Indian airports are waking up to the key role cargo plays in their business. All new airports including Hyderabad and Bangalore are stepping up their cargo activities, while brownfield ones such as Mumbai are setting up systems to focus on cargo. A new cargo terminal is getting ready in New Delhi, with its first phase set to go operational shortly. On the other side, Hyderabad’s international airport, which flaunts a world-class cargo terminal, operated by a joint venture company between GMR and global ground and cargo handler Menzies Aviation, is beefing up cargo throughput, especially pharmaceuticals, and aims to generate more than 20 per cent of its revenues from cargo.

Across the world, cargo is increasingly turning an important factor for airline business as well. In some cases, it makes the most important difference between profit and loss. Almost every aircraft carries cargo in its belly. Emirates, a leading foreign airline in the region that operates over 100 flights to 10 destinations in India, carries over 3,000 tonnes every week in its belly space. They also fly a weekly dedicated freighter to Chennai having a capacity of over 100 tonnes, and charters freighters to airports like Kochi and Thiruvananthapuram as per demand. Air cargo is indeed vital for Emirates. Saudi Airlines says their cargo operations account of around 15 per cent of their total revenues.

Every industry player loves India’s slow but steady transition to manufacturing-based economy from a services-oriented one. India’s exports and imports are also growing. With leading international car manufacturers setting up their production base here and foreign pharmaceutical players expanding production capacities, time-sensitive, high-value imports into India are also on a steady ascent. When the global economy is facing a slowdown, many international airlines and air cargo players are looking up to India for growth. For instance, Emirates, which had a flat growth in India in 2011 over the previous year, hopes the situation to improve, albeit slowly, in 2012. That is definitely encouraging, given the negative growth of the air cargo industry in rest of the world.

Apart from pharmaceutical products, India’s wide export basket has several other items – such as engineering goods, textiles/garments, leather, gems and jewellery. It is also turning out to be a significant player in perishable goods - fruits/vegetables and meat/sea­food. Imports of electronic goods and auto components have gained ground as well.

India’s potential needs no further stamp of approval. At the same time, it is an understatement that India lacks in basic infrastructure, especially for perishable cargo. Supply chain and procurement in India is always the responsibility of the buyer or the seller. Support from the government is nowhere to be seen. We need to have in place a policy for supply chain, if the government wants to boost India’s trade through air cargo. The dream of making Nagpur in Maharashtra a cargo hub is dying a natural death, owing to lack of initiatives by India’s civil aviation ministry. If GMR’s efforts are successful, Hyderabad may turn into India’s first dedicated cargo hub.

At the World Economic Forum (WEF) in Davos recently, top government representatives and industry leaders deliberated on supply chain related issues and sought to develop ways in which economic damage caused by disrupted supply chains could be mitigated. Everyone believes that several risks remain, because today’s supply chains, especially in emerging markets, can be long and not entirely traceable. They concluded that there is an urgent need to introduce greater flexibility in operations and enhance collaboration between businesses and governments – nationally and internationally – to better manage the risks to global supply chains.

We are yet to learn the ropes on supply chains, let alone assessing the economic damage caused by their disruptions.

antojoseph@mydigitalfc.com