International air cargo volumes at Indian airports grew by 4.5% during the April-July period, a significant slowdown compared to the 19.9% growth recorded in the same period last year, according to data from the Airports Authority of India (AAI).
The moderation in growth comes after a strong performance last year, which was driven by disruptions in sea freight caused by Houthi-rebel attacks on vessels in the Red Sea. These attacks forced shipping lines to reroute via the Cape of Good Hope, leading to port congestion and a shift of cargo from sea to air to meet trade commitments. This shift had temporarily boosted air cargo volumes in India.
Indian Air Cargo Growth Returns to Single Digits
With the easing of sea freight congestion and the normalization of shipping routes, the urgency to rely on air freight has diminished. “What we are witnessing is not a decline, but a normalization, where ocean freight regains its share for non-critical shipments and air freight returns to its regular volumes,” said Deepak Kumar, national air logistics manager for Kuehne + Nagel.
During the April-July period, airports in Bengaluru, Delhi, and Hyderabad saw growth rates between 1.7% and 2.1%, a stark contrast to the 20%+ growth they experienced last year. Mumbai reported a 3.9% increase, while Chennai was the standout performer with a 17.1% year-on-year gain in international cargo.
Challenges Impacting Growth
Several factors have contributed to the slower growth in air cargo volumes. The withdrawal of transshipment facilities for Bangladeshi exports, announced in April by the Central Board of Indirect Taxes and Customs, has particularly affected Delhi and Kolkata airports. This decision followed demands from domestic apparel exporters and occurred amid strained India-Bangladesh relations.
Additionally, geopolitical issues and the imposition of higher tariffs by the United States have created uncertainty for exporters. India’s merchandise exports grew by 2.5% during the April-August period, with exports to the US rising 18% year-on-year. However, month-on-month exports to the US declined by 14% due to an additional 25% tariff on Indian goods.
Muted Outlook for the Rest of the Year
Typically, international air cargo volumes pick up after August, driven by export shipments. However, this year, growth is expected to remain subdued due to ongoing tariff uncertainties. “Many exporters are in a wait-and-watch mode, anticipating the removal of the extra 25% US tariffs and the early conclusion of a trade deal,” said Manoj Singh, a senior air cargo professional.
While the air cargo sector adjusts to these challenges, the normalization of trade routes and the easing of sea freight congestion signal a return to more stable, albeit slower, growth.