Pharmaceuticals and Perishables remain key growth sectors for the Asia-Africa and Asia-UAE trade as the demand for life saving drugs and fresh produce in Asia, especially from India and Vietnam, continue to pour volumes into Africa and UAE, while inbound E-commerce rides on its unabated growth.
Upamanyu Borah
Efficient logistics networks is the reason high-value pharma shipments which are highly time-critical reach the needs of patients worldwide, and, consumers in countries like the US and Africa enjoys the same produce year-round, even when it is out of season because it will likely be in season somewhere else in the world.
Pharma shipments are of significant importance to the entire cargo industry – both from a strategic point of view and as a source of revenue. Besides, the growing middle class is creating an increase in cargo demand for one type of cargo: fresh produce. While the volume of electronics is decreasing, fresh produce is increasing by roughly the same amount. With above, the demand for global pharmaceutical sales and fresh foods are expected to show healthy growth into the future, and also both are expected to be fueled to a significant degree by emerging countries like China, India, Africa, Brazil, Russia and Mexico.
India and Africa: Strengthening ties
India’s partnership with Africa based on a consultative model of cooperation, non-prescriptive, participative, and responsive to the needs of the African countries, witnessed an increase in bilateral trade of nearly 22 per cent from the last year. Ranking as the third largest export destination in Africa, India-Africa trade has touched $ 62.66 bn for 2017-18. Trade with Africa now accounts for just over 8 per cent of India’s total trade, but this is only marginally higher than the 7.6 per cent in 2001. India became the fifth largest investor in Africa with investments amounting to a staggering US$ 54 bn (as of 2008-2016).
India-Africa trade has not only diversified but also multiplied in the last 15 years. The strengthening of South-South complementarities between these two regions suggests that India-Africa trade could touch US$117 by 2021.
The impressive growth in trade between Africa and India stems from a mix of factors, including the growing stock of foreign direct investment undertaken by African and Indian corporate entities; and deepening economic and political ties illustrated by a number of strategic initiatives, most notably ‘Focus Africa’ launched by the government of India in 2002 to boost trade and investment between Africa and India, and the India Africa Forum Summit launched in 2008. The Asia-Africa Growth Corridor was launched in 2017 as an economic co-operation between the governments of India, Japan, and multiple African countries.
Primary commodities and natural resources account for around 75 per cent of Africa’s total exports to India. African exports to India are growing at a rate of 32 per cent annually, with Indian exports to Africa at a rate of 23 per cent. The top six African exporters to India are Nigeria, South Africa, Angola, Egypt, Algeria and Morocco and ac count for 89 per cent of total African exports by value to India, mainly due to exports of oil, gas, ores and gold.
India’s exports to Africa are dominated by pharmaceutical products and refined petroleum; over the last five years, these two products have accounted for about 40 per cent of total exports into African markets.
Food security is also a common concern for India and Africa. India being the biggest producer of food grain and horticulture crop has helped the African continent develop its agriculture sector. Diplomats from both sides have sought greater cooperation in agriculture and agro-processing, which would have a great bearing on the food security situation in Africa and India.
India’s pharmaceutical exports to different regions in Africa
Source: Ministry of Commerce and Industry, Government of India
Golden era of UAE-India relations
Relations between India and the UAE are at their best ever. The bilateral relationship has matured and transformed into a comprehensive strategic partnership as both countries continue to explore deeper cooperation in new areas.
The UAE-India relations go beyond economic, trade and investment exchange to include other promising sectors like the aviation. There are over 950 direct weekly flights between the UAE and India, a number that shows the strength of people-to-people and economic ties between the two countries. Flights between the UAE and India take the lion’s share of air traffic between the Arabian Gulf and India.
The deepening of energy ties was a highlight of 2018. Defence has also emerged as a strong area of cooperation between both the countries. India and the UAE also signed an MoU in 2019 for cooperation in the field of manpower and both the countries are exploring the possibility of linking their respective e-platforms for the benefit and welfare of Indian workers coming to the UAE. India and the UAE also signed an MoU for cooperation in Africa in 2018.
Going forward, India and UAE are discussing cooperation in the establishment of logistics hubs, cold storage, warehousing and more to operationalise the food corridor between the two countries. Currently, India exports up to $2.5 bn of food to the UAE every year, and the joint food corridor may help triple that volume to the value of around $7 bn in the next three years. Relevant business groups from the UAE and Indian states including Punjab, Madhya Pradesh, Maharashtra and Gujarat are in discussion to cooperate in operationalising the food corridor as early as possible.
The proposed food corridor will help in ensuring food security for the UAE, as it will get the best quality agricultural products at cheaper prices. It will create opportunities for joint research and development in the agriculture sector. The food corridor will also help in increasing the earnings of Indian farmers. It will also help generate approximately 200,000 jobs in India as per initial estimates while increasing Indian food exports to the UAE to $7 bn per year.
The UAE side has already identified 20 specific food products that are currently imported in large quantities. India is quite competitive in exporting those products. The idea is to focus initially on these 20 products, such as certain cereals, vegetables, fruits and even poultry, to see if you could produce them in the India-UAE food corridor. The UAE entities are making their own collaboration with Indian partners and have the option to either process the foods or to put them into cold storage and take them back to the UAE when required.
Air Hub Support
The ability for air cargo to move these extremely temp-sensitive or perishable goods from one place to another quickly is a key driver of this cargo growth. In some cases, it is cheaper to harvest and ship produce via air to a country than it is to grow the produce in a temperature-controlled greenhouse in the destination country. This is leading to an increased focus by air cargo providers to tailor offerings to better fit perishable cargo needs. There is increased use of temperature-controlled containers and a greater focus on maintaining the cold chain at airports.
KIAB is the gateway to South India; it is strategically located close to major industrial and business hubs and corridors in South India and currently has 15 cargo freighters flying to different parts of the world. Bengaluru International Airport Limited (BIAL’s) aim is to make KIAB a successful passenger and cargo hub with state-of-the-art infrastructure and technological advancements that deliver operational efficiency.
“We are committed to providing consistent and reliable world-class air cargo solutions with a focus on the needs of our customers. Over the past few years, BIAL has invested substantially in world-class cargo infrastructure with best-in-class cargo terminals for faster turnaround and processing,” says Satyaki Raghunath, Chief Strategy & Development Officer, BIAL. The current design capacity of KIAB’s combined cargo terminals is 570,000 metric tonnes (MT), catering to both international and domestic traffic. There is scope to further expand capacity, up to 850,000 MT. “To boost cargo movement, we have strengthened our connectivity to catchment areas in the hinterland of Bengaluru, with the introduction of a dedicated road feeder service – under the brand name LOGI Connect – connecting Tirupur, Coimbatore and Ambur to the airport. This has helped in establishing KIAB as a major cargo hub across South India,” adds Raghunath.
The master plan of KIAB has also incorporated additional space for the development and building of an integrated air cargo and logistics hub in the future on the East Side of the airport to cater to an eventual demand of between 1.2 – 1.5 mn MT of cargo in the long-term.
As such, to meet the ever-increasing demands and handling requirements of temperature-sensitive cargo with modern cold storage infrastructure, Air India SATS Airport Services (AISATS) launched AISATS COOLPORT at KIAB in October 2016. Spread across over 11,400 sq mts, the specialised cargo centre serves as a one-stop-shop and houses a complete range of facilities under one roof for seamless handling and storing of temperature-sensitive import and export cargo.
According to Ramanathan Rajamani, CEO, AISATS, “The AISATS COOLPORT uses a combination of the latest digital technologies and state-of-the-art infrastructure to ensure speedy, efficient and damage-free movement of cargo. The facility has a handling capacity of 40,000 MT per annum. It houses dedicated cold storage rooms with adjustable temperatures ranging from -250C to 250C, refrigerated q-lanes with a temperature range of 20C to 80C, separate X-ray machines for perishables and pharmaceuticals to avoid any cross-contamination. AISATS also offers data logger reports on request to track product temperatures during its handling period.
AISATS COOLPORT, Rajamani says, also provides an in-house custom clearance facility, a Drug Controller Laboratory and a plant quarantine inspection and certification system to enable speedy processing of huge quantities of perishable cargo. It also offers backward integration by providing reefer trucking services from the point of origin to the point of warehouse entry.
Cochin International Airport has a separate centre for handling perishable cargo. The Centre for Perishable Cargo can handle 24,000 MT per annum. The concept is aimed at maintaining the quality of the produce through the intervention of relevant technologies. It acts as a vital link for the maintenance of the cold chain during the export process of perishable cargo.
Delhi International Airport Limited (DIAL) has become the exclusive cargo transshipment hub for India’s neighbours like China and Bangladesh with the newly launched Transshipment Excellence Centre (TEC) and its two integrated cargo terminals. DIAL has also developed Airport Cargo Logistics Centre (ACLC), as on-airport warehousing facility, to handle all types of cargo, such as perishable, pharma, textile, retail, electronics, project cargo and livestock.
Videh Kumar Jaipuriar, CEO, DIAL asserts, “Delhi has emerged as a cargo hub for businesses in North India and neighbouring countries. This new movement of international transhipment cargo connecting China to Ukraine and Dhaka to Manchester via DIAL will give a significant impetus to the air cargo and regional logistics sectors. TEC not only provides new momentum to the efficient movement of transshipment air cargo through secure channel, but also contributes significantly in promoting DIAL as air cargo hub of the region and an air cargo gateway to the world.”
With the three operational runways and nine freighter parking bays, DIAL is India’s largest and busiest airport. The airport is going to add three more freighter parking bays. DIAL has the capacity to handle over 1.8 mn MT of cargo annually, which is scalable to 2.3 mn MT. In FY19, the airport achieved a new milestone of handling over 1 mn MT cargo, the highest volume of cargo handled by any airport in India in a year.
DIAL has a world-class dedicated temperature control facility to ensure end-to-end temperature-controlled supply chain. The facility can handle around 1.5 lakh MT perishable and pharma cargo annually. DIAL is the first Authorised Economic Operator (AEO) certified airport by Indian Customs, and also the first to receive e-AWB 360 (e-Airways Bill 360) certification from International Air Transport Association (IATA) for achieving 100 per cent e-freight compliant processes.
GVK-led Mumbai International Airport Limited (MIAL) became the first airport in India and third in Asia to receive the IATA CEIV Pharma certification. The airport is now set to launch the country’s largest temperature-controlled solution for the transport of pharmaceuticals on the tarmac region built by Cargo Service Center (CSC). This facility will include a fully temperature-controlled independent facility with a storage capacity of 300 tonnes of pharma at any given time. It will have the capacity to handle a throughput of 14,000 tonnes per month, with six freezer chambers of 2 to 8° celsius and one of -5° celsius. CSC currently runs pharma zones for export consignments at Mumbai, Delhi and Ahmedabad.
“The CSC terminal in Mumbai is declared as The Pharma Excellence Center and will become the hub of pharma activity. Once a month, industry hands will get together with members from the pharma fraternity to discuss their research, new deliveries, new trials, new technology, new machinery, new ways of packaging and training. CSC has a unique opportunity of being a neutral player to bring all pharma companies on a single table with the aim to enhance the quality of Indian pharma for the global market,” says Tushar Jani, Group Chairman, Cargo Service Centre.
Mumbai airport’s (MIAL) partnership with various prominent airports such as Amsterdam, Brussels and Miami is also expected to boost India’s pharma exports.
In a bid to promote pharma business in Hyderabad, GMR Hyderabad International Airport (GHIAL) is working towards developing a full-fledged pharmaceutical value chain logistics at the airport. It is also looking at doubling the airport’s cargo capacity. In Hyderabad, 60 per cent of the cargo exports comprise pharma products. The airport already has a 33,000-tonne capacity dedicated temperature-controlled pharma zone, a 20-acre Free Trade Zone with warehousing and distribution and the integrated terminal operated by GMR and Menzies Aviation of UK.
SGK Kishore, CEO, GHIAL says, “In the coming years, we are looking at developing a full-fledged pharmaceutical value chain logistics getting developed at Rajiv Gandhi Hyderabad International (RGI) Airport. Meanwhile, existing capacity is all set to get doubled. ”
According to GMR, the current terminal handling 1,50,000 tonnes of cargo annually will be expanded to handle double the capacity. “We have come out with comprehensive master plan to ensure that the facility gets expanded. New initiatives include cool container links for pharma products, general and temperature-controlled warehouses within the cargo village, promotion of road feeder services and 24×7 customs clearance of cargoes. The latter is particularly required for a full-fledged cargo hub as both Delhi and Mumbai airports have one-shift of customs operating hours, while airports such as Hong Kong, Dubai and Shanghai have 24×7 customs clearance,” says Kishore.
GMR is also looking at exploring blockchain technology ‘to make data available in real-time’ throughout the pharma cargo chain.
Meanwhile, the state-of-the-art cargo terminal located at Addis Ababa Bole International Airport which is the largest transshipment terminal in Africa and one of the biggest ten in the world with an annual capacity of about 1.0 mn tonnes is now the base of operations for Ethiopian Airlines’- the fastest growing Airline in Africa. The cargo terminal includes facilities such as perishable cargo terminal fitted with different climate chambers and cool chain storage; dry cargo terminal warehouse; fully automated warehouse with the latest technologies including Elevating Transfer Vehicle (ETV); G+2 office building; and apron area which accommodates five additional big (B777) freighter aircraft.
Similarly, UAE’s Sharjah International Airport (SHJ) is a specialised airport for cargo handling. The airport has both expertise and facilities such as CEIV certified pharmaceutical handling facility, extended quarantine for livestock, special equestrian handling, and bonded trucking services.
“We have clear-cut goals, precise and comprehensive plan has been designed for the year 2020. As an airport, we will continue to facilitate all our partners and will provide constant support to their business plans,” says Gohar Ali Shah, Business Development Executive- Commercial, Sharjah Airport Authority.
Besides, Ras Al Khaimah International Airport (RKT) is planning to be a base for other freighters operating from the UAE. The proximity to major markets in Dubai, faster turn-around time and the commercial advantages over other big airports, make RKT an ideal choice for the many small freighters operating in the region. Sanjay Khanna, CEO, RKT mentions, “With increased operational facilities including chillers, freezers and live animal facility, our airport is fully prepared to accept and overcome the challenges during the year 2020. Managing the export acceptance, import delivery, and timely transport of shipments through IPTA and RFS is a complex operational challenge, and we strive constantly to improve our service and operational capabilities.”
Logistics Networks
Ethiopian Airlines (ET) has been providing a convenient air cargo service on major trade lanes such as Asia-Africa, Africa-Europe, Africa-Middle East, Middle East-Africa and Europe-Asia lanes using its latest B777F aircraft and belly-hold capacity. Fitsum Abadi, Managing Director for Africa’s largest cargo operator- Ethiopian Cargo & Logistics Services says, “ET has been fulflling its role and taking the line share in connecting these major lanes, especially Africa with the rest of the world. The increased volume of trade resulting from huge investments in Africa by China and India is causing the cargo traffic between the regions in Africa to thrive and this in turn has increased ET’s market share in the cargo business.”
India is still the major source of export products to Africa, says Abadi, and the volume is expected to grow in the year ahead. Therefore, Ethiopian Airlines is offering its dedicated freighter flights and belly capacity of its passenger aircrafts for accommodating adequate air cargo shipments from India. “The current annual uplift is around 23K tonnes, and the products vary from a wide range of general to temp-sensitive cargo such as pharma and perishables, chemicals, textiles, garments, engineering goods, auto spare parts, etc.” informs Abadi.
In terms of market penetration, East Africa’s largest integrated logistics services provider Siginon Group, is the oldest locally owned logistics company in Kenya- one of Africa’s key emerging markets. Siginon Group, which basically started out as a small clearing and forwarding company today is into transportation, warehousing and distribution by air, road and sea. The group’s flagship business, Siginon Global Logistics (SGL) move cargo by road within East and Central Africa in 12 different countries. SGL also moves cargo by rail, sea and by air – through the Port of Mombasa and JKIA Airport to all over the world.
In the fourth quarter of 2015, Siginon Aviation, the group’s another subsidiary and the leading provider of ground and air cargo services to the local aviation industry located in Jomo Kenyatta International airport (JKIA) in Nairobi and also Eldoret International Airport in Eldoret, kicked-off its operations in Uganda and Tanzania through partnership, and in the second quarter of 2017, the company expanded its operations to Ethiopia as well. The company is putting up ground handling facilities in all these areas to be able to support air cargo development for the region.
Siginon Aviation operates two air cargo handling facilities in Kenya. Its air cargo handling facility, Siginon Cargo Centre (SCC), is located at Jomo Kenyatta International Airport (JKIA) in Nairobi while the Siginon Eldoret Cargo Centre is located in the Eldoret International Airport (EIA) in Eldoret. The company has invested more than $10 mn in a state-of-the-art air cargo terminal in Nairobi which includes a 5,000 sq mt general cargo warehouse, a 3,000 sq mt perishables center, a 2,000 sq mt basement parking for transit vehicles and a specialised storage area for dangerous, valuable and temperature sensitive cargo. The facilities are capable of handling perishable products such as vegetables, fruit, and flowers that are Kenya’s major exports. Siginon Aviation prides itself in the first cool corridor in JKIA that ensures that they handle perishable cargo at the prescribed temperatures up to loading onto the aircraft.
The company’s last division, Siginon Container Freight Station (CFS) is located in Miritini, adjacent to the Mombasa Port. Siginon CFS serves importers and exporters moving cargo that is local or transit containerised cargo as well as vehicular cargo at the Port of Mombasa.
In terms of facilities, Jack Mwaura, Group Commercial Manager, Siginon Aviation says, they have seen a bit of change in expansion of airports, having more warehouses, road network, and the runways. “If you look at the developments in Africa there are quite a few significant ones. For example in Addis Ababa, Ethiopian has built the largest cargo facility in Africa. There are other cargo facilities coming up in Malawi and Togo and in South Africa as well. It’s changing for the main carriers which are Kenya Airways, Ethiopian Airlines and South African Airlines, among others,” informs Mwaura.
“We are collaborating with global players like DHL. Besides, we work closely with the regulatory authorities. In Siginon, we have our own CFSs and within them, we have our own ground handling facilities. At Nairobi, inside our two facilities we have banks, revenue authorities, and bureau standards. So we see ourselves not just to serve internal but also external customers,” adds Mwaura.
According to IATA’s latest airfreight market analysis, which details figures for November 2019, noted that industry-wide freight tonne kms (FTKs) dipped by 1.1 per cent year-on-year (YoY). This marked the 13th consecutive month of YoY decline in airfreight volumes, however Europe and Africa were the only regions to record growth in air freight demand compared to November last year. African carriers posted the fastest growth of any region, with an increase in demand of 19.8 per cent compared to the same period a year earlier. Strong trade and investment links with Asia contributed to the positive performance. Capacity grew 13.7 per cent YoY.
UAE is predominantly an air market for India. Out of the total air cargo volume handled by India, approximately 20 per cent is for the UAE lane. Besides, with the increasing interest shown by the west in UAE, India can be a bigger provider of daily needs; marine, processed foods, perishables, etc. Economic sources expect the value of trade exchanges between the UAE and India to hit $100 bn in 2020.
India is one of the largest mango exporters in the world and Indian mangoes are one of the most sought-after fruit, especially in the UAE, and also in the USA, UK, Canada and other parts of Europe. Over one-fifth of the total volume of 2.6 mn tonnes cargo carried by Emirates SkyCargo in 2018 originated from India. “That translates into millions of dollars of revenue and opportunities for a range of Indian businesses,” states Keki Patel, Cargo Manager for India & Nepal at Emirates Skycargo.
Emirates SkyCargo has played a crucial role in ensuring the quality of this native Indian fruit, preserved by ensuring the right temperature is maintained and the rapid loading and unloading of perishable goods.
In 2018, Patel informs, Emirates SkyCargo flew more than 6 mn mangoes out of India to destinations around its network, which is a proven record growth of more than 50 per cent as compared to 2017. Emirates SkyCargo also exported over 2,290 tonnes of other perishables which includes large volumes of fruit and vegetables from Mumbai between April and June 2018 to the Middle East during Ramadan and even to the UK to meet the demand for perishable exports during the busy season.
Emirates SkyCargo has built up its Dubai hub as the key hub for cargo to and from six continents, over 150,000 tonnes of perishables and 27,000 tonnes of pharmaceuticals moved through Dubai from the second quarter of 2018 to August 2019.
Maersk, the leading global integrated logistics company, is fully equipped to support the trade growth through its vast network, technological know-how and extensive inland coverage in India.
Data sourced from Maersk India Trade Report Q3 2019 showed that Middle East countries contributed significantly to trade growth from North and West India, with countries like Saudi Arabia and UAE each delivering double-digit growth. This growth can be attributed to the festive season of Eid that fuelled the demand further propelling the consumption in the regions.
“Q3 witnessed solid movement of Indian sugar into Middle East countries. From mid- December, exports into East African countries such as Sudan, Somalia and Djibouti are increasing” says Steve Felder, Managing Director, Maersk South Asia.
Most recently, Maersk successfully delivered its first end-to-end shipment of freshly produced ‘Green Chillies’ from Varanasi to Jebel Ali, United Arab Emirates (UAE) within a duration of 9 days. The company worked closely with Agricultural and Processed Food Exports Development Authority (APEDA), the apex organisation under the Ministry of Commerce & Industry, responsible for the export promotion of agricultural products, to enable trade opportunities in the state via land and sea routes. The delivery is a testament to Maersk’s efforts to unlock the agro-trade potential in Uttar Pradesh and expanding across the country by leveraging end-to-end cold-chain logistics solutions.
“Additionally, due to its favourable climatic and geographical conditions, the agricultural produce from the state of Uttar Pradesh, especially Varanasi region enjoys a preferred demand in the global market which is the reason the government has plans to make it an export trade hub. Our initiative to take local produce to global market is in-line with our aim to be a global integrator of container logistics connecting and simplifying trade for the farmers and entrepreneurs across the region,” ascertains Felder.
In another move, Global trade enabler DP World has launched initiatives such as end-to-end trade solutions, which may boost trade and investment between India and the UAE. The recent launch of the India-UAE Bridge initiatives are set to attract trade and investments for both Indian and the UAE, as DP World offers technology-driven end-to-end (e2e) smarter trade solutions to Indian trade fraternity.
DP World remains committed to India’s vision of ‘Make in India’, and Dubai’s ambition to remain the region’s top trading hub and India’s gateway to global markets. The e2e solutions delivered under the India-UAE Bridge will support investors through value propositions by leveraging assets and capabilities in both countries.
“India and the UAE have enjoyed long and enduring cordial business and trade relations over the years, making India one of our top three trading partners. Long-term investment flows in both directions and is the hallmark of trust we place in each other. We aim to work in partnership with stakeholders to create value and explore opportunities with Jebel Ali Port and Jafza acting as a springboard for investors in both countries,”says Mohammed Al Muallem, CEO and Managing Director, DP World (UAE Region) and CEO of Jafza.
In 2018, DP World’s USD 3 bn joint investment fund with India’s National Investment and Infrastructure Fund was set to acquire assets and develop projects in sea and river ports, freight corridors, SEZs, inland container terminals and logistics infrastructure such as cold storage.
