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| Vol. 22 No. 27 Bulldog Edition | Friday
August 11,
2023 |
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India Cargo - Ask Shesh |
Shesh Kulkarni, Managing Director, India, Noatum Logistics is an air cargo veteran. Noatum is a leading supply chain management company with global coverage, specializing in freight management, international supply chain management, contract logistics, project logistics, eSolutions, and customs and clearance. FT: Let’s have a look at 2023. With your immense experience, how has the air cargo landscape changed after the Covid pandemic in the country? Shesh Kulkarni: The last two years, i.e., starting mid-2020 to December 2022, the cargo industry has been on a roller coaster ride. Pre-Covid, rates were very low and post-Covid for almost two years freight rates went through the roof. In certain instances, freight rates were 12 to 13 times higher than the pre-Covid times and added to it, was the nuisance of equipment shortfall. However, in the last four months of 2022 the rates dramatically dropped and reached pre-Covid levels. There were further drops as many shipping lines and airlines started adding capacity on key routes. As China slowly opened in 2022, all the equipment that was stuck in the interiors of China found its way back to the mainstream. The first half of 2023 has been a trying time for all freight companies, airlines, and shipping lines, as everyone hustled to re-calibrate. FT: Cargo has become the main driver for many airlines to make money. How do you see the air cargo business shaping up despite the challenges it faces? SK: It is true, cargo made it to the centre stage which in one way, is very good. That is how it should be always. In logistics, the service providers, carriers, and all those engaged and involved in supporting the process are key and must get their dues. In my personal view, cargo will still play second fiddle to passenger capacity in the aviation sector. There has been a readjustment and a large section of mainstream carriers (Airlines) did not rush to deploy freighters. They will instead continue to use the belly capacity. Simply put, 2023 seems a challenging year for now. FT: With freight rates, how do you see the current scenario? SK: The landscape changed dramatically in the last three months of 2022 It looked different in the early 2022 through mid-2022. The current freight rates both air and sea are down big time. It is now the shippers and consignees market. The customers who have business will go around in circles around the industry. There will be a long-term impact. FT: The Indian government’s plans to boost international and domestic cargo has yielded results. Would you like the government to further enhance its role and take more initiatives to boost cargo from the country? SK: It is evident that India will be the frontrunner and it will be the beneficiary in the long run. The government of India is doing everything to attract industries and investments. There is a shift of certain volumes from China to India but to match China’s capacity is not an easy task. China over 30 years has built a very robust infrastructure and the policy. India’s “Aatmanirbhar” (self-reliant) policy is gaining momentum. But, building infrastructure and capacity, is a 10-to-15-year cycle. Hence, we will see the results of the government’s work post-2028/2030. Needless to say, the government is on top of their game. They have built—and continue to build—wonderful infrastructure, airports and ports. The road infrastructure is getting better day-by-day. Freight corridors and highways are good and adding immense value. The Customs processing times has dramatically reduced and is at par with international standards. With all this, the list of positives is only growing. The only negative, I see, is the cost of sourcing capital in India, which is still prohibitive. India’s domestic economy is holding well. Consumer demand is growing and the government is investing in mega projects, which is good for the Indian industry. The growth of domestic economy is benefitting Indian companies, and as a result imports have gone up, which are largely sourced from China. This because Indian manufacturing is not geared up to take bigger orders and meet price points. With growing automation in the industry, the last mile operators will be game changers. The logistic industry has been adopting digitalization extensively, which is the need of the hour. Artificial Intelligence, Machine Learning are all becoming integral part of last-mile delivery. FT: As an air cargo frontliner, do you think the time has come to actively start work of creating air cargo hubs that we have all been thinking for a long time? SK: In the coming 5 years, we will see multiple air cargo hubs operational and functioning in India. We will see a few in the South, West and in North. If you visit Bangalore airport, one will be amazed to see how futuristic the infrastructure will be, once it is ready. Bangalore is the Gateway to the South and will remain so. Tirthankar Ghosh |
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