India: Poor infrastructure limits airfreight
India is a nation of contradictions. On one hand, the South Asian nation is enjoying a booming economy, capitulated by its status as a Mecca for the IT, textiles and pharmaceuticals sectors — but the other side tells a bleaker story.
Hovering at 8 percent to 9 percent annual GDP growth, India’s economic success belies the extreme poverty experienced throughout the country. It’s this poverty, however, that has also led to its success as a manufacturing hub.
India’s low labor costs and consistently high levels of output have convinced numerous companies to set up shop in the region, attracted by the promise of strong returns on investment. Such industrial growth in a poverty-stricken nation raises multiple logistical questions.
For instance, is India’s aviation sector equipped to handle the influx of goods being exported? Does it have systems in place to ensure that this growth trend continues? Not so, many experts contend.
If there’s a general consensus among air cargo experts, it’s the weakness of India’s aviation infrastructure. Citing air-traffic congestion and a lack of technological systems, many aviation insiders have expressed concern about the nation’s flight operations.
Bernard Asare, director of air traffic management strategy and business development at the U.S.-based ITT Corp., is one of them. To him, it’s simply a matter of infrastructure investments failing to keep pace with demand. “Air traffic congestion in India and globally is the result of outdated technologies and operational procedures not keeping up with rapidly changing aviation industry dynamics,” Asare says.
And then there’s the political red tape and nontransparent dealing seen throughout India.
The problem is multifaceted, Asare asserts. Air traffic continues to grow amid archaic air traffic management systems, and this only leads to more obstruction in India’s airspace and airports.
Still, Asare says air navigation service providers globally — including in the U.S., EU nations, Brazil and China — are facing air traffic growth similar to India’s. Major investments in infrastructure are needed to ensure those systems can cope with that growth. “Unfortunately, Airports Authority of India doesn't have the capacity to handle the massive growth and influx of traffic [into the region].”
It’s why shipment delays are so common, according to John Cheetham, regional commercial manager for Asia-Pacific at British Airways World Cargo. A casualty of India’s weak infrastructure and crowded airspace, cargo deliveries are often postponed, he explains.
“Customs practices are also a constraint on airfreight as closures, public holidays and strikes often impact the movement of cargo,” Cheetham says. Either way, he maintains, the biggest detriment to India’s airfreight operations is its infrastructure.
Madhav Thapar, senior vice president of airfreight for Africa and South Asia-Pacific at DHL Global Forwarding, couldn’t agree more. Pointing to a “geographical imbalance” in capacity development, Thapar says some Indian airports with high volumes of airfreight are encumbered by their lack of modern processes.
Fortunately, he says, DHL has taken numerous measures to overcome this hurdle. In recent years, the global freight forwarder has procured a bonded warehouse in Bengaluru, launched a free-trade zone in Tamil Nadu, and opened industry-centric compliance centers in various parts of India, Thapar says. Establishing a presence throughout the nation has enabled DHL to maintain better control of its inventory, he explains.
What’s more, Thapar says, “DHL works constantly with the Indian authorities, both directly and through industry associations and forums, to constructively develop solutions [to infrastructure constraints].” Considering the volume of goods being imported and exported out of the region, this is even more necessary, he explains. In fact, DHL counts India as its largest airfreight market in Asia.