Air Cargo Rates Soar: India’s Logistics Sector Resilience Shines Amid Festive Demand Surge

In a significant turn of events, airfreight forwarders in India are experiencing a marked surge in cargo rates, both inbound and outbound, underscoring the resilience of the country’s supply chain. This surge is primarily attributed to heightened demand during the festive season, propelling air cargo rates from India to North America by an impressive 8% to 10%, and to Europe by approximately 10% compared to the comparatively lean period between June and August.

The surge in inbound air freight rates has been even more pronounced since the end of September, witnessing an 18% increase in the North America-India sector and a 15% average rise in Europe-India rates.

The festive season, characterized by an upswing in e-commerce activities, has played a pivotal role in this development. Forwarders are now anticipating further rate hikes as the perishables trade season approaches.

Despite facing short-term challenges, forwarders remain optimistic about long-term improvements as supply chains stabilize and economies adapt to the evolving landscape. However, industry experts caution that a return to pre-pandemic rate trends remains a distant prospect.

Joy John, Director of Sea and Air Freight at Mumbai-based Jet Freight Logistics, shared insights with The Loadstar, noting that airfreight rates in and out of India have stabilized in recent weeks after a festive-driven surge in volumes. Mr. John highlighted the market’s bullish outlook through mid-December, attributing the steadiness to carriers adding more capacity on connections out of India.

Vineet Malhotra, Co-founder and Director at Kale Logistics Solutions, echoed these sentiments, citing a noteworthy 12% overall increase in rates compared to September 2022. Domestic cargo within India experienced a significant upswing, with Mumbai Airport reporting an impressive 87% year-on-year increase in volumes last month.

Recent data also points to a 6% rise in Indian merchandise exports in October, signaling positive momentum in the sector. A. Sakthivel, President of the Federation of Indian Export Organisations, highlighted the resilience exhibited by the sector, suggesting that exports are on a trajectory toward recovery. He acknowledged that demand remains a challenge in certain markets due to high inventory, and growth may indicate a shift in market share from other countries.

However, Mr. Sakthivel emphasized that geopolitical unrest in West Asia, arising from heightened hostilities between Israel and Palestine, introduces a layer of uncertainty and skepticism in global trade circles. He asserted that the conflict would have limited impact on India’s export/import flows unless it escalates and draws more countries into the turmoil.

On a positive note, there are indications of potential growth in Indian air cargo capacity as global investors position themselves to capitalize on the country’s promising economic outlook. Middle East-based Vaayu Group’s recent acquisition of a stake in Pradhaan Air Express, an all-cargo airline startup in India, suggests further expansion in the Indian airfreight market. This strategic move aligns with the growing confidence in India’s economic trajectory, making it a focal point for global investment in the logistics and supply chain sector.