The global pandemic has changed many a lives across the world including Bangladesh, mostly for the worse. Any crisis of national and international magnitude brings along with it risks and also opportunities.
My departure from being a regular paid employee to an aspiring entrepreneur in the aviation sector was not an impulsive decision. Being in the corporate sector, I was somewhat aware about the potential of the aviation sector as far as cargo handling is concerned. It is quite natural that passenger flights will seize to operate during a global health pandemic, but air cargoes can't wait. So, especially during this pandemic when loads of cargoes are stranded and awaiting shipment at the airport, we must pay attention to the business opportunities there. This is how Covid-19 threw me out of my regular job and reinstated me in the Aviation Business.
When asked about the current state of aviation business in Bangladesh, Sharful Anam Sabir Akhand who was once one of the frontrunners in the aviation business, sighed and said, "The freighters are not in a very good position now. The passenger flights are replacing the cargo flights as they are readily available. Customers are also happy as they are getting these flights which are cheaper than the cargoes as these passenger flights' fuel consumption is quite low." He also continued, "The big freighters are still in the business as their freights are used for carrying vaccines, masks, PPE and medical equipment, laptops, android phones, etc. all over the globe. They have the market monopoly."
Air cargo logistics play a vital role in the economic development of a nation. Globally, more than one-third of the value of goods traded internationally is transported by air and therefore air cargo industry is considered an indicator of global economic health. From the point of view of airline industry, air cargo services contribute near 20 per cent of the total revenue. Airlines, air cargo terminal operators, ground handling service providers, Integrated Express Service Providers, forwarders, domestic cargo transport service providers, inland trucking and customs house agents are the key players in the entire air cargo supply chain. Thus, the air cargo industry brings a wide variety of service providers together to move goods both in domestic and international destinations with a single-minded purpose of faster and efficient goods delivery.
These business entities in air cargo logistics industry in turn interact with a number of cross-border regulatory agencies, the principal among whom is the customs establishment. Speedier services in the air cargo supply chain facilitate a large number of business entities to become more competitive.
Bangladesh freight market came into being during 1991-92 without much prior experience. During the rise of the industry, despite the absence of government regulations and policies along with inexperienced exporters and importers, the freight and logistic industry managed to reach imported goods worth US$52.84 billion during the fiscal year 2017-18 and exported products worth about $36.67 billion, according to data from the Bangladesh Bank. However, as per Civil Aviation Authority of Bangladesh (CAAB) data, even during the pandemic about 8,553 cargo flights carried 2,405,346 tonnes of goods to and from abroad while 183,109 tonnes from the country to various international destinations between April 2020 and May 2021. It only proves that Bangladesh has huge air transportation potential. However, the global freight forwarding market shrunk by nearly about 7.5 per cent in 2020.
In 2016 nearly 85,000 tonnes of apparel items were shipped by air to the European Union (EU), which made up approximately 95 per cent of the total air-freight sent from Bangladesh to the EU and 8.6 per cent of the country's total exports. In the same year Australia, the UK and Germany imposed restriction on direct cargo flights from Bangladesh, finding safety and security measures to be insufficient. But having failed to fulfil the condition, this ban came as a major setback to textile exporters as the EU was responsible for over $15 billion worth of textile exports in the given year alone. With over 92,000 tonnes of cargo carried by air every year to the Euro region, this news was of extreme concern.
However, the good news is that, after years of dysfunctional security systems at the Hazrat Shahjalal International Airport, the alarms have finally had an effect. The airport has recently been equipped and upgraded with Explosives Detection System (EDS) and Explosive Trace Detector (ETD) machines to comply with the security standards of the EU and the UK. In addition, 37 dual-view X-ray machines have been installed at the airport and officials have received European standard training in cargo handling and machines operation. Once the machines come into operation, it is believed that this will strengthen security features at the airport and ensure safe passage of passengers and goods throughout the world.
By 2032, Dhaka will be the 90th aviation megacity of the world. Airbus global market forecast 2014 projects seven per cent growth of overseas and domestic passengers to and from Bangladesh in 10 years. Ninety per cent of Bangladesh aviation market is orientated towards international destinations. It is also highlighted that air traffic will double in next 15 years. Bangladesh has some inherent advantages over other countries. Large population base, more than ten million people working outside the country and more than one million people visit Saudi Arabia for performing hajj and umrah every year (Haque, 2018). This has made Bangladesh a lucrative destination for many foreign airlines.
In 2020, the air shipment of garment items declined 33.68 per cent to 134,806 tonnes from 203,256 tonnes in 2019, according to data from the Bangladesh Garment Manufacturers and Exporters Association. It is because of the sudden roar of air freight rates. Shippers are now paying $3.25 per kg to send cargo to Europe, up from $2.40 a few months back last year. In Hazrat Shahjalal International Airport, there is a huge queue of cargoes nowadays. The reason shows the undergoing construction work. It's interesting that the garment owners prefer air cargo for exporting apparels. For vaccines, and raw materials also air cargo is the best choice.
The air freight market opportunity is enormous. In last 10 to 12 years, the country witnessed a phenomenal growth in international and domestic freight movement. In 2019, 154 per cent and 479 per cent growth was shown in international and domestic freight movement respectively. However, the freight market has been quite volatile amid the pandemic since 2020.
Interestingly, in mid-May 2021, air cargo business spiked a bit as fruits, vegetables, particularly mango export, started from south-west Bangladesh to Europe. Apart from this a significant number of air cargo started flying with fish, live crabs, prawns, medicines, leather goods, raw leather, raw jute, jute yarn and finished jute products. It shows that as soon as restrictions on passenger flights are lifted, air cargo shipments will get a significant boost.
The freight and logistics industry generated more than 40,000 jobs directly during the past years and became one of the crucial sectors that are contributing to the economic growth of the country. Despite the promise of significant employment, the current pandemic has made this industry a little sloth.
To overcome the present crisis, the industry needs new investors. Sabir said, "Only new investors in the market can change the business scenario as freighters can buy their own aircraft to compete in the passenger to cargo (P2C) market."
(Rezina Sultana is Managing Director of SkyPower and FlyDhaka Cargo Freighter Services, Bangladesh.
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