Cargo gears up for new flight

Written by Sudhir Chowdhary | Updated: Jan 28 2008, 06:39am hrs
For those booking consignment by air, heres an eye-opener. While few doubt that air cargo involves vast chunks of paper work and documents (not to mention unfortunate delays that are of late, becoming the norm due to inadequate facilities at most of the Indian airports for cargo handling) few others are probably aware that it costs $1.2 billion to airlines every year.

Combined, these documents could fill 39 Boeing 747 cargo freighters or 81 Airbus 300 freighters. Thats not all. In 1972, the average time for an air cargo shipment was 6.5 days. Today, 34 years later, the average time has been reduced by a mere 12 hours to 6 days.

For airlines, cargo is a $55-billion business that generates 12% of their revenue. More broadly, air cargo transports 35% of the total value of goods traded across borders. No wonder, an equivocal demand has emerged from interested partiescargo airlines, freight forwarders and ground handling agentsto bring in greater efficiency in air cargo, which could have broad implications across the global economy. Towards this, an initiative undertaken by the International Air Transport Association (IATA) is laudable.

Along with seven key cargo airlinesAir Canada, British Airways, Cathay Pacific, KLM, Martinair, SAS and Singapore Airlinesfreight forwarders (DHL Global Forwarding, Panalpina, Kuehne+Nagel, Schenker, TMI Group-Roadair, Jetspeed) and ground handling agents, IATA recently kickstarted the move to a paper-free air cargo environment with the launch of six e-freight pilot projects. As part of this, cargo on key trade routes connecting Canada, Hong Kong, the Netherlands, Singapore, Sweden and the UK is now processed electronically. The industry has set a deadline of the end of 2010, for the implementation of e-freight wherever feasible.

While e-freight is yet to come to India, Airports Authority of India (AAI) officials seem to be searching for alternate measures to bring in an era of hassle-free cargo handling. Take for instance the recent initiative undertaken at the international cargo terminal of Indira Gandhi International Airport wherein, an e-payment facility has been provided.

If cargo airlines and freight forwarders are to be believed, the facility has definitely expedited the transactions as the present arrangement provided for an export terminal charges slip called TC, which is generated on the internet. Payment for the same was carried out through a pre-deposit account (PDA). Under the new facility, the airport authorities are able to provide its trade partners (cargo clearing agencies) the facility to pay Delhi Airport International Ltd (DIAL)s charges directly through their Punjab National Bank (PNB) account. The transaction is online and instantaneous via PNBs Net-banking site.

Nevertheless, much needs to be done to bring in an era of e-cargo. And the pilot projects initiated by IATA hold the key to bring in the concept here as well. DHL officials inform that the projects will systematically test for the first time common standards, processes, procedures and systems designed to replace paper documents that typically accompany air freight with electronic information. During the initial phase, selected shipments will travel without a number of key documents that make up the majority of the paperwork, including house and master air waybills. Results from the pilots will be used to expand e-freight to other territories.

But is India ready to adopt e-cargo in a big manner For one, e-freight requires business, technical and legal frameworks to be in place to allow airlines, freight forwarders, customs administrations and governments to seamlessly exchange electronic information and e-documents.

A lot of work also needs to be done by the customs authorities and the government here. India must take the important step of signing both the Montreal Protocol 4 and the Montreal Convention of 1999, says Albert Tjoeng, corporate communications manager, APAC, IATA.

According to him, the government has to work on providing the impetus for exporters to reduce paperwork, while customs needs to change existing processes.

Elaborating, he says that to qualify for e-freight, a country must fulfill five criteria:

* Have legal framework/legislation that enables electronic customs clearance

* Have customs and governmental systems environment able to support e-customs

* Have customs procedures and business framework in place to support paper-free environment

* Have legal framework/legislation that supports paper-free commerce for the trade (recognise electronic data or e-docs as having the same legal status as paper documents and contracts)

* Have treaty compatibility (i.e., Montreal Protocol No 4 or Montreal Convention 1999) on e-freight trade lanes

Thankfully, it is the phenomenal market growth that could well bring in efficiency in cargo handling in the country. Bluedart officials say cargo business is witnessing a lot of action in the air in India and the reasons for this are not hard to decipher. Freight demand is driven by economic growth and trade and routes linked with India are forecast to show particular strength. International air freight volumes are currently dominated by Asia Pacific. Freight within Asia Pacific, between Asia Pacific and North America and between Asia Pacific and Europe accounted for 55% of total international freight in 2006.

According to a study by Centre for Asia Pacific Aviation, India figures among top 30 freighter markets in the world. The market is projected to grow 20-30% for the next 10 years.

Registering nearly 20% growth in the last three years (both domestic and international), especially 34% growth in domestic cargo in the last one year, air cargo sector left the rail and shipping sector far behind in growth.

The growth in total tonnage of cargo carried was 10.3% and 9.2% in shipping and railway cargo, respectively, during the last three years. The total air cargo carried in the country was 13.97 lakh metric tonne (LMT) in 2005-06 and 15.5 LMT in 2006-07 respectively. It is expected to grow to 125 LMT by 2025.

No wonder, cargo handlers are taking to the skies with a new zeal.