Indian Air Cargo onwards and upwards

As the Indian economy expands at a rapid pace, the air cargo industry has risen to the occasion, propelling the nation’s growth trajectory to new heights. With a perfect blend of robust infrastructure, cutting edge technology, and strategic partnerships, the industry is soaring toward unprecedented success. This cover story delves into the remarkable journey of Indian air cargo, showcasing its upward trajectory and the factors driving its growth. With facts, figures, and insightful interviews, this story unravels the untapped potential of Indian air cargo. Join us on this captivating journey as we uncover the thriving world of Indian air cargo as it forges ahead, carving a path to success amidst a global marketplace.

During the COVID-19 pandemic, which wrought devastation across the nation both from a humanitarian and economic standpoint, the aviation sector – in particular the air cargo industry – emerged as a rare success story. With other modes of transport constrained due to the lockdown, the air cargo sector came as an aid that helped maintain the crucial supply chains. India’s air cargo industry has witnessed remarkable growth ever since, propelling the nation’s economy to new heights. With a vast network of airports and a rapidly expanding fleet of cargo carriers, India has emerged as a key player in the global logistics arena.

As per a report ‘India Air Cargo Outlook 2023’ by Trade And Transport Group, towards the end of 2022, the air cargo industry traffic volumes globally declined by about 8%, and the express traffic volumes declined by nearly 7-8%. On the other hand, India saw an increase in international traffic volumes of about 10% and 8% growth in the domestic market.

Now, this budding air cargo industry has caught the eyes of global logistics players and is bagging million-dollar investments from across the globe.

As reported in May, Spicexpress – the cargo arm of SpiceJet – has won a USD 100m investment from UK-based SRAM & MRAM Group. On the other hand, air freight capacity aggregator Teleport, also looking to take a slice of the promising Indian cargo market, has voiced its intentions of taking a stake in Pradhaan Air Express in the next couple of months with a strategic partnership. Looking at the market potential, CMA CGM Air Cargo- the cargo airline division of the French-based CMA CGM shipping group, from May, has also begun operating four weekly flights in Mumbai with an A330F aircraft.

Another example of the progress made by the Industry is the fact that Airports like Delhi International Airport Ltd. have already handled transshipment cargo from Bangladesh.

But how did the Indian air cargo market do it?

Becoming one of the most promising markets in the global scenario since the pandemic began, the potential of India’ air cargo industry reflects its role as a global economic driver. India experienced a positive trend with an increase in international traffic volumes of about 10%, suggesting that despite the global decline, India’s air cargo industry is showing resilience and potential for growth.

Moreover, “There is huge amount of investment happening in Indian manufacturing which will keep the Indian domestic cargo to grow Y-O-Y over the next decade. The Indian express and e-commerce business are giving tail winds to domestic air cargo. As demand stabilizes in the consuming economies, we can expect the international air cargo to see a positive curve again. This should happen by Q3 of 2023-24,” says Yashpal Sharma (Managing Director, Skyways Group and President, Air Cargo Forum India).

“The way the Indian air cargo industry has shaped itself in the pandemic years and given its best to the world is undeniable. We have witnessed the highest market tonnage towards the end of 2022, with major commodities moved to be pharmaceuticals, chemicals, electronics, and auto parts from the major airports,“ says Ashish Asaf (Group Managing Director & CEO, S.A. Consultants & Forwarders Pvt. Ltd.)

Quoting an example by Satyaki Raghunath (Chief Strategy & Development Officer, BIAL) BLR Airport, which accounted for an 11% share among Indian airports and a 36% share among South Indian airports before the pandemic, has seen its market share increase to 13% among Indian airports and 41% among South Indian airports post-COVID. Its focus on the cargo business has contributed to its success and has further bolstered the industry.

BLR Airport also maintained its leading posi[1]tion as India’s top airport for handling perish[1]able cargo for two consecutive years, process[1]ing over 52,366 metric tonnes (MT) of perish[1]able cargo during FY-2022, which contributed to 28% of India’s and 41% of South India’s mar[1]ket share, showing a 9% growth compared to the previous year. The airport also reported a 14% increase in the processing of roses during this year’s Valentine’s season.

The entry of Indian carriers in the freight operations and increased share by international airlines in the market has also been a welcomed and encouraging move for the industry.

Five Indian carriers now operate freighters, of which three – IndiGo, Quikjet, and Pradhaan Air Express – commenced operations in the last 12 months using narrow-body freighters. The other two are BlueDart Aviation and SpiceJet.

Mr Sharma adds, “With the inclusion of new freighter operators like Pradhaan Air and Quikjet, there is expectation of Indian market to have long term sustainable capacity which will be great for Indian shippers. But for the freighters to go up, the Government must re[1]look their policy of duty on aircraft leasing as this is a big deterrent for this industry.”

Ramesh Mamidala (Head Cargo Commercial, Tata Air India Ltd.) said, “Now all the airlines in the country have big plans for cargo, expansion of fleet is happening, there is more capacity coming in.”

“India’s strategic location at the crossroads of major air routes between Europe, Asia, and North America gives it a competitive advantage in terms of connectivity and accessibility. This has made India a key player in the global air cargo market,” said Xerxes Master (President, AMTOI).

Deepak Kumar (Country Head- Air Logistics, Kuehne+Nagel), highlighting the factors at play in driving the growth in the sector said, “Economic growth in the post-pandemic world, increasing consumption and growth of various businesses & MSMEs are expected to be the major influencers for the increased movement of air cargo across Indian airports. As economic activities pick up in the country, the air freight movement will also lead to higher growth.”

Encouraging businesses to manufacture in India and to stimulate targeted investments in manufacturing, “Initiatives like ‘Make in India’ and ‘Production Linked Incentive’ have positioned India as an attractive destination for manufacturing, further bolstering the air cargo industry,” said Kamesh Peri (CEO, Çelebi Delhi Cargo Terminal).

Overall, “the focused approach in the manufacturing sector propelled by the production capacity expansion, government policy support, start led investment growth in the priority sectors of mobile phones, e-commerce, engineering and automotive OEM’s has opened new geographies and segments, said Ruby Abidi (Director Air Cargo, Cargo Partner Logistics India).

“E-commerce retailers are increasingly using air cargo to deliver goods to their customers quickly and efficiently. India has become the second-largest exporter of mobile phones. So there is a good opportunity with electronics, a fast-moving market. Indian GDP is robust, undoubtedly. The expected growth 26.19% CAGR from 2022 – 2030,” says Satish Lakkaraju (Global head-Pharma and Air Cargo, WIZ Freight).

Videh Kumar Jaipuriar (CEO, Delhi International Airport Ltd.) says “This will be facilitated by major infrastructural reforms and the addition of 33 new domestic cargo terminals by 2024- 2025. Currently, foreign carriers handle more than 95% of international freight, but Indian carriers are increasing their cargo capacity, both domestically and internationally. Key additions include Pradhan Air, Quick Jet, and Indigo. The merger of Air India with the Tata Group is also expected to increase Indian carriers’ air cargo market share.”

This is an abridged version of the Cover story published in the June edition of the Logistics Insider Magazine. To read the complete story, click here.

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