Page 18 - ITLN July - Aug 2023 for Magzter

Spotlight
Air Cargo

India bright spot for

global air freight

Indian air cargo industry is a rare ray of hope, hope of growth due to
multiple levers - economic growth, increasing EXIM trade and laser
focus of global companies on India for supplies as well as demand.

Jyothi Shankaran

lobal cargo revenue is generated on the domestic and the realistic in my view," says Horst. "India
expected to be $142 billion remainder on the international sectors, is not going to replicate the trajectory
in 2023, according to the Frederic Horst, Managing Director, Trade that China had in the past but I do
Glatest update from The and Transport Group said in his report expect a decent level of growth coming
International Air Transport Association India Air Cargo Outlook 2023. from the market – just not 20+ percent
(IATA), 31 percent lower than $207 Cargo handled across Indian airports per year for the next seven years."
billion in 2022 but well above $100 may touch 2.4-2.5 million tonnes in The air cargo industry in India has
billion earned in 2019. 2023 even as passenger/belly capacity come a long way with strong consumer
"Yields will be negatively impacted comes back, says Horst. "With 5-6 demand serving as the primary driver of
by two factors: (1) ramping- Indian conglomerates investing abroad, growth," says Deepak Kumar, Head, Air
up of passenger capacity which the India link is always going to be Logistics, India, Sri Lanka, and Maldives,
automatically increases available belly strong. So, India is in a good position as Kuehne+Nagel. "It is one of the most
capacity for cargo and (2) potential far as trade is concerned." competitive and growing markets in
negative effects on international International traffic in the first quarter the air cargo sector. Air freight traffic
trade of economic cooling measures of 2023 was up 8.3 percent but still between domestic and foreign airports
introduced to fight inflation." Yields down 14 percent compared to 2019, says has also experienced a significant post-
are expected to correct with a 29 Horst. "In 2017 and 2018, foreign carriers pandemic recovery resulting in faster
percent decline this year but remain moved about 79 percent of total traffic. product delivery to end customers.
high by all historical comparisons. In 2022, it was 87 percent, Horst added. "As economic activities pick up in the
"Yield increases of 54.7 percent were "The drop in Indian carrier market share country, air freight movement will also
recorded in 2020, 25.9 percent in 2021 was really driven by Jet Airways exiting lead to higher growth. E-commerce,
and 7.4 percent in 2022." the market. A lot will hinge on how much shifting consumer habits, and MSMEs
widebody belly capacity gets added by are expected to be the major factors as
India story bright Indian carriers. If Air India adds some more people have access to the Internet
Given the gloomy outlook, the Indian widebody freighters to its network then and a well-developed digital payment
cargo industry is a rare ray of hope, that will lead to a shift in the share as infrastructure that has spread across
hope of growth due to multiple levers - well. But foreign carriers will continue the country. The Indian air cargo industry
economic growth, increasing EXIM trade to dominate India – much like they offers new opportunities, and while
and laser focus of global companies on dominate other markets due to their important stakeholders like cargo
India for supplies as well as demand. networks." service providers, airlines, and
The Indian air cargo market generated airport operators are
2.2 million tonnes of traffic - 1/5th the 10 million tonnes by 2030 -
size of China’s and about 1/10th the Doable?
size of the U.S. air cargo market - in "That would require more than 20
2022 with about 30 percent of the traffic percent growth per year – that’s not