Although India represented less than 1 percent of global air cargo traffic in 2023, the country’s domestic air cargo market is set to explode in the next few decades.
According to Boeing’s World Air Cargo Forecast released in November, the aircraft manufacturer projects India’s air cargo volume to quadruple over the next 20 years, with compound annual growth rate (CAGR) reaching 7 percent.
The market’s growth prospects are well ahead of worldwide projections, where global volumes moved through 2043 are expected to more than double along with a CAGR of 4 percent.
Economic growth, expanding manufacturing, and an enormous domestic consumer market are all anticipated to propel the country’s air cargo capabilities in the coming years, the Boeing report said.
However, the biggest factor in the forecasts comes from the growth in India’s nascent e-commerce market.
“Rising household incomes, high internet penetration, and widespread smartphone adoption are powering a booming e-commerce market. Although still relatively small in volume compared to established e-commerce markets like China, the U.S., or the EU, Indian e-commerce volumes are growing faster than almost anywhere else at more than 25 percent per year,” the report said. “Higher household incomes across the board, along with a rising affluent class, will drive explosive e-commerce growth and demand for distribution via domestic air cargo.”
Major logistics players are getting in on the potential growth of the Indian market. Amazon’s recently launched air cargo division for third-party logistics providers and freight forwarders is offered across three major areas: the U.S., the E.U. and India.
Last week, FedEx introduced a new air route connecting its Asia Pacific hub in Guangzhou, China to Bengaluru, India as it looks to capitalize on growing volumes between the two countries starting in the holiday season. The service operates five times a week, cutting transit times by one day and ensuring next-day delivery to South India, the company said.
U.K.-based Virgin Atlantic Cargo is planning to boost its cargo capacity in and out of India by around 40 percent in 2025, with the new belly space totaling a 336 percent increase over 2019 levels. The airline added a second daily service from London to Mumbai in late October, complementing its two-a-day flights to Delhi and daily Bengaluru service.
Moves like these are expected to power further growth in global air cargo capabilities. According to Boeing, the global freighter fleet is forecast to grow by approximately 66 percent from 2,340 airplanes in 2023 to 3,900 airplanes in 2043.
However, the logistics companies expanding their air cargo fleets comes in response to customer cargo demand.
Count Inditex as one retail giant contributing to India’s anticipated air cargo growth—largely to avoid shipping delays due to the lingering Houthi attacks in the Red Sea. In March, Inditex said it saw one-week product delays due to the Red Sea disruption.
The Zara parent sent 3,865 shipments by air from India in the 12 months through August, a 37 percent increase on the previous year, according to a Reuters analysis of shipment records from trade data provider ImportGenius.
Nearly 87 percent of these shipments (3,352) were sent via air since Jan. 1, as more container shipping companies decided to avoid the Suez Canal.
The share of air freight in Inditex’s shipments from India increased to 70 percent in the first eight months of this year, up significantly from 44 percent last year, according to an analysis of customs data which Swiss watchdog group Public Eye shared with Reuters.
That same share out of Bangladesh rose to 31 percent from 26 percent in the year-ago period, the group said.
As India’s role as an air cargo exporter accelerates, the Asia Pacific region is still dominating market share and overall growth in the sector.
The region’s manufacturing dominance has contributed 56 percent of the global 12 percent year-on-year increase in tonnages in the first 10 months of 2024, according to analysis by WorldACD Market Data.
With that, Asia Pacific’s share of worldwide outbound air freight tonnage has risen two percentage points to 41 percent from 39 percent last year. The number further distances the region from Europe (24 percent), Central and South America (14 percent) and India’s market, Middle East & South Asia, which has 9 percent of global outbound volumes.
In the short term, India may see more of a boost in outbound air cargo as concerns of a port strike rear their head this month. Six unions comprising dockworkers at 12 major ports in the country said they would go on an indefinite strike Dec. 17 due to the reported failure of the government to implement provisions initially agreed to back in August.
With protests already scheduled for Thursday and Dec. 10 at the major ports, shippers may have more incentive to shift some ocean freight over the air instead.
