Dubai: One of India’s biggest conglomerates, the $11 billion Mahindra Group, has picked Dubai to be the international hub for its air cargo chartering operations.
The entity, Mahindra Logistics, has already entered partnerships with multiple fleet operators and with a focus on riding the higher volume of shipments moving between India through to the UAE and then beyond.
The focus will not be limited only to such movements. The ambition is to extend the coverage from Dubai to wherever clients want their shipments to reach – by air. "What we have launched out of Dubai is our global chartering business, which is only for cargo," said Rampraveen Swaminathan, Managing Director and CEO – Mahindra Logistics Ltd..
"In the long run, we’ll have full freighters deployed to move material across the world, but essentially anchored in and out of Dubai."
Mahindra Logistics is the second major Indian company to confirm Dubai as its international hub in recent weeks. Malabar Gold & Diamonds recently moved into its new base at Dubai's Gold Souk Ext., from where all of its overseas operations will be handled.
The Mahindra Group's reach stretches across industries, whether that's automotive, cargo, industrial, retail and high-tech consultancy.
It will not be an easy run, air cargo chartering remains intensely competitive, with UAE and Gulf’s legacy airlines having a major say in the movements. But in a post-Covid environment, there have been a shift in shipment patterns, and Mahindra Logistics can expect to cash in on that.
“By global, we mean it's not restricted only on the Middle East or GCC,” said Saurav Chakraborty, Head – Global Cross Border Solutions at Mahindra Logistics Ltd. “We are going to target the segment of foreign-to-foreign movement, say from Shanghai to Istanbul. So, the world is going to be ours.”
"From our perspective, CEPA reaffirms the strength of the UAE-India relationship and serves as a high-level strategic confirmation that the UAE will continue to be a major trading partner for India. This agreement lends weight to our broader macroeconomic view of Dubai as a natural choice for expansion, enabling us to make regional and global advancements..."
- Rampraveen Swaminathan of Mahindra Logistics Ltd.
Lease an aircraft - in full
What the company does is lease the entire aircraft – at all times. There is no piecemeal approach of sharing space in the cargo-hold of another airline.
Mahindra Logistics will book a certain number of trips with airline owners on a full-aircraft basis. This gives the flexibility to cover anything from small to bigger sized payloads. “Or even odd dimensions,” said Swaminathan.
A $30b market in the making
“If it’s a pharma company or an engineering products company or an electronics company, we have a larger logistics relationship with them. That's one of the big levers which will actually will drive influence in terms of customer relationship.
“The other part is our capability in terms of solution finding for specific segments. These are two reasons why we believe we are confident about being able to penetrate the market.”
Plus, there is a lot happening within the air cargo space, which means enough room for key players to ride on it. The global air cargo market is valued at around $22 billion to $23 billion, and ‘going to probably grow to $30 billion in next three years,” said Swaminathan. “We think there’s a specific niche is where we will be able to penetrate and create value.”
Type of aircraft
The aircraft chosen would vary with the type of client, tonnage and all of the other factors that need to go into the decision.
“If it’s a B2B segment or a B2C segment, the requirement might be for a full flight, say 50 tonnes of cargo, we would offer an A330 or B757,” said Chakraborty. “Wherever the requirement is for something higher – 100- or 120 tonnes - then a Boeing 777 or 747 would be more suitable.
“Additionally, we are also one of the specialist players in the ODC (Over Dimensional Cargo) segment. We also tapped into our expertise to offer an A124 - which is a larger aircraft - in the past.” (In cargo industry parlance, ODC refers to a shipment that extends beyond the normal deck of the cargo.)
"Our India business is predominantly centred around freight forwarding, and not aircraft chartering," said Swaminathan. "When we look at charter services, it's very important to pick a location for our business in what we think will be very significant neutral global hub for trading.
"We believe that from a global trade location and the access it provides into larger, MENA and parts of Africa and onward movements towards Atlantic lanes, Dubai is a great location from a regional and global trading hub."
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