Untapped Freighter Potential

Courier, express and parcel (CEP) companies have never had it so good in India. The factors driving healthy growth of CEP companies are many – general surge in economic development in India, improved logistics operations, enhanced connectivity by road, rail and air, technological strides and e-commerce. The growth story is likely to continue in the years to come as there is considerable movement of people and goods between the metros, Tier-II and -III cities.

The growth story of CEP can be looked at from different angles. The parcels delivered by the CEP service providers are non-palletised items and are seldom over 50 kg in weight. While they are delivered either by rail or road, it is the Express segment which generally gets moved by air, considering that it is prompt, fast and is time-bound delivery. E-commerce players are using the Express service more often than not as time is of essence.

Impressive Domestic Services

As there is movement of CEP within and outside the country, the players range from the very local, regional, national to international. The biggies in the CEP segment have been UPS, FedEx from USA and DHL, TNT from Europe. In India, leading the business are Blue Dart, QuikJet Cargo Airlines and players such as Gati and DTDC. The country-specific players are now witnessing exponential growth, driven by the surge in e-commerce activity and this is likely to continue for many more years.

Dedicated Freighter Companies

However, in such an expanding market, there are only two dedicated freighter companies in India – Blue Dart Aviation and QuikJet Cargo Airlines. It may be recalled that Deccan 360, the venture of Captain G.R. Gopinath, met with failure, even with Reliance Industries picking up 45 per cent stake. Cargo operations in India are difficult and most airlines are content with carrying cargo in their aircraft belly. The belly-space utilisation is certainly not an ideal situation for time-critical shipments or movement of dangerous goods.

India has seen impressive growth in passenger aircraft but the freighter segment has lagged behind considerably. There are just seven freighter airplanes serving the seventh largest economy in the world. It was only this year that QuikJet started its freighter operations, while Blue Dart has been a strong performer for some years now. Blue Dart Aviation has six Boeing 757 aircraft which it is optimally utilising. QuikJet is also using a Boeing 757 aircraft with a capacity of 21.2 tonnes.

QuikJet Links Metros

QuikJet connects Delhi, Chennai, Bengaluru and Hyderabad. It is India’s first neutral cargo airline offering airport to airport freighter capacity with a premium overnight network specifically designed to best serve the requirements of the express cargo, e-commerce and motor industries. As of now, the service offers four daily flights, operating overnight to link Delhi with Chennai, Bengaluru and Hyderabad in the first phase and Mumbai and Kolkata in the second phase.

To Acquire another Aircraft

Captain Preetham Phillip, Chief Executive of QuikJet Airlines, had indicated in the media that the company would acquire another aircraft soon. The company has sold aircraft space to Mumbai-based Sovika Aviation. The airline is a joint venture with ASL Aviation group, a Dublinbased aviation services provider. A little over 70 per cent stake is owned by ASL Aviation and the remaining is with individual investors including Cyrus Guzder, former promoter of AFL Pvt. Ltd.

At the time of the launch of the aircraft in February this year, the Chief Executive of ASL Aviation Group, Hugh Flynn, said, “QuikJet will now offer a neutral cargo service and as it grows, it will aim to serve multiple customers, airlines, businesses and industry to help enable better growth, competitiveness and customer service. In turn, this will benefit the Indian economy which will be felt more and more as QuikJet expands its operations in the months and years ahead.”

Captain Phillip said, “We have significantly improved air cargo capacity and we now offer customers a far better premium service keeping in mind the time-sensitive nature of the air cargo business. Our newly introduced connectivity with Sovika will provide a key advantage to the booming e-commerce industry.”

Demand Driven by E-commerce

With e-commerce going aggressive, the share of B2C component in a CEP company has increased, eating into B2B. It has brought into focus how these companies have started route and resource planning to cater to more deliveries per day and covering a vast geographical spread. According to Goldman Sachs, India’s e-commerce market would touch $100 billion by 2020 and this indeed is encouraging news for the CEP industry and many new companies have surfaced in the recent past and they include Ecom Express, Delhivery and Gojavas.

Blue Dart Raking in Profits

However, Blue Dart Express Limited remains South Asia’s premier express air and integrated transportation, distribution and logistics company. The company registered a net profit of Rs. 189.88 crore for fiscal 2015-16, up from Rs. 126.84 crore in 2014-15, while total stand alone income rose to Rs. 2,553.86 crore from Rs. 2,268.50 crore. During the year, it handled over 1,594.79 lakh domestic shipments, 8.94 lakh international shipments and over 5,95,623 tonnes of documents and parcels across India and 220 countries globally.

Blue Dart Express has announced that it would enhance its equity from 74 per cent to 100 per cent in Blue Dart Aviation. Anil Khanna, Managing Director of Blue Dart Express Limited, said, “While the economy continues to face several challenges, Blue Dart has continued to be resilient and has displayed exemplary quality and service excellence by incorporating high benchmarks and quality standards in every aspect of business. Blue Dart has steered through successfully with a clear focus on fundamentals like quality, consistency, reliability, passion and commitment. We are committed to serve the country and sustain our leadership position in the air and ground express segments through the widest range of innovative products and services, dedicated air and ground infrastructure, superior technology and passionate people force.”

He further added, “Blue Dart continues to be one of the most admired and awarded companies in India. It has recently featured in the list of India’s Super 50 Companies by Forbes India, ranked in the BW Real 500 as one of the 500 biggest non-financial companies in India by Businessworld and KPMG and was awarded the “Best Express Service Provider of the Year – Domestic” at the Ninth Express, Logistics and Supply Chain Conclave, 2015.

Delivery to Nearly 35,000 Locations in India

Blue Dart Express Limited offers secure and reliable delivery of consignments to over 34,720 locations in India. As part of the DP DHL Group (DHL Express, DHL Global Forwarding & DHL Supply Chain), Blue Dart accesses the largest and most comprehensive express and logistics network worldwide, covering over 220 countries and offers an entire spectrum of distribution services including air express, freight forwarding, supply chain solutions and customs clearance. The freighter unit has dedicated capacity to support time-definite morning deliveries through night freighter flight operations.

Anil Khanna said, “The macroeconomic situation in the last two to three years has not been encouraging to support growth. Despite an adverse external situation and challenges, the company has been able to deliver a reasonable performance, aided by our clear focus on the e-commerce vertical although the core verticals have not shown much traction.”

Blue Dart Aviation meets the intensive maintenance rigours and has a ‘lean and mean’ maintenance team that can conduct up to ‘D’ level check. It is equipped with a structure repair shop, wheel and brake shop, avionics and radio labs with highly qualified technicians and engineers. Blue Dart has positioned itself as the preferred, seamless link to a country projected to be an economic superpower of the 21st century.