2.

Operational Environment At Bombay, the air cargo agents operate from industrial estates and other private offices in the neighborhood of the Air Cargo Complex. The air Cargo Agents Association of India (ACAAI), has only a small room, that affords one table space per agent, present office and ithin the Air Cargo Complex. The arehouse of each agent merely has the standard

eighing scale, and in a fe cases some mechanical handling e!uipment. In an effort to move to ards the "ind of operations their foreign counterparts have, ACAAI has re!uested the IAAI to provide an area ithin the airport perimeter for a bonded Agent#s Cargo Terminal to be set up. It is proposed that this terminal cargo agents and ould be $ointly operated by all participating air arehouses for boo"ing and ould include individual

transit storage, individual offices and a $oint bonded arehouse for handling the brea" bul" of inbound consolidations and palleti%ing containeri%ing (consolidated) export cargo. &hile in principle this has been agreed to, it is hoped that concrete action on this ould be forthcoming in the near future. The various air cargo complexes established at inland airports re!uire greater promotional efforts, greater uplift capacity upto the gate ay airport, and bonded truc"ing as an alternative to the latter. Contrary to the situation overseas, the Indian air cargo agent faces certain restrictions and difficulties ith regards to obtaining regular entry permits to enter related operational areas here he is re!uired to function. 'epresentation has been to the concerned authorities to emphasi%e that the function of the air cargo agent is an extension of the airlines function on the ground, thereby necessitating the issuance of entry permits under similar criteria.

i . ex e

3. Commercial Environment The commercial environment in hich the Indian air cargo agent functions are not as simple and regulation(free as it is abroad. Being a developing economy, e have many import trade controls, customs formalities, foreign exchange regulations, and a fair volume of documentation despite adopting )*I at some of the ma$or airports. As mentioned earlier, airfreight rates for exports are not yet favorable to consolidation. The seasonality of our air exports, especially of garments and perishables can play havoc ith the scheduled cargo capacity of the airlines. In these pea" seasons, certain airlines offer extra freighter flights to meet the heavy demand. An area that needs serious attention is the non(availability of ade!uate or timely statistics and commercial Intelligence. The +ational Informatics Centre (+IC) has established cells at Bombay, *elhi and ,adras airports to assimilate information in air exports. The *irectorate -eneral of Commercial Intelligence . /tatistics, based at Calcutta also prepares annual statistical information. Customs publish daily customs lists. 0o ever, from the for arders# vie point the type of analyses end the true frames in hich they are re!uired are not yet available. It is hoped the efforts of the +IC ill provide these in the near future. 1rofessional training for the staff of air cargo agents has been available only through training programs sponsored by both our national carriers and by international airlines. The Bombay Customs 0ouse Agents Association has for several years been organi%ing commendable professional training programmed for the Customs /taff.

The overvie

of the Indian scene reveals that the operational environment

needs substantial development to enable the activities of air cargo agents to cover a comprehensive usage of for arding services. It is the favorable change ta"ing place in our commercial environment that puts hope in the minds of Indian for arders, that considerable moderni%ation and further professionalisation of their industry no appears to be in the offing.

LOOKING FORWARD &hat then does the Indian air cargo agent loo" for ard to2 3f course, his corporate strengths in terms of finance, personnel and management ability the extent to ould largely determine of hich he enhances his range of activities or develops ne er business

techni!ues. But given this, a rapid gro th in his commercial environment is no

primary importance. 0e needs this impetus to induce him to invest, moderni%e his infrastructure and gear up his activity to provide the comprehensive range of services re!uired of him in today#s contexts. Investing in technology is no a !uestion of survival. This not only improves the customer service but also lo er the total operational cost. 4. As indicted above, the air cargo agent is primarily interested today in operating his bonded arehouse, consolidating export cargo, organi%ing ith combined transport. charters in pea" seasons, handling transshipment cargo profitably and offering door(to(door services, perhaps /peciali%ed arehousing, and all type of ancillary services that his

overseas counterpart provides, is perhaps not on his immediate hori%on.

5.

&hat the air cargo agent no needs (a) Airfreight rates 6A7 rates at high eight(brea"s to encourage export consolidations re(grouping of the multitude of specific commodity rates into a fe

broad categories introduction of 89* (pallet:container) rates hen the Agent#s Cargo Terminal is operational. (b) )ntry permits 6or agents# authori%ed personnel to provide access to all relevant cargo(related operational area. (c) 6or arders# 9iability Insurance (d) Agents, Cargo Terminal (e) Automated cargo handling and storage systems In the arehouses of all airlines, and the agents cargo terminal. (f) Computeri%ation and simplification of documents Customs documents, IATA documents for carriage of goods etc. (g) /implified formalities /implification of procedures and re!uirements of the Customs, IAAI, 'BI. etc. (h) Increased man(po er All around. especially through increased productivity of existing personnel (i) ;oint efforts (a) 1lanning< pooling of commercial and mar"et information at a micro level bet een airlines, agents and the authorities to plan for gro th are an integrated manner.

(b) ,ar"eting< by airlines and agents mar"ets and ne commodities. ($) 1rofessional training

ith the support of the airport

authorities and the ,inistry of Commerce to develop ne

In improving the operational and commercial environment of the agent and thereby his providing a very efficient, moderni%ed and comprehensive services the strengthening of this lin" in the Thin of distribution can only serve benefit the system as a hole.

Chapter

World

6 Air Cargo Forecast

The orld economy is ad$usting to the Asian mar"etD commodity prices, most notably oil, are subdued. In fact, the lo cost of petroleum has provided very positive support to ill the economies of the industriali%ed countries, albeit at the expense of the ,iddle )ast. &orld -*1 gro th is expected to average 5.?> per year through 5=4@, although it be some hat slo er through the first 4= of these years. /lo ing gro th, at about the same time, in the ma$or economic regions (( Asia, +orth America, and )urope (( is troublingD it is a trend that is unli"e past economic cycles. 9ong(term air cargo gro th is expected to average B.E> per year. The Asia(related air freight mar"et ill slo , but its gro th rates ill still lead the rest of the industry. The

fastest gro th, at F.5> per year, ill still be ith the intra(Asian freight mar"ets. In fact, all mar"ets ith respect to Asia ill be exceeding the forecast orld average B.E> annual gro th. Air cargo accounts for about 4G> of the revenue of passenger airlines and may gro at a faster pace as customers re!uire additional value(added services.

Yield-Profit Squeeze The profit s!uee%e mar"et ithin the passenger industry has focused attention on the cargo

ith its lo er hold revenue opportunities. Industry yield for cargo and passenger

services has been declining since 4?@=. This trend reflects airline productivity gains, technical improvements, and intensifying competition. Cargo yield leveled off and began to move up ard during 4??G. A reversal occurred during 4??@, reflecting both ma$or increases in capacity and the traffic imbalances resulting from the Asian economic reversals.

International Ex ress A pattern of gro th is today emerging in the international express mar"et. This international increase in some respects mirrors the express industry#s enormous success in

the 8nited /tates. Beginning

ith a E> share of the 8./. mar"et in 4?@@, express today

claims over B=> of the 8./. domestic mar"et and has averaged 5A> gro th per year. The 8./. express industry revolution has resulted in a B4> share of the mar"et. 0o ever, its most important impact is that it has changed dramatically the psychology of the customer. Today, airfreight is an integral element of the distribution channel. Customers use airfreight for sound business decisions. This is the basis for increasing change in the industry. International express is follo ing a pattern similar to the 8./. express industry. The current international share of about B> 5=4@. The big difference ill continue expanding, approaching E=> by ith respect to this mar"et is the customer. The customer no

reali%es the importance of efficient distribution channels and is directly involved in designing and creating their future. The integrators# mar"et share continues to expand in the international mar"etplace. These operators seem to be continually modifying their business practices in response to their customer re!uirements. Current terminology defines their operations as Cthird(party logistics providersC and Centerprise resource planning ()'1) companiesC. ,ost combination carriers and freight for arders have done little in response to the threat of mar"et(share deterioration at the hands of the integrated operators. A C)3 from a ma$or for arder recently said, Cairlines and agents Hfor ardersI must offer a level of service comparable arned, ould lose mar"et share. or" together to ith that of the integrators.C Those that did not, he

Air Cargo !ro"t# Forecast Air cargo gro th of 4=.4> for 4??@ is announced 0o ever, there ith caution. The Asian economic

model is being redefined, and the next several years are going to be troublesome. ill be many opportunities as economic dise!uilibrium presents many

ne

opportunities for the flexible operator. AC,I, or ith the ability to provide capacity

et lease, companies are in an here needed. They also can

advantageous position freighter investment. Currently, the AC,I

provide capacity to those airlines that are unsure of the future and ant only a short(term idebody freighter fleet represents about F> of the industry

idebody freighter capacity. The long(term gro th for air cargo is expected to average B.E> per year through 5=4@.

World Forecast $etail &orld airfreight 5=4@. ,ail 'T7s mar"et gro th ill gro more rapidly than mail, averaging B.A> annually through

ill display steady gro th, averaging G.A> annually. International orld 'T7s ill decline from G4.?> in 4??@ to

ill continue to outpace domestic, exceeding FB> of total 'T7s by the

year 5=4@. The 8./. airline share of

5@.?> by the year 5=4@. 0ighest airfreight mar"et gro th ill occur on Asian routes.

Freig#ter Fleet %equirements The orld#s $et freighter fleet ill nearly double by 5=4@, ith additional 4,===

airplanes. The need for freighter capacity

ill increase as pressure continues for idebody freighters sho the greatest

improved air cargo service levels not easily satisfied ith lo er hold capacity. Both large (over BA tonnes) and medium (E= to BA tonnes) tonnes) and medium standard(body fleets proportionate increase, adding AA= and AGB units respectively. The small (less than G= ill be increasingly dominated by freighters from express carriers. 3ther significant issues affecting the forecast include the increasing popularity of converted freighters, /tage III noise compliance, and the impact of regulatory scrutiny of conversions.

A further issue that may be affecting future fleet composition is the Coutsi%edC freight mar"et. /ome freight is too large to pass through the cargo doors of today#s fleet. T o approaches are being applied to satisfy this increasing mar"et segment< significantly modifying existing passenger airplanes or adopting military designs to accommodate commercial outsi%e loads. These airplanes can accept significantly larger loads and allo the shipper to provide a more timely service beforehand. ithout having to disassemble the shipment