E-commerce firms give airlines a miss, ship Diwali parcels by road, rail

This comes on the back of tie-ups between e-commerce companies and Indian Railways, and expansion of fulfillment centres which has enabled increased storage and quicker deliveries

In the Diwali week, domestic airlines are in seventh heaven, propped up by robust demand. But this time around their fortunes are mixed. While passenger demand remains strong, cargo loads have dropped as e-commerce firms have switched to trucks and trains to transport consignments.
 

This comes on the back of tie-ups between e-commerce companies and the Indian Railways, and the expansion of fulfilment centres, which have enabled increased storage and quicker deliveries.
 

Manish Tiwary, vice president and country manager, Amazon India says the company has been working with Indian Railways since 2019. “Today you get faster delivery in a city like Ratnagiri or Kolhapur because of the way we've connected [by] leveraging Indian Railways,” says Tiwary.
 

“There has been a five times growth in railway lanes,” he adds.
 

For example, Bengaluru to Mysuru can be described as a lane. Using the engagement with Indian Railways, Amazon India now has more than 325 intercity transportation lanes, he says.
 

Sourabh Pandey, chief experience officer (CXO), fulfilment & experience at Meesho says they work with multiple third-party logistics partners like Shadowfax, Delhivery, Ecom Express and Xpressbees. The e-tailer primarily opts for road transport as it’s “both reliable and cost effective”.
 

“During the festive season, we have been able to reduce transit times by making more direct connections instead of aggregating loads to reach our customers quicker,” he said.
 

 Flipkart didn’t respond to queries sent by Business Standard.
 

 While e-commerce firms are reaping gains through this change in strategy, passenger airlines and air cargo firms are despondent.
 

“The shift from air cargo to surface transport was anticipated but not to the extent that we are seeing now,” says Amit Bajaj, chief executive officer (CEO) (air cargo and trucking) of global freight platform Cogoport.  
 

Air cargo volume for us would double ahead of Diwali because of festive shipments but this year, there is reduced demand for air cargo from e-commerce companies, he said. An increase in air freight rates too has proved to be a dampener, he added.
 

Vistara’s chief commercial officer Deepak Rajawat echoed the sentiment, saying the industry had anticipated a surge in air cargo demand, especially on the back of relaxed pandemic curbs. However, the reality has been contrary to the expectations. Overall capacity in the market has increased making the space more competitive for all airlines, he added.
 

IndiGo said that changing market dynamics and a shift in consumer preferences have impacted transportation patterns.

“International business is also sluggish due to various geopolitical and economic factors exacerbated by the increase in aviation turbine fuel cost,” a spokesperson for the airline said.
 

Between April – August, domestic airlines carried over 554,000 tonnes of freight, a growth of 23 per cent over the same period last year. While volumes have grown due to an increase in flights, average loads are dipping.
 

An industry executive said domestic cargo loads have declined 6-8 per cent in the last 3-4 months as e-commerce companies are transporting more and more parcels by road or rail. Rajawat, however, said despite industry-wide challenges Vistara has managed to carry good loads.
 

Railways. on the other hand, are looking at better days ahead. “We had a flat trajectory until recently when it came to e-commerce parcel revenues due to the old tendering policy. With e-auctioning, our revenue has increased especially during this festive time. There is a significant boom,’” a senior railway ministry official said on the condition of anonymity.
 

The railway ministry also plans to capitalise on the launch of new initiatives such as Vande Bharat parcel trains to attract more freight volume.
 

While there is a pronounced shift, not all is lost for the air cargo industry.
 

“When required, we would leverage both air and ground transport and we have a complex algorithm which works on it. Both air cargo and surface transport are a significant part of the firm,” Amazon’s Tiwary says.
 

Pandey from Meesho concurs. “We use air transport as well for certain locations like Port Blair to serve our customers on time," he adds.