News / Dramatic rise in air cargo rates as India braces for G20 and e-commerce push

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After battling weakening demand conditions over the past year, Indian airfreight forwarders are seeing some uptick in volumes and rates – but supply disruption, particularly during the G20 summit, could dim optimism.

According to market sources, resurgent e-commerce shipping and seasonal holiday sourcing from the US and the EU have boosted the industry, albeit moderately.

“The overall market scenario is a bit more positive than the recent lows,” Joy John, director of sea and air freight at Mumbai-based Jet Freight Logistics (JFL), told The Loadstar.

Mr Joy also said amid generally steady freight rate trends, fuel surcharges have pushed pricing up for some carriers.

“Belly space availability on many routes has tightened due mainly to additional check-in baggage demand from Indian students travelling across the borders for studies,” he noted.

“Festive loads are expected to start by the middle or end of September,” Mr Joy added.

Ligi Logistics reported that export demand for the US and EU had seen rates increase “drastically”, while inbound flows to Mumbai and Delhi could be affected by the monsoon season.

Pradeak Krishnamurthy, joint MD at the Chennai-based company, also reported some congestion. He explained: “Due to the unpredictable situation at transhipment points, cargo was being off-loaded and the ETA to the destination has been delayed.”

He specifically flagged congestion issues at Delhi Terminal and warned: “It is advisable to make advance bookings with carriers.”

Vineet Malhotra, co-founder and director at Kale Logistics Solutions, said demand was, in part, due to India’s rapidly accelerating potential as an e-commerce market and manufacturing powerhouse, particularly for fashion and textile products that dominate exports to the US. He put Indian cross-border e-commerce trade at some $68bn.

“With policy support of 100% FDI [foreign direct investment] permitted in B2B e-commerce verticals, we are opening doors to high growth in this sector,” said Mr Malhotra.  “E-commerce exports as a key driver of economic growth indicate a positive shift.”

In addition to higher demand, airlines out of India are bracing for more disruption from service restrictions put in place by the government to facilitate the two-day G20 summit in Delhi, scheduled for 9-10 Sept. A large number of flights, including cargo connections, to/from the capital could either be cancelled or rescheduled in the coming days.

“Freighter service permissions, including for scheduled ones, have been suspended,” a Delhi-based forwarder told The Loadstar.  “Though, admittedly brief dislocations, the capacity pressure could linger for a few weeks.”

Additionally, local traffic authorities have imposed restrictions on heavy truck movements and have pulled some 200 train schedules linking Delhi in line with government guidelines, sources said.

However, Jitendra Srivastava, CEO at Mumbai-based forwarder Triton Logistics & Maritime, told The Loadstar any disruption would have a short-lived impact on cargo flow.

“Due to safety reasons, there is a possible reduction of air cargo movement from Delhi Airport,” he said. “For multimodal logistics solutions, we will keep cargo flowing for our customers.”

According to the latest TAC Index data, published yesterday, air freight rates from India to Europe have risen 13% since 21 August, to $1.29/kg, while to the US they have edged up 2.3%, to $2.15/kg.

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