Logistics cos add to fleets to cash in on cargo boom

Logistics cos add to fleets to cash in on cargo boom

New Delhi: Indian logistics companies are acquiring cargo planes, and foreign players are trooping afield, as strong growth in Asia’s third largest economy spurs demand for speedy movement of goods.

Transporters and couriers are trying to keep up with the robust pace of organized retail, growing at 25% annually, and manufacturing, which grew 9.7% in April-September from a year ago.

“India...promises to rival the largest markets in the world before long," said Oliver Evans, chief cargo officer at Swiss International Air Lines, in a statement earlier this month.

From next week, the airline is going to add 18 tonnes to its 22-tonne daily cargo capacity to and from India.

The country could have three dedicated cargo airlines by mid-2008, a study published by the Centre for Asia Pacific Aviation (Capa) and industry body Ficci earlier this year, said.

Anticipating opportunities, companies are queueing up for the action.

Gati Ltd will lease five planes by March 2008 and is considering launching a cargo airline. Blue Dart Express Ltd has plans to invest Rs1,000 crore by 2015 to expand its air and ground infrastructure and has said it could add planes.

Hyderabad-based Flyington Freighters ordered six Airbus A330-200F planes in January and six more in June. The delivery is expected in 2009.

First Flight Couriers Ltd is in talks to lease two Boeing 737-300 cargo planes for its operations, deputy managing director Rajkumar Saboo said over the telephone.

“When there is growth, you want things to move faster and that is going to drive air freight services," Gati’s chief executive Mahendra Agarwal told Reuters earlier this month.

“Companies climb up the logistics value chain if they get planes themselves," Kapil Kaul, Capa chief executive for the Indian subcontinent and Middle East, said.

Jet Airways Ltd, India’s biggest private sector airline, plans to start a cargo carrier, and state-run Air India plans to convert six more of its passenger planes into freighters by mid-2008, adding to its current fleet of four.

“Air India plans to become a key player in the domestic market by expanding operations to all the secondary cities of the country," said chairman and managing director Vasudevan Thulasidas last week.

Singapore state investor Temasek Holdings holds a 27% stake in First Flight Couriers. Last year, foreign firms such as FedEx spent $30 million (Rs139.23 crore then) to buy Prakash Air Freight Pvt. Ltd, and DHL Express, an arm of Deutsche Post AG, bought 81% in Blue Dart.

And there are yet no signs of their interest waning.

“We’re looking for opportunities," Rajesh Subramaniam, FedEx’s senior vice-president for international marketing, said in October, when asked if he was looking for more deals. Reuters