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New opportunities of business product development to increase cargo volume for GRM


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New opportunities of business product development to increase cargo volume for GRM

  1. 1. Sukesh Chandra Gain Faculty of Management Studies Problem statements: "You are the Business head of Commercial operations at the Delhi Airport and are responsible for looking into new opportunities of business product development with a focus to increase Air Cargo Volumes from 0.4 Million Tonnes per annum to 1 million tonnes per annum (including exports and imports) in the next 4-5 years. You have to come up with a business proposition of a product which will help you achieve your targets. You have to define your product for Air Cargo Volume development to meet the targets.” Introduction: Internationally, revenues from air cargo are a strong revenue source for airport developers. Indian air cargo volume has increased 25% in 2009-10 to 691 million metric tonnes from 552 million tonnes the year before. Airports Authority of India (AAI) have forecasted the growth of international cargo and domestic cargo at all the airports taken together at 10% and 15% during the year 2010-11 and 2011-12, respectively and at 10% & 12% during the years 2012-13 and 2014-15, respectively taking 2009-10 as the base year. 1
  2. 2. Cargo traffic during last 3 years: Year Target Achievement Change Domestic 2007-08 575.34 568.23 7.11 2008-09 627.90 552.06 75.84 2009-10 688.01 690.90 4.89 International 2007-08 1133.41 1146.75 13.34 2008-09 1259.94 1149.92 110.02 2009-10 1402.49 1270.71 131.78 (in 000 metric tonnes) Solution: As a Business head of Commercial operations at the Delhi Airport I would suggest the following measures to increase Air Cargo Volumes from 0.4 Million Tonnes per annum to 1 million tonnes per annum in the next 4-5 years: 1. Encouraging domestic carriers to offer discounts to freight forwarders to enhance ancilliary revenues of the carriers as well as of the airport. 2. Planning to launch full-fledged freighter service between Delhi and other important international airports (eg. Helsinki) as the cargo volumes are growing quite impressively in these locations. 3. Focusing on promising industries like construction machinery, fresh- cut flowers, medical supplies and pharmaceuticals. Pharmaceuticals, in particular, seemed to be the most promising target market as pharmaceuticals are high-value and time-sensitive products. 2
  3. 3. 4. Provision of twenty-four-hour operations and support services, and garnering support from the surrounding community to pursue and build industry clusters to support increased cargo volume. 5. Construction of Cargo City (CCC): This will make all stakeholders (shippers, freight forwarders, handling agent, export and import brokers, airlines, and last but not least, customs and other government authorities) in one bonded area, so as to accommodate the growth in traffic & ensure a smooth and safe handling for the transfer cargo. This will include the following facilities: I. Perishables center II. Export & transit area III. Import & transit area IV. Express area V. Live animal center 6. JUST-in-TIME Delivery: Implementing the idea of the Sea - Air Cargo to combine the geographical advantages of India. The idea is to divert the emergency commodities from sea port to airport. The Vessels shipping high value goods from Asia to Europe could make a stopover at any of the nearby port. The Specific commodities could be unloaded, transported by truck to a free trade Zone at Delhi airport airport, re-manufactured, re-packed or stored until a just time delivery requires them to be flown as belly cargo to European or African destinations. 7. Understanding the nature of air cargo that has the potential to flow through Delhi Airport and building the facilities to suit the unique needs of these target customers. We should design air cargo facilities to meet the specific needs of these industries, and develop marketing plans to solicit and gain air cargo business with these target customers. 3
  4. 4. 8. Introducing Marketing campaign: “We carry everything, from emeralds to elephants”. 9. There should be hassle-free and direct Customs clearance both for Export and Import cargo. 10. Making international tie up with various foreign airlines and trucking companies. This will enable GMR to increase the cargo volume between any two points on the globe. 11. E – Freight: Developing technical system of inventory management for cargo handling of import/export functions. This should take care of the entire management of cargo, supports Electronic Data Interface (EDI) messages with Indian Customs and should replace the existing paper correspondence between Customs, Airlines, and the custodians. 12. Encouraging increased domestic network by Indian carriers. Airlines should be also encouraged to run cargo bases at the airport. 13. New integrated cargo terminal should be fully operational with elevated transfer vehicle and the automated storage and retrieval system, that helps in smooth cargo handling. 14. Setting up a cargo village for all air cargo agents and freight forwarder. It should be providing rent-free space to animal quarantine, plant quarantine and drug controllers’ office apart from e-trade initiatives. 15. A shorter close-up time (the time between receiving a cargo and the scheduled take-off time of the intended flight) will allow for more time at upstream processes. To shorten the close-up time, cargos should be processed quickly and stored at a staging area to be ready for loading to airplane, so that resources at the initial phase of cargo handling process (space and operators) are freed up to accept more cargos. 4
  5. 5. 16. We should focus on I. Reducing cost of shipping / delivery. II. Reducing cost of inventory. III. Reducing cost of Transportation duration. IV. Reducing cost of re-manufacturing. 5