Air Express Services: A Growing Role in Air Cargo

Tulsi Nowlakha Mirchandaney

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Evolution of Air Cargo

1911 1940 1969

AIRMAIL AIR CARGO AIR EXPRESS

Page 2
Air Express: Rapid Expansion
 *International
 1991: 3.5% Market Share (International Air Cargo)
 2005: 11.0% Market Share
 Growths: 17% (Average Annual – since 1997)
81.4%
of the world’s
 *USA freighters are used
 1975: 3.2% Market Share (Domestic Air Cargo) by
 2005: 60.9% Market Share Air Express
Operators
 **India
 Size of Industry: 4,175 cr
 Average Annual Growths: 17.2% (Estimated)

* Source: Boeing: World Air Cargo Forecast 2007

** Internal Estimates Page 3
International Express: Rapid Growths

Source: WACF 2007

Page 4
USA: Express Market Leadership

Source: WACF 2007

Page 5
Intra-Europe: Express Growths Overtake Air Cargo

Source: WACF 2007

Page 6
Intra-Europe: Express Growths Overtake Air Cargo

Source: WACF 2007

Page 7
Intra-Europe: Express Growths Overtake Air Cargo

Source: WACF 2007

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Air Express: End to End Solutions
ORIGIN Consignor

CUSTOMER – TRANSPORT INTERFACE

Forwarder

INTEGRATORS
TRANSPORT MODEL(S) Airline

TRANSPORT – CONSIGNEE INTERFACE

Agent

DESTINATION Consignee

Time--Definite Time-Control

Integrated Service Providers

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Air Express: Critical Supply Chain Support
 Time-Definite, Door-to-Door Distribution
 Emphasis on Speed, Reliability, Security, Real-Time Data Flow
 Overnight Deliveries
 Business Driven TRADE
 Specially Relevant to: FACILITATOR
 Time-Sensitive/Emergency Material
 High Value Goods
*5% of India’s
 High-Security/Confidential Items
GDP (by value)
 Vital Role in Business Logistics Systems
carried by Air
 Just In Time
Express
 Supply Chain Management

* Internal Research

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GDP Impacts on Air Cargo Growths

Source: WACF 2007

Page 11
India: GDP Impacts on Air Cargo & Air Express Growths

Source: CMIE Report December 2007& Internal Sources

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Domestic Air Express: Economic Growth Co-relation

32

28
Blue Dart
% change in y-o-y growth

24

20

16

12 Services

8
Manufacturing
4

0
2001-02 2002-03 2003-04 2004-05 2005-06

Source: CMIE and Blue Dart Financials

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Air Cargo: The Indian Scenario

 Primarily Focused on Passenger Air Services &

Infrastructure

 Air Cargo considered a By-Product of Passenger Air

Services

 Air Cargo in India is not fully aligned to business needs.

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 The India Challenge: Mammoth, Diverse, Poorly Connected

USA EU PARAMETERS INDIA

*9.161 3.976 Area (mn sq. km) *2.973

301 490 Population (mns) 1130

50 + 1 district 25 member states States 28 + 7 UT
2** 20 Languages 16

0.227 0.237 Railways (mn km) 0.063

6.43 4.635 Roadways (mn km) 3.383
4.165 2.400 Paved Roads (mn km) 1.604
14,947 3,393 Airports 346
5.675 4.259 Tonnage: 2 largest airports (mns) 0.811
Source: CIA World Fact Book, 2007
Area of land only (area of territorial water excluded)
English and Spanish contribute ~ 93%, remaining are mixed dialects

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Air Express: The Business Imperative
Infrastructure
 6 Freighters (3 B757s and 3 B737s)
 Integrated Road Network
 Advanced Technology DEL

AMD CCU

Network
BOM
 62 Route Connections HYD

 300 tonnes each night MAA

BLR

 7 Aviation Hubs
 9 Domestic Hubs
 21 Ground Regional Hubs
 4,021 Vehicles

Source: CMIE and Blue Dart Financials

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Air Express: The Business Imperative
Quality
 Net service reliability levels of Volumes
99.96%
JAN-DEC 2007

 Despatch Reliability 99.25% SHIPMENTS (In mns)

Domestic 72.40
 ISO 9001-2000 Certified standards
for the entire Operations, Products
and Services. TONNAGE:

Express and airfreight loads

People - 191,875 tonnes
(> the total exports out of
 Committed, Professional, Trained Chennai & Bangalore)

Source: CMIE and Blue Dart Financials

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India: Positive Future Outlook

30
Logistics Spend:
India: 13% of GDP
25

20
compared to
% to GDP

15

10
USA: 8.7%
5

0
Peru Argentina China Brazil Mexico Germany India Taiwan Portugal Canada Japan Italy UK USA

Countries

Domestic Consumption
 Large Population
 Increased purchasing
power
 Changing lifestyles
Source: CMIE and Blue Dart Financials
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India: Positive Future Outlook

 Outsourcing hub

 80% of goods will be manufactured in countries

other than where they would be purchased.

Source: CMIE and Blue Dart Financials

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India Opportunity: FTA with SAARC

Key Role in South Asia Trade

 3.9% of World Air Cargo
 4.2% of World Tonne/Kms
 Over 1.4 mn tonnes
into/out of the region

Source: CMIE and Blue Dart Financials

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USA: Trucking Network Complements Air Services

Page 21
USA & Europe: Trucking Network Complements Air Services

India’s Golden Quadrilateral is an opportunity

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Regional Hub: Some Asian Success Stories
DUBAI CARGO VILLAGE
 Dubai Airport Free Zone
 Capacity
– 800,000 tonnes (annual)
– 7,420 tonnes (storage)
– Truck Docks: 56 (with 7 solely for sea-air)
– Ship to Plane: 4 hours
 Individual Express Facility for FedEx & DHL
 Commenced Operations in July 1991
 Annual Airfreight Movement (tonnes): 751,575*
 Ranked 17th largest Cargo Airport in the World**

* Dubai Cargo Village: 2007 statistics

** Airports Council International

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India’s Opportunity: Regional Hub

Dubai & Mumbai Airports: Air Cargo Traffic (1991-2007)

1650000
1500000
1350000
1200000
Metric Tonnes

1050000
900000
750000
600000
450000
300000
150000
0
1991 1993 1995 1997 1999 2001 2003 2005 2007

Dubai Mumbai

Source : CMIE Report March 2006

Dubai International Airport

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India’s Opportunity: Regional Hub

USD Bn India Singapore UAE Thailand Malaysia

GDP 912 133 163 205 168
Industry 252 46 102 73 79
Services 493 87 58 112 74
Agriculture 167 0 3 20 15

Exports 127 273 143 128 160

Imports 173 240 86 127 124

Airports BOM DEL SIN DXB BKK KUL

(Mn Tonnes) 0.431 0.38 1.91 1.50 1.18 0.67

Source: Press Information Bureau, CIA –World Fact book, Ministry of Finance and Department of Statistics, Malaysia, Central bank of thailand, DBresearch,
Airport Council International, Airports Authority of India

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THANK YOU

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