The Red Sea Crisis Boosting Air Freight from India: A Game-Changer in the Making
In recent months, the Red Sea crisis has had a significant impact on air freight from India, with the country experiencing a more than doubled growth rate. This surge puts India on track to achieve its target of handling 10 million tonnes (MT) by 2030-31. The peak air freight reached over 3.5 MT in 2017-18, and post-Covid, the numbers have bounced back, reaching 3.5 MT once again. Yashpal Sharma, President of the Air Cargo Forum of India (ACFI), highlighted the importance of addressing key issues such as reducing trans-shipment time and allowing double dipping by foreign freighter aircraft to meet the set targets in the coming years.
Sharma stated, “Less than 2% of global freight is transported by air. Even a small shift following the Red Sea crisis could lead to a substantial increase in air cargo carriage. With a vast potential in India, we must overcome challenges such as speeding up trans-shipment processes that currently take 2-2.5 days.”
India’s air freight market presents a unique landscape, with international imports, exports, and domestic cargo sharing an almost equal distribution. While less than 15% of air cargo is carried by freighter aircraft, the rest is transported in the belly of passenger planes. Piyush Srivastava, Senior Economic Advisor in the aviation ministry, noted the rise in freighter aircraft during Covid, emphasizing the need for streamlining air freight processes and improving turnaround times.
India has made significant strides in air cargo development, with 70 airports equipped with cargo facilities. However, there is untapped potential due to challenges in transportation modes integration. The country’s ambitious projects like PM Gati Shakti, with investments worth Rs 13.5 lakh crore, aim to transform India into a major global supply chain hub.
The Red Sea crisis has accelerated the demand for air cargo services from India to key export destinations like the US, Canada, and Europe. In fiscal 2023, scheduled airlines transported nearly 698 thousand metric tonnes of domestic cargo. Presently, India’s airports have a combined handling capacity of around 6.5 million tonnes, with plans for expansion and modernization to reach the 10 MT target by 2030.
ACFI estimates India’s air freight market to grow from $12.41 billion in 2023 to $16.37 billion by 2027, with a compound annual growth rate (CAGR) of 5.7%. The sector is poised for significant growth, driven by emerging trends like e-commerce and express delivery services. As India positions itself as a key player in the global logistics landscape, the air freight industry is set to play a pivotal role in facilitating trade and economic growth.