India's rapid economic expansion, commerce and the fast growing food processing sector has led to a strong and secular growth in air cargo traffic. Domestic cargo movement of airlines has shot up by about 34 per cent in 2007, while international cargo movement has grown by 15 per cent.

Cargo growth in aviation over the last three years has overtaken the railways and shipping, and is set to grab part of their share of freight traffic, says the Associated Chambers of Commerce and Industry of India (ASSOCHAM), which sponsored the ASSOCHAM-Eco Pulse (AEP) study.

The AEP study on Changing Pattern of Cargo Traffic in India from 2000 to 2007 analysed three major modes of transportation - aviation, railways and shipping. It found that cargo business in the aviation sector grew by around 19 per cent, against 10.3 per cent and 9.2 per cent in shipping and railways during the last three years.

The burgeoning domestic traffic has reduced the proportion of international airfreight to inland traffic from 200 per cent in 2000 to 164 per cent in 2007, mainly because of the rise of low-cost domestic airlines.

Along with logistic companies and retail majors, domestic airlines are launching dedicated freight aircraft to boost goods traffic within the country.

The government is laying emphasis on the food-processing sector and horticulture, giving rise to a need for greater capacity in low-cost domestic airfreight. Dedicated freight aircraft flying national and international routes would give a boost to industry, ASSOCHAM president Venugopal Dhoot said.

In spite of a reduction in freight rates, railways goods traffic saw a downward trend. Revenue generated from freight has declined to 8.7 per cent in 2007 from 11 per cent in 2006. The proposed dedicated freight corridor (DFC) is likely to sharply increase railways goods traffic, but the extreme long-term nature of the project gives air cargo the advantage, the report says.

Ports and shipping saw a gradual decline in annual growth rates from 11.3 per cent in 2004-05 to 10.4 per cent in 2005-06 to 9.5 per cent in 2006-07. In contrast, total air cargo traffic has increased from 15.6 per cent in 2005-06 to 21.5 per cent in 2006-07, clocking a compound annual growth rate (CAGR) of 9.5 per cent for the last six years.

International air cargo traffic increased from 9.75 lakh tonnes in 2005-06 to 11.20 lakh tonnes in 2006-07. Domestic air cargo traffic swelled from 14.81 tonnes to 17.99 tonnes in the same period, registering a CAGR of 12 per cent for the past six years, compared to 7.7 per cent for international cargo traffic.

The total cargo traffic of all major ports increased from 4.23 lakh tonnes in 2005-06 to 4.64 lakh tonnes in 2006-07, registering a CAGR of 7 per cent. But this lagged behind overall goods traffic, which grew by an average 10.3 per cent during the same period.

Cargo growth in the railways was the lowest of the three, with a CAGR of 6.6 per cent over the last six years. Railways freight traffic has increased from 6.68 lakh tonnes in 2005-06 to 7.26 lakh tonnes in 2006-07, but the growth rate has declined from 10.9 per cent to 8.68 per cent over the same period.