Air Cargo Congestion and Rising Rates Plague Indian Subcontinent, Experts Show Concern

​[[{“value”:”

According to recent statistics from Xeneta, air cargo congestion, and escalating air freight rates – a situation exacerbated by the imminent onset of religious festivals – are creating a stir for forwarders operating within the Indian subcontinent. Data reveals a significant surge in rates, particularly from India to Europe, posing challenges for supply chain stakeholders.

Xeneta reports that air freight rates from India to Europe have skyrocketed by 75% month-on-month, reaching $2.85/kg for the week ending 10 March. Similarly, rates from Bangladesh to Europe surged by 29%, peaking at $3.44/kg. Wenwen Zhang, an airfreight analyst at Xeneta, attributed the spike to a notable increase in demand, particularly in the apparel sector. Zhang emphasized that the surge surpassed last year’s peak week in early June by 29%, underscoring the unprecedented demand dynamics currently at play.

Further analysis of the information underscores the broader impact, indicating significant increases in general cargo spot rates across India, Bangladesh, and Sri Lanka. Rates surged by 81%, 40%, and 55% respectively in the week ending 3 March compared to four weeks earlier, primarily driven by robust demand for apparel products from these markets.

Industry experts seem concerned that the situation may exacerbate in the coming weeks, citing the upcoming Ramadan and Easter festivities. Ramadan, in particular, is anticipated to disrupt productivity in factories and logistical connections in the Middle East, exacerbating the existing challenges. The ripple effects of this congestion are being felt beyond the Indian subcontinent, with Dubai experiencing an influx of cargo from India. This surge has placed unprecedented pressure on traditional origins in South-east Asia, hinting at an imminent rise in rates from East Asia to Europe, potentially exceeding $5 per kg.

While rates from Dubai to Europe have seen a modest 10% month-on-month increase to $1.24/kg, rates to the US surged by 12% to $2.52/kg. A report from Transport Intelligence sheds light on the underlying factors, attributing the surge in demand from specific Asian markets such as Bangladesh and Vietnam to the aftermath of the Suez Canal crisis. Producers of clothing and consumer goods have resorted to airfreight to expedite their shipments to European markets, albeit these markets remain exceptions.

Despite challenges, sustained demand from India remains a significant driver of air freight volumes. The country’s consumer-driven market, coupled with growing investments in sectors like electronics, underscores its pivotal role in the air cargo landscape.

While rates from Sri Lanka to Europe have remained stable, they surged by 19% to the US, mirroring the upward trajectory seen in rates from India and Bangladesh to the US. Hans-Henrik Nielsen, global development director at CargoGulf, shed light on the broader regional dynamics, noting a 30% increase in air rates from China and South-east Asia over the past two weeks. Nielsen highlighted the simultaneous decline in sea-air rates ex-China, providing some relief amid escalating air freight costs.

“}]]