capacity effective november 1, 2013

t he economic uncertainty in parts of the world has of course affected cargo

traffic to and from these countries. But for any industry every crisis brings opportunity and it is how it seizes such opportunities. However, for Jet Airways and as in all periods of economic stress, yields are under some pressure in certain regions but there are several sectors, commodities, market segments where yields are growing.

“India continues to be a vibrant market despite the relative slowdown in the overall economy and the depreciation of the Rupee. Certain sectors and industries are affected more than others but the market as a whole remains reasonably strong. Of course we will have to keep monitoring the impact of economic developments in India and globally for any potential effect they might have on our business,” said a spokesperson of Jet Airways.

Commenting on the existing infrastructure the spokesperson

maintained that India’s air cargo infrastructure is developing and being augmented especially at the key airports. Jet Airways feels that concerted, well-coordinated efforts by all agencies and authorities involved in improving such infrastructure will help India benefit from the growth opportunities that are evolving.

“Jet Airways is well poised to capitalise evolving opportunities by leveraging on our strengths, products and service. As our network expansion unfurls we will serve our customers with greater reach, spread, and widen the services and products we offer,” the spokesperson said.

The cargo market will grow:Jet Airwaysthe economic uncertainty in parts of the world has of course affected cargo traffic to and from these countries. But for any industry, every crisis brings an opportunity and it remains to be seen how it seizes such opportunities. For Jet Airways, as in all periods of economic stress, yields are under some pressure in certain regions. But there are several sectors, such as commodities, and other market segments where yields are growing.


the market became much more transparent in the recent years. At the moment, there is still a lot of scheduled capacity available in most

of the markets. This increases the pressure on all players such as operators (scheduled as well as charter), forwarders and brokers.

“We have a diversified product range of cargo. Besides this, we started to approach other market segments like relief, Oil & Gas and automotives a long time ago. This helps us to overcome the difficulties of the overcapacity in most of the trunk routes. Our knowledge and experience of outsized or heavy cargo enables us to still do a lot

of general cargo flights. On top of this, we have the in-house know-how to fly to remote places all around the world,” said Hunziker. He expects a little peak for the rest of the year. “But think that in 2014, we have to deal with the same challenges,” he added.

He underlined the fact that India too has a kind of overcapacity situation. However, he has high hopes about the Indian market and its future. “India is one of the big players in the future and there is still a big need of ongoing construction work. This, together with its big potential for exports, will generate additional cargo. Maybe, we have to think different than the traditional routes to Europe or the US which are covered by scheduled carriers,” he pointed out. According to him, trade lanes to various places in Africa and China will increase and provide a big potential for charter solutions.

“We are very happy with the performance of our team in India. On the other hand, we are also facing some difficulties with the current market conditions. However we have done our homework here in India and are confident about the future. We have changed the focus a bit and approached new routes with bigger potential for charters,” Hunziker added.

He emphasised the need to have close cooperation/communication with customers, which will enable Chapman to profit from some last-minute opportunities. The company is also examining the potential in different places besides Delhi to profit from first-mover opportunities.

Charter servicesIn Conversation

Our knowledge and experience of outsized or heavy

cargo enables us to still do a lot of general cargo flights. On top of this, we have the

in-house know-how to fly to remote places all

around the world

Reto Hunziker Group cargo director, chapman

Freeborn

Chapman Freeborn exploresnew tRAde beyond delhiAre charter operators facing serious challenges due to the present overcapacity in the air cargo market? Reto Hunziker, Group Cargo Director, Chapman Freeborn, has reasons to say no. In an interview with Cargotalk, he explained his arguments.


Current IssueAn Appeal

ACAAI’s petition inter alia, submitted that in the light of the provisions of the Competition Act, 2002, the existing

functioning and the modalities of International Air Transport Association (IATA) in India could amount to complex phenomena of cartelisation both on ‘micro’ and ‘macro’ economic operational processes and hence, may be in violation of Section 3 and 4 of the Competition Act, 2002. ACAAI did not

want to find itself in a situation where, for any reason, if IATA was found to be indulging in any anti-competitive practice in India, ACAAI would be construed as an unwitting collaborator acting in concert with such practices whether voluntarily or otherwise.

ACAAI’s position is that the CCI is required to examine the facts to a chain of activities such as unilaterally determining the polices

CCI BeGIns InvesTIGATIOn On IATA CArGO ACTIvITIesSoon after the notification of the provisions in 2009 on anti-competitive practices and use of dominant position under the Competition Act, 2002, the Air Cargo Agents Association of India (ACAAI) reasonably apprehended that many of the working conditions of the International Air transport Association (IAtA) which were forced upon the business of Air Cargo Agents might fall under cartelisation. ACAAI, therefore, wrote a letter to the Competition Commission of India (CCI) to examine the position and subsequently, ACAAI submitted a formal petition on December 21, 2012 with ‘Information’ in its possession. Here are the details of the further developments provided by ACAAI.

StopConfuSion


Current IssueAn Appeal

that govern the Air Cargo Agents, prescribing the qualification and conditions for the accreditation and retention of Air Cargo Agents, acting in a self-acclaimed regulatory capacity, determining the commission (or its exclusion for example in recovering fuel surcharge on behalf of the airlines) payable to agents, determining norms for Air Cargo Agents, and institutionalising IATA in its various operational bureaucracy would all amount to macro-economic cartelisation. It was further pointed out that determination of financial criteria, penalty for non-compliance, exclusion of fuel surcharge from payment of commission to agents etc, which prejudicially affected the Air Cargo Agent so far, would amount to micro-economic cartelisation.

ACAAI’s decision to move CCI was strengthened by the fact that in USA, the anti-competition authorities there found IATA indulging in similar anti-trust activity and banned IATA from the country. Also many other Competition Regulatory Bodies of countries like Australia, Italy, Israel, as well as the European Union and others found several of the activities of IATA similar to those practiced in India as falling under “anti-competitive practice”.

While adjudicating the matter, the CCI vide its Order dated March 21, 2013 inter alia held that there was prima facie

merit in the Information submitted that IATA could be in contravention of Section 3 (3) of the Competition Act 2002.

The CCI accordingly was pleased to direct its Director General to investigate into the anticompetitive practices of IATA and IATA India and further the Director General was also directed to investigate the role of the persons who at the time of contravention of the Competition Act, 2002 were in charge and responsible for the conduct of the business of IATA.

This accords as a major feat in favour of ACAAI’s position in the light that, had CCI not found merit in the ‘Information’, they would have dismissed the ‘Information’ at the outset itself without directing investigation.

ACAAI also found that IATA and IATA India were all set to introduce and implement a new Cargo Accounts Settlement System (CASS) in India. It is the concern of ACAAI that, for various cogent reasons as set out in their application for interim relief to the CCI, implementation of CASS would be prejudicial to the Air Cargo Agents and thus ought to be stayed in the meanwhile by way of balance of convenience until the investigation by the Director General is concluded, and the main application is comprehensively decided by the CCI. However, CCI observed CASS to be only a modern technologically-derived accounting system, and that the same

was declared to be a pilot project by IATA where there is no compulsion for the agents to join CASS; hence, if later on, in the final hearing if it was found to be in violation of Section 3 (3) of the Act, the agents could seek damages under the provisions of the Competition Act. Hence, no stay was granted. On behalf of its members, ACAAI is not persuaded to accept this Order; particularly because, CASS forms a part of the entire Agency Programme which in itself is under investigation.

There are many aspects of the concerned Order not granting the stay that are susceptible to challenge as unfortunately being not correctly appreciated by the CCI. Therefore, ACAAI has filed an appeal before the Appellate Authority against the Order of the CCI refusing the stay, and thus the matter of the stay is presently sub judice. Therefore, it must be appreciated by all concerned, that a false impression is being sought to be created by the interested parties as if to suggest that the Order of the Commission refusing stay was final and binding.

It must also be noted that the order on interim relief does not affect the main case of ACAAI regarding the economic cartelisation of IATA as set out above. It is reiterated that the same is presently under active investigation by the Director General, CCI.

The above details from ACAAI are for public interest for all concerned parties to make themselves aware of the factual position in order that they may not be misguided by communications issued by certain parties conveying any contrary impression or interpretation.

ACAAI’s decision to move CCI was strengthened by the fact that in USA, the anti-competition authorities there found IATA indulging in similar anti-trust activity and banned IATA from the country


expert viewsIndustry Scenario

interestingly, leading Indian carriers as Jet Airways and Air India get just 8-10 per cent of their revenues from cargo, which is lower than the international

average of almost 15-20 per cent.

However, there is tremendous potential to grow the air cargo industry in the country. “During the ongoing downturn; growth of express industry, just-in-time manufacturing, global outsourcing business, pharmaceutical and electronics are likely to be the key drivers of Indian air

cargo business. Moreover, the Free Trade Agreement between India and South-East Asian countries is expected to boost trade. There is significant potential for Indian airports to become transshipment hubs,” Dubey said.

Problems and remediesIn his opinion, lack of adequate and appropriate air-cargo infrastructure at airports remains the key stumbling block for Indian air cargo sector. But, it is commendable that the government has taken initiatives like 24x7 customs operations and Risk Management System for faster clearance of imports at metro airports.

“We can de-congest our choked air cargo infrastructure by creating off-airport facilities like air freight stations (AFSs, like CFSs), utilisation of existing ICDs/CFSs for air freight, freight forwarders’ bonded terminals, bonded trucking facilities etc. This can reduce dwell time and decongest warehouse space, thereby enhancing air cargo operational efficiency,” Dubey maintained.

He also underlined that the government is yet to provide industry status to air cargo logistics sector which would improve off-airport cargo logistics facilities. It needs to promote transshipment hubs, dedicated freighter operations and air-cargo training programmes.

“The analysis of the air cargo logistics issues reveals challenges in the form of lack of enabling infrastructure, complicated regulatory processes and inadequate technological enablement of cargo-handling supply chain,” Dubey underlined.

The Government has initiated several key measures like formation of Inter-Ministerial Air Cargo Logistic Board, 24x7 customs operations at metro airports, Risk Management System for faster clearance of imports at metro airports etc., to overcome the multiple hurdles bedeviling the sector. “Still, there are challenges ranging from infrastructure to regulations, technology, processes and human resources,” he emphasised.

Key recommendationsn Put in place legal framework to

ensure creation and utilisation of AFS instead of merely notifying the facility

n Deploy adequate staff under one roof at air cargo complexes for faster customs clearance. Ensure 24x7 customs operations across all airports

n Lay down minimum standards of quality service for every stakeholder

n Extend RMS facility for exports to decongest the warehouses

n Simplify customs processes and documentation through full adoption of EDI

n Standardise and simplify transshipment procedures through allowing ramp to ramp transfer for pre-sorted containers cargo and provision of dedicated sterile transshipment warehouse.

lACk OF AIr-CArGO InFrAsTruCTure mAjOr sTumBlInG BlOCkthe total air-cargo volume of 2.19 MMtPA handled in FY-13 by all Indian airports put together is less than that handled by standalone airports like Hong Kong, Memphis, Shanghai, Incheon, Anchorage and Paris. this does appear to be an anomaly, considering that the Indian economy is the third largest in the world. this also highlights the huge untapped potential of air cargo in India. Amber Dubey, Director, KPMG spoke to Cargotalk on the problem areas.

The lack of adequate and

appropriate air-cargo infrastructure at airports remains

the key stumbling block for Indian air cargo sector.”

Amber Dubeydirector, KPmG

n RAtAn KR PAuL


International CargoStudy Report

Worldwide, the cargo industry is suffering from the external problem of weakened supply amid a gloomy economic

environment. But less apparent is the fact that the pain is largely self-inflicted. Increasingly, the aircraft of choice across the Pacific is the 777-300ER, which can carry upwards of 18 per cent more cargo volume than the 747-400. And the 777-300ER is displacing the 747-400, with the twinjet increasing its share of trans-Pacific flights from less than 1 percent in 2006 to 27 per cent in 2013. The 747-400 meanwhile accounted for 40 per cent of flights in 2006, but only 15 per cent in 2013.

This trend is structural and ongoing, as carriers look to add trans-Pacific passenger capacity.

The Northeast and Southeast Asian carriers hold 29 per cent of the 777-300ER backlog, and airframe manufacturers plan for their next-generation aircraft to carry even more cargo. The largest global cargo market measured in FTKs is between Asia and North America, comprising 10 per cent of global FTKs in 2011. This is expected to grow to 21 per cent by 2031, with the China-North America sub-market accounting for over 75 per cent of the total Asia-North America market. Airbus expects China-North America FTKs to grow by 6.5 per cent to 2031 while Asia (non-China)-North America will grow by a slower 4.1 per cent. Boeing forecasts an overall 5.7 per cent growth from Asia (including China) to North America to 2031, ahead of its 5.2 per cent global growth forecast.

The CAPA study says that a structural change in the largest market is significant in its own right as well as for its potential flow-on impacts: pressure falling on the largest market impacts the feasibility of manufacturing new freighters that would also be used in other, lesser regions. The impact from passenger flights on the Asia-North America cargo market facilitates a comprehensive analysis, unlike Asia-Europe where significant passenger and freight traffic is diverted through the Middle East. The implications are greater on Asian carriers as they, unlike their North American counterparts, operate dedicated freighter aircraft, and it is they which are the main focus of this report.

belly-hold CARgo in tRAnS-ASiAAsIA-n. AmerICA TrAnsPOrT leAdInG The wAyAccording to a recently-unveiled CAPA Cargo Research; owing to the increase of trans-Pacific passenger flights, belly-hold cargo capacity is driving the structural changes of air cargo market in this region. In addition, long-haul passenger flights are growing rapidly, increasing 25 per cent on trans-Pacific routes between 2006 and 2013. that also directly increases the amount of belly capacity available for cargo. Accordingly, the trans-Pacific is the world’s largest cargo market now.

carotalk acaai october 13

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