Aviation to outshine traditional cargo carriers

New Delhi, Sep 4: Cargo growth in the aviation sector in last three years has surpassed the traditionally preferred railways and shipping medium for goods transportation and is set to capture their share of freight traffic, said an industry chamber.

According to an Assocham study titled 'Changing Pattern of Cargo Traffic in India', the advent of dedicated cargo aircrafts at international and domestic routes has led the growth of goods traffic transported by air.

The chamber added that the share of railways and shipping, in goods transportation, will decrease if immediate reforms are not brought in.

For 2000-2007, the study found that cargo division in the aviation sector has grown by around 19 per cent as against 10.3 per cent and 9.2 per cent growth in shipping and railways freight traffic during last three years.

Economic expansion, robust commercial activity and the fast-growing food processing sector has led to a strong and secular growth in the air cargo traffic, says the study.

The domestic traffic of the airlines shot up by about 34 per cent in the year 2007, while international cargo movement registered an estimated hike of 15 per cent. Bulging domestic traffic has declined the proportion of international freight to inland traffic from 200 per cent in the year 2000 to 164 per cent in 2007 primarily on account of rise in low-cost domestic airlines.

With the domestic airlines, logistic companies and retail majors planning to launch a dedicated freight aircraft to boost the goods traffic within the country, the share of railways and ports would also witness a decline in absence of facility improvement programme, says the study.

As the government lays stronger emphasis on the food-processing sector and horticulture, there is a need for greater capacity in the domestic airway facility at low cost. ''Dedicated freight aircraft at national and international routes would give a boost to the industry,'' Chamber President Venugopal N Dhoot said.

In spite of the reduction in freight rates, the railway-carried goods traffic saw a downward trend as the revenue generated from freight declined to 8.7 per cent in 2007 as compared to 11 per cent in 2006.

There is a growing concern about the slowdown in the key infrastructure sectors including railway freight traffic, causing a decline in the growth rate of the infrastructure sector to 6.9 per cent during April-June 2007 as compared to 7.4 per cent in the same quarter last year.

''Although Dedicated freight Corridor (DFC) is a promising proposition for the growth in railways goods traffic, the long-term nature of the project gives advantage to air cargo,'' said Mr Dhoot.

Ports and shipping is another sector witnessing a decline in the growth rate of its cargo loads. The sector saw a gradual decline in the annual growth rates from 11.3 per cent in 2004-05 to 10.4 per cent in 2005-06 to a further 9.5 per cent in the current year.

The expansion in the aviation industry in the recent past has helped the total cargo traffic of all airports increase from 15.6 per cent in the year 2005-06 to 21.5 per cent in 2006-07, recording a compound annual growth rate (CAGR) of 9.5 per cent for the last six years.

While the international cargo traffic increased to 11,20,185 tonnes in 2006-07 from 9,74,921 tonnes in the fiscal 2005-06, domestic cargo swelled from 14,80,672 tonnes to 17,99,408 tonnes during the same period registering a double-digit CAGR of 12 per cent for the past six financial years as compared to 7.7 per cent of international cargo traffic.

The total cargo traffic of all major ports has increased from 4,23,567 tonnes in 2005-06 to 4,63,839 tonnes in 2006-07, registering a CAGR of seven per cent. However, beckoning on the strong economic growth of more than eight per cent for last three years, goods traffic grew by an average 10.3 per cent during the same period.

''The Ennore port witnessed the maximum traffic growth at 25.7 per cent, followed by the Jawaharlal Nehru port and Kandla port with 16.83 per cent each. Cochin port showed a dismal performance with negative growth of 1.48 per cent in the year 2005-06 but scaled up to 10.28 per cent in the year 2006-07. However, the port lagged behind as it recorded a CAGR of mere 2.4 per cent during the last six years,'' the study says.

In spite of a robust revenue generation in the last two years, the cargo growth in the railway industry was minimum of the three prime transport mediums with 6.6 per cent compound annual growth for past six financial years.

Freight load carried in railways has increased from 6,68,000 tonnes in 2005-06 to 7,26,000 tonnes 2006-07, but the rate of growth have declined from 10.9 per cent to 8.68 per cent during the same period.

Buoyed by the strong demand, cargo traffic of petroleum oil lubricants, pig iron and finished steel registered double-digit growth rates of 19.5 per cent and 14.6 per cent respectively in the financial year 2007.

CAGR of these commodities for last six years were 10.4 per cent and eight per cent. Food grains and iron ore for exports traffic has been declining continuously at the rate of 10.4 per cent and 55 per cent in FY06 and 1.5 per cent and 5.8 per cent in FY07.

UNI