Air Cargo is actually ‘Cheaper’…! An exclusive interview with Cyrus Katgara – Partner, Jeena & Co
After almost a hiatus of two years due to pandemic, Apace Digital Cargo met Cyrus Katgara, Partner, Jeena & Co in person and had an exclusive interview on the post-pandemic situation for the industry. He has stressed upon the air cargo sector and considered it as a ‘cheaper’ mode of logistics; though Jeena’s major business comes from the ocean! He called wide body aircrafts – the thing of the future. And there are many more interesting things to know which he has shared in a candid conversation with Jasleen Kaur.
How has been the post-pandemic situation for the industry and for Jeena specifically?
Post pandemic situation is extremely tight as far as space is concerned. Because of the reduced capacity, there was a scarcity of space but the situation seems better. However, the freight rates are going to be high this year especially for the shipping sector. And freight rates are high in many countries, not only India.
And how will the impact on logistics cost?
Let me clarify this. One of the recent reports stated that logistics cost is actually 8.36% rather than what everyone thinks it is 14%. For air freight, I must say, it is not more than 8%. You can actually underline my statement that air freight is actually cheaper. Air Freight is the right medium for high value commodities like Pharma. Let me tell you, Zara, one of the successful garments brands, which changes fashion / collection every three months, uses air freight as a medium to tap the market on time. Even air freight saves the cost of inventory too. Logistics cost which is stated to be 14%, has 7% cost of inventory and other 7% is freight/shipping. So if we use air freight, we can reduce this cost.
Coming back to Jeena, what is the post pandemic strategy of Jeena? What would be the focussed areas?
You would be surprised to know that Jeena is doing more in the ocean than air. My ocean P&L is more than air P&L. For Jeena, it is a split actually (50:50 ratio for ocean and air). But in the last two years, we did a 60:40 ratio (60% ocean and 40% air). Ocean shipping is all containerised traffic.
And our other section of big business in the ocean is projects. One massive project can make major shifts in the P&L. There are different kinds of projects we handle and they have their own challenges. Sometimes, we made big moves to remote areas or where there is no infrastructure. We have stationed our teams in Africa to handle such projects. If you follow our Jeena Linkedin page, we keep on sharing highlights about our work and culture.
Even in the Criticare sector, Jeena Criticare created a milestone and completed 100 tonnes of vaccine deliveries. It was also a big project in itself. What do you have to say?
We bought Criticare four years ago. It was going bankrupt but I am happy that we saved more than 200 jobs. I give full marks to my team who worked day and night during the Covid. They are actually the unsung warriors. They worked 24×7. When we got the ICMR contract, at that time we were already delivering 2000 shipments a day. Through Criticare, we are delivering within 24 to 48 hours in about 350 zip codes.
Moving on, you have already set benchmarks – be it pharma or projects. So what is next for Jeena?
We are already offering the gamut of 30 services in the freight forwarding vertical only. And consulting to multinationals is one of the newest areas we have stepped into.
If we talk about new companies, we have observed that many new e-commerce companies are coming in. But Jeena never stepped into it.
This is the domain where Jeena is never interested in. We are rather more focussed on big projects which have a huge potential. But e-commerce is a buzzword. E-commerce is undoubtedly a huge market but it can’t be compared to the hard freight. This is like my Jeena Criticare. 20,000 shipments of Jeena criticare in a month is equal to my five ocean shipments. Therefore, I see my sea freight more profitable.
Jeena has always stressed upon Paperless shipments. What is the sustainability strategy at Jeena?
See my table and you won’t find a single paper here! This is something happening and not happening at the same time. If in the value chain, everyone stresses upon being paperless, then this is going to work. We are focussed on being digital but can’t go digital fully. It is changing but it is not completely paperless. If customs say we don’t need paper, here we will actually win the game. Today, for say, if Jeena handles 40 shipments in a day, I have to carry print outs of all the 40 shipments because I don’t know which shipment is going to be examined.
You have been associated with Government bodies so how do you see the role of Government towards the industry?
I won’t say it is better than before but I would say it is the best. I must give full marks to the Ministry of Civil Aviation for their hard work towards the sector. They are taking actions themselves and they want results from us. Mr Piyush Srivastava, Sr Economic Advisor, Ministry of Civil Aviation is working too closely with us and the minister himself is super active on the cargo front. And it’s only after the pandemic where air cargo saved the world, now everybody has realised that how air cargo is important. And I must say, the future is wide body aircrafts. Although India’s wide body aircrafts orders are zero. Cargo should be wiped out from narrow-body aircrafts for international flights because there is zero capacity for cargo with the baggage space. So we urge the government to consider orders for wide bodies which are long term players.
As you shoulder one more responsibility of the Presidency of ACFI, what initiatives have been taken at ACFI? How has been the communication with the government and the industry?
In the last two years, we have seen lots of changes. The ministry has really recognised the value of ACFI contributing towards the whole spectrum of cargo – be it freight forwarding, terminal operators, bonded truckers, courier companies or airlines. ACFI is continuously making project reports for the ministry – how they need to plan, how to transform brownfield airports or interactive greenfield airports also.
Being a veteran of the industry what is your message to the youngsters who are choosing cargo and logistics as their career?
Watch your wallets! It is because we are becoming a finance company with unsecured financers and unsecured creditors, which is a big thing. Many new companies are coming up and it is very difficult to assess their credibility.