Low oil prices and better yields than the passenger segment make the cargo sector an attractive business. But India’s infrastructure needs to improve, says Venky Sanjeeva, Senior Director & Head, Transportation, Unisys India, in a chat with BusinessLine. Excerpts:

Jet Airways recently launched a freighter service. Are the economic conditions apt for this?

When we look at the cargo segment worldwide, it paints a healthy picture. It is expected to grow by 4.2 per cent a year for many years. India is growing faster, at about 5.5-6 per cent a year.

Airlines worldwide recognise that yields from cargo are higher than yields from just flying passengers. It is not surprising that Jet Airways has added freight services. Certainly given the drivers of growth, it is the right time for Jet to enter the space. But the challenges in the two segments are different.

Despite Jet’s entry, the cargo segment hasn’t got its due. Why is that?

That is changing in a big way now. There is a quantum shift from five years ago. We see some of the initiatives happening globally. One of them is the e-trade initiative pursued by airlines worldwide. It helps airlines completely eliminate paper. There are carriers in North America who are implementing e-trade. This will help a newbie to take advantage of the efficiencies in the supply chain through technology and establish its business on a stronger footing.

But the Indian experience has not been pleasant. Air Deccan and Air India didn’t succeed in the cargo space.

There is demand in the Indian market but factors such as the infrastructure, policies, processes that enable it… these need to improve. And we do know that the government has tried to set it right. There is a cargo promotion board that is being set up. It will help frame policies to improve cargo. But the supply chain is long. There are multiple agencies, custom operators, forwarders and airlines. It is a long chain. It is the technology that needs to be leveraged to bring efficiency. Infrastructure is the largest challenge in the Indian context for building cargo. You need systems that enable management of cargo electronically. There is a huge cost to loading papers and to seek approval to move a piece of cargo. Using paper is highly inefficient.

What are the other trends in technology?

There are other technologies that are emerging. There are tracking mechanisms through RFID (radio frequency identification) that allows airlines and other constituents of the entire supply chain to track their cargo accurately. Earlier, if there was a consolidated piece of cargo with 10 pieces, five in orgin and five in transit, you wouldn’t know which five is where. Through RFID you would know that. These types of technologies are very important to improve efficiency.

Another advantage of RFID is that today a lot of input of data is done manually. Again RFID allows an airline in its warehouse to capture that without manually doing it. This helps in increasing speed and accuracy. Earlier, airport authorities wouldn’t allow certain frequencies of RFID to be used. Some of them have been solved due to technology. The ability to use RFID is no longer a challenge. Now passengers will be able to put RFID tags on their bags. Also, earlier cost of a RFID chip was high. It is now within a level that is acceptable to the industry.

How can technology be used to speed up the supply chain?

Some of the other emerging technologies relate to mobility. For instance, you know there is a shipment that is due to arrive today at 2 pm on a flight. And you know that the truck needs to pick it up from the airport. Often, the flight could be delayed. Today once the trucker is told, he would just show up and add to the overall traffic. The use of technology allows us to send information to his mobile phone on when to come. This could be real time.

In the India context, this is very important given the congestion in our cargo terminal. In Mumbai, a shipment comes from Europe in 10-11 hours and it could take another 12 hours to take it out. So a congestion-kind of situation can be well managed by giving timely information.

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