New Delhi: Fuelled by a surging economy, cargo growth in aviation sector in the last three years has surpassed traditionally preferred railways and shipping medium for goods transportation and is set to snap their share of freight traffic, according to Assocham.
With advent of dedicated cargo aircrafts at international and domestic routes, the fast growing goods traffic transported by air is expected to entice away the share of railways and shipping if immediate reforms are not put in place to boost traffic flow in the latter. This were part of the results that emerged from the Assocham Eco Pulse (AEP) Study on ‘Changing Pattern of Cargo Traffic in India’ for FY 2000-07.
* An analyses of the three major modes of transportation: aviation, railways and shipping revealed that cargo division in aviation sector grew by 19% as against 10.3% and 9.2% growth in shipping and railways freight traffic (2004-07).
* Economic expansion, robust commercial activity and fast growing food processing sector led to strong and secular growth in air cargo traffic.
* Domestic traffic of airlines shot up by 34% in 2007 while international cargo movement registered estimated growth of 15%.
* Bulging domestic traffic declined proportion of international freight to inland traffic from 200% in 2000 to 164% in 2007 primarily on account of rise in low-cost domestic airlines.
* As domestic airlines, logistic companies and retail majors plan to launch dedicated freight aircrafts to boost goods traffic within the country, share of railways and ports are likely to witness decline in absence of facility improvement programme.
* Government is laying emphasis on food processing sector and horticulture creating need for greater capacity in domestic airway facility at low cost.
* In spite of reduction in freight rates, railway carrying goods traffic saw downward trend, as revenue generated from freight declined to 8.7% in 2007 as compared to 11% in 2006.
Performance of key infrastructure sectors
* Slowdown in key infrastructure sectors including railway freight traffic, caused decline in growth rate of infrastructure sector to 6.9% during April-June 2007, as compared to 7.4% in same quarter last year.
*Although dedicated freight corridor (DFC) is a promising proposition for growth in railways goods traffic, long term nature of the project gives advantage to air cargo.
* Ports and shipping may witness a decline in growth rate in cargo loads. The sector saw a gradual decline in annual growth rates from 11.3% in 2004-05 to 10.4% in 2005-06 to a further 9.5% in current year.
* Air Traffic: Allured by expansion in aviation industry in recent past, total cargo traffic of all airports increased from 15.6% in 2005-06 to 21.5% in 2006-07 recording compound annual growth rate of 9.5% (2001-07).
* While international cargo traffic increased from 9,74,921 tonnes in FY 2005-06 to 11,20,185 tonnes in 2006-07, domestic cargo swelled from 14,80,672 tonnes to 17,99,408 tonnes during the same period registering double-digit compound annual growth rate of 12% for past six financial years as compared to 7.7% of international cargo traffic.
*Ports & Shipping : Total cargo traffic of all major ports increased from 4,23,567 tonnes in 2005-06 to 4,63,839 tonnes in 2006-07, registering CAGR of 7%. With strong economic growth of more than 8% for last three years, goods traffic grew by roughly 10.3% during same period.
* Railways : In spite of robust revenue generation in last two years, cargo growth in railway industry was minimum of the three prime transport mediums with 6.6% compound annual growth for past six financial years.
* Freight load carried in railways increased from 6,68,000 tonnes in 2005-06 to 7,26,000 tonnes 2006-07, but rate of growth declined from 10.9% to 8.68% during same period.
* Buoyed by strong demand, cargo traffic of petroleum oil lubricants, pig iron & finished steel registered double-digit growth rates of 19.5% and 14.6% respectively in FY 2007. Compound annual growth of these commodities for last six years were 10.4% and 8%. Food grains and iron ore for exports traffic has been declining continuously at rate of 10.4% and 55% in FY2006 and 1.5% and 5.8% in FY 2007.
* Dedicated freight aircrafts at national and international routes would give a boost to industry.