Volatile ATF price, depreciating rupee & rising infra levies hurting air cargo biz, says Blue Dart MD

Blue Dart MDr Balfour Manuel discusses with DH’s Lavpreet Kaur, the changing scenario his company is operating in and what it augurs for the future

Just as Indian aviation is waking up to the potential of air cargo after air freight turned into its sustenance during the pandemic, Indian airlines have ramped up their investment in this relatively untapped segment. Not only have players such as SpiceJet set up new cargo divisions, couple of dedicated cargo operators - eg: QuikJet Airlines (for Prime Air) - have joined in. Against this backdrop, Blue Dart Managing Director Balfour Manuel discusses with DH’s Lavpreet Kaur, the changing scenario his company is operating in and what it augurs for the future. Excerpts from the interaction:

Please share your reading of the current air cargo segment in India and its growth in the next few years

The air express transportation industry in India is expected to continue to grow thanks to the rising demand for ecommerce. To remain agile and responsive to changing market dynamics, an equally agile supply chain and air express infrastructure is needed. Despite disruptions, the express logistics sector has witnessed growth, attracting global funds and investments in 2022. The industry is changing with massive investments in advanced technologies such as AI, machine learning, blockchain, robotics, and automation, along with developing world-class logistics infrastructure in the country.

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What's Blue Dart shipping the most in India? How is it evolving post-pandemic?

Across all the segments we are expressing growth. According to syndicated reports, the ecommerce logistics market is projected to grow by 25-30% between 2021-26, while the surface business to business (B2B) express market is expected to grow by 13-15% and the air B2B express market is estimated to grow by 3-6% during the same period. The logistics and supply chain industry in India has a bright future.

What are some of the gaps in infrastructure that air freight and logistics players in general are dealing with today?

The Indian logistics sector is moving towards an organised business model from its present unorganised, fragmented structure. Implementation of the Logistics Efficiency Enhancement Programme (LEEP) will have a positive impact on the freight paradigm, making it cost-effective and optimised, with improved mode share and operational efficiency. However, the volatile price of ATF and the depreciation of the Indian rupee are ongoing challenges. Furthermore, rising infrastructure levies add to the cost burden.

What are some of the challenges with D2C focussed logistics players today?

The logistics industry has undergone a significant transformation with the onset of the pandemic. The direct-to-consumer (D2C) model has emerged as the latest trend in the ecommerce sector in India, allowing brands to reach customers directly and offer lower prices, quality assurance, and better policies. However, meeting the rising demands and expectations of customers can be challenging, and many D2C brands struggle to grow and scale without a seamless order fulfillment strategy and an experienced fulfillment partner. Open Network for Digital Commerce' (ONDC) can address the needs of these players.

What are some of Bluedart's key focus areas for the year, and long-term future plans?

Blue Dart is taking measures to enhance package handling capacity on both air and ground, in addition to improving service quality to cope with the increased volume. Our focus is on expanding our presence in Tier II and III markets, with a specific focus on Bharat.

How has e-commerce impacted Blue Dart’s biz and how much penetration does Blue Dart have into this market?

Blue Dart is at the forefront of the evolving logistics industry, utilising innovative solutions such as drone delivery, autonomous hubs, and robotics. We are also developing an indigenous network modelling system to improve tracking and recommend efficient routes. Our reach is expanding.

E-commerce was already a segment that was becoming increasingly popular with our customer base. The pandemic only fuelled this trend and we saw business pick up in Tier II, Tier III cities as well. We will continue to innovate in this segment to ensure we are the provider of choice for our customers.