AIR CARG O WEEK


WEEKLY NEWS


freight solutions, which are crucial for high-value, time-sensitive goods. From pharmaceuticals to electronics and perishables, air cargo provides a critical service for


industries where speed is


essential. Moreover,


the rise of e-commerce has created significant


demand for cross-border trade and last-mile delivery solutions. As consumers expect faster delivery times, air freight becomes an increasingly important part of the supply chain. This has led to increased charter flights and the development of specialised cargo services catering to the needs of e-commerce businesses. India’s central location in the global supply chain also positions


BOON AND BANE BY Ajinkya GURAV


INDIA’s air cargo industry is experiencing an unprecedented boom in 2024, with a year-on-year revenue surge of 42 percent. This growth is being fuelled by both the rising demand for airfreight and the increase in passenger traffic. However, this success is part of a broader context shaped by global shipping disruptions and growing e-commerce.


Key drivers Several factors have contributed to the remarkable growth of air cargo in India. The ongoing Red Sea shipping crisis has forced companies to seek alternatives to ocean freight, as shipping vessels face longer routes around Africa. As a result, many


businesses are turning to air cargo to avoid the extended lead times associated with maritime trade. This shift underscores air cargo’s unmatched reliability and speed, particularly when businesses cannot af ford delays. In addition, government policies aimed at promoting trade and


infrastructure development, alongside the burgeoning e-commerce sector, have pushed the industry to new heights. With global trade in flux, the need for faster, more ef ficient logistics solutions has never been more pressing. The result is a booming demand for air freight, with the global airline market expected to grow from US$553.9 billion in 2022 to US$735 billion by 2030.


Merits in the sector The growth of air cargo in India opens up numerous opportunities. Businesses now have access to faster, safer, and more reliable


it as a strategic hub for air cargo. As businesses look to diversify their logistics networks and avoid over-reliance on sea routes, India’s airports are set to play a key role in global trade routes, especially within Asia and between Asia and Europe.


Navigating challenges Despite these opportunities, the air cargo sector faces significant operational challenges. One of the most pressing is the new export Goods and Services Tax (GST), introduced in October 2022. Under the new regulations, exporters must pay an 18 percent GST on goods before they receive payment from clients. For freight forwarders and intermediaries, who often work on credit, this creates a cash flow issue, putting financial pressure on exporters. Additionally, India’s airport infrastructure remains a major


bottleneck. While metro cities like Mumbai, Delhi, and Bengaluru boast comprehensive cargo facilities, many


regional airports


still lack the necessary infrastructure to handle large volumes of freight ef ficiently. Airport operators are struggling to keep up with the growing demand, and many are calling for investments in more robust cargo processing capabilities. The limitations of India’s infrastructure could hinder the


industry’s ability to capitalise fully on the growth opportunities. Without improvements in cargo handling facilities and capacity, there is a risk that the current growth trajectory could slow down, af fecting the industry’s long-term potential.


07


www.aircargoweek.com


7 OCTOBER 2024 ACW


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