G20 disruptions might dampen renewed optimism among Indian airfreight forwarders

In the midst of a turbulent year marked by fluctuating demand conditions, Indian airfreight forwarders are finally catching a glimpse of brighter prospects. However, there is a general sentiment that the supply chain disruptions looming in the run-up to the G20 Summit could tamper their optimism.

Market sources have indicated that a resurgence in e-commerce shipments and seasonal holiday sourcing from the US and the EU have given the industry a modest boost.

Joy John, Director of Sea and Air Freight at Jet Freight Logistics, cautiously remarked, “The overall market sentiment is somewhat more positive than recent downturns.” He also pointed out that amid generally stable freight rates, fuel surcharges have contributed to increased pricing for select carriers.

One noticeable development is the tightening availability of belly space on many routes, primarily due to heightened demand for check-in baggage from Indian students heading overseas for their studies. Mr. John anticipates that festive cargo loads will start to ramp up around the middle to end of September.

Export demand for the US and EU markets has witnessed a significant rate increase, according to Ligi Logistics. However, the inbound flows to Mumbai and Delhi may be affected by the monsoon season. Pradeak Krishnamurthy, Joint MD at a Chennai-based company, expressed concerns about congestion at transhipment points, resulting in delayed arrivals at destinations. He specifically mentioned congestion issues at Delhi Terminal and advised making advance bookings with carriers.

Vineet Malhotra, Co-founder and Director at Kale Logistics Solutions, attributed the rise in demand to India’s burgeoning status as an e-commerce and manufacturing hub, particularly for fashion and textile products dominating exports to the US. He estimated that Indian cross-border e-commerce trade had reached around $68 billion, citing the policy support of 100% FDI in B2B e-commerce verticals as a catalyst for growth.

Despite the surge in demand, airlines in India are bracing for further disruptions due to government-imposed service restrictions in preparation for the upcoming two-day G20 summit in Delhi on September 9-10. A substantial number of flights, including cargo connections, to and from the capital may face cancellations or rescheduling in the coming days. “Freighter service permissions, including scheduled ones, have been suspended,” reported a forwarder based in Delhi, adding that while these disruptions may be brief, capacity pressure could persist for a few weeks.

In addition to air travel restrictions, traffic authorities have imposed limitations on goods vehicle movements and adjusted some 200 train schedules connecting Delhi in accordance with government directives.

However, Jitendra Srivastava, CEO at Mumbai-based Triton Logistics & Maritime, remains optimistic, assuring that any disruption will have a short-lived impact on cargo flow. “For multimodal logistics solutions, we will keep cargo flowing for our customers,” he affirmed.

The most recent data from the TAC Index, published yesterday, reveals a 13% increase in air freight rates from India to Europe since August 21, reaching $1.29 per kilogram, while rates to the US have risen by 2.3% to $2.15 per kilogram.

Credits: Loadstar