Air cargo traffic to grow 60% in 5 years, says ICRA

Air cargo traffic in India is expected to grow close to 60% in the next five years to 4.7 million tonnes but infrastructure bottlenecks remain a major constraint to the growth in the sector, a report said on Tuesday.

The country needs to upgrade its air cargo handling capacity to deal with the growth in traffic, rating agency ICRA said in a note.

Combined capacity

Airports currently have a combined capacity to handle 4.63 million tonnes of cargo per annum. Cargo traffic in India crossed 2.98 million tonnes in FY2017 and reached 2.5 million tonnes in the first nine months of FY2018. “Cargo handling capacity at airports would need to be upgraded by around 2 million tonnes over the next five years,” ICRA said.

It also highlighted that lack of sufficient cargo handling infrastructure at tier 2 and 3 cities, congestion at major cargo terminals in the metros and lack of dedicated facilities for cargo operators had resulted in delays and increased transaction costs.

“High dwell time [time from cargo arrival to custom clearance] leads to significant transaction costs and operating expense for the air cargo operators. One way to achieve lower dwell time to match with global standards is air freight stations, which can help decongest airports,” Harsh Jagnani, ICRA’s sector head for corporate ratings said.

Despite healthy growth in traffic, cargo handled at all airports in India in 2017 was 3.3 million tonnes, which was significantly lower than cargo handled at the world’s busiest airport in Hong Kong, which is said to have handled 4.9 million tonnes.