India on Path to Become Most Promising Air Cargo Market in 2024

Air cargo, the relatively smaller cousin of commercial aviation has slowly and steadily made its mark as one of the most essential mediums of transporting goods and services. Rarely do we stop to appreciate the logistics, the workforce behind this huge industry that ensures most of our basic amenities reach us on time. In this article we will catch a glimpse of India’s bludgeoning air cargo market, its size, freighter fleet, technological advancements and much more...

On one hand as the global Air Cargo market is anticipated to grow at a considerable rate between 2024 to 2031, India has grabbed this opportunity by both hands to not just develop but become one of the top five freight markets by 2025 and has set an ambitious target of 10 million tonnes for Indian air cargo to achieve by 2031 from the current 3 million tonnes. The government is doing everything in its power to make this a reality.

According to the recent forecast by Research and Markets, India’s Air Freight Market is estimated to be $13.08 billion in 2023 and is expected to reach $17.22 billion by 2028, growing at a CAGR of 5.65 per cent.

GLOBAL AIR CARGO MARKETS ENTER 2024 WITH CAUTIOUS OPTIMISM, INDIA MARCHES HEAD-ON WITH RESILIENT PERFORMANCE

However, Xeneta advises the global air cargo industry to enter the year 2024 with cautious optimism. Analysing the 2024 market further Niall van de Wouw, Xeneta’s Chief Airfreight Officer says that calling 2024 as the new dawn for air cargo would be too optimistic but it is the start of a new cycle for airline, forwarders and shippers. “They are appreciating the stability returning to the market so they can more accurately predict the transportation costs for the products they are selling.”

As compared to global air cargo industry, the Indian air cargo sector has faired really well, claims industry experts. Most of the Indian air freighters anticipate a more resilient performance going ahead in 2024. “At Continental, we believe the air cargo sector has seen immense growth in 2023, yet challenges such as subdued demand during peak seasons and concerns over elevated airfares evident,” says Vaibhav Vohra, Managing Director at Continental Carriers. “Despite a dip in air cargo during festive peak times and uncertainties surrounding sustained higher prices as potential hurdles, we anticipate a more resilient performance in 2024,” he further adds.

Further elaborating his point with examples Vohra continues to state various factors leading to his optimistic outlook. Some of those factors are

• The anticipated acceleration of global economic recovery is poised to drive increased demand for cross-border goods transportation.
• As businesses rebound from the challenges of the previous year, there is a projected surge in trade activities, inherently amplifying the demand for air cargo services.
• Industry’s unwavering commitment to sustainable practices and the integration of eco-friendly technologies align seamlessly with broader global trends.

This dedication holds the potential to attract businesses actively seeking environmentally conscious transportation options, further fortifying the positive outlook for the air cargo sector in 2024.

Vohra’s opinion is seconded by Keku Bomi Gazder, Managing Director & Chief Executive Officer at AviaPro Logistics Services Pvt Ltd. “Despite a lukewarm 2023, I am cautiously optimistic about the air cargo sector’s performance in 2024,” Gazder adds thoughtfully. Speaking about his strategies in 2024 to tackle various challenges he adds, “Our strategy involves a multi-faceted approach. We anticipate a gradual recovery as global economic conditions improve,”

India’s air cargo industry is experiencing significant growth. This growth is projected to continue, with India aiming to become one of the top five freight markets by 2025 and achieve 10 million tonnes of air cargo by 2031.

The increasing globalisation and e-commerce trends offer growth opportunities. “However, we acknowledge potential headwinds, such as fuel price volatility and geopolitical uncertainties. Rigorous cost management, route optimisation, and customercentric services will be our focus areas to ensure a positive outcome,” Gazder further adds.

“The air cargo industry in India has demonstrated remarkable performance in the year 2023, and the outlook for 2024 is equally promising,” says Anto Bright, Founder-Owner of SKYBHEX, an independent cargo charter service provider. He further goes on to praise New Logistics Policy and PM Gati Shakti that has placed India in a favorable position to become a leading global logistics hub.

India’s strategic regulatory reforms and infrastructure development initiatives, including the affordable and efficient solutions offered by the country, which align with sustainable practices, are undoubtedly contributing to its steady growth in the industry.

AIR CARGO AND TECHNOLOGY

The air cargo industry in India is undergoing a significant technological transformation, placing sustainability at the forefront of supply chain management. This shift is characterised by innovations and advanced logistics solutions aimed at boosting operational efficiency, cutting costs, and enhancing overall competitiveness.

Key technologies like Artificial Intelligence (AI), the Internet of Things (IoT), Blockchain, and Machine Learning are poised to redefine logistics practices, ushering in a more eco-friendly and efficient future. This has enabled better tracking and visibility of goods, reduced waste and emissions, and improved efficiency. These technological advancements have facilitated better tracking of shipments, reduced transit times, and optimised routes ultimately leading to reduced fuel consumption and emissions.

Speaking about modern & smart warehouses Vohra stresses the need and importance of sustainability that is gaining global prominence. “At Continental, our strategic initiatives include collaborating with customs authorities for efficient customs deployment at our Air Freight Station (AFS).” Vohra also plans to implement a Customer Relationship Management (CRM) system to enhance their ability to track client interactions and preferences. “This system aligns with our commitment to excellence and sustainability in the evolving landscape of the air cargo industry,” Vohra further adds.

Gazder also stresses importance on the adoption of cuttingedge supply chain management tools. “Blockchain ensures transparency and security in transactions, while data analytics enables us to make informed decisions.” Attaching exceptional importance sustainability, Gazder adds “Sustainability is a prime focus, with investments in fuel-efficient aircraft, green packaging, and environmentally conscious operational practices.”

Bright explains this with an example. Today, cargo containers are installed with IoT sensors to provide real-time information on location, temperature, and humidity, ensuring the quality and safety of the cargo. Furthermore, blockchain technology provides a transparent and secure system for monitoring the movement of goods, reducing the risk of fraud, and ensuring compliance with sustainability regulations. AI can assist businesses in responding to disruptions with agility, making them more resilient and more carbon efficient.

Thus, with the entry of advanced technologies like artificial intelligence, IoT, cloud computing, robotics, and blockchain in supply chain management, the future of the industry looks promising.

IS INDIA TECHNOLOGICALLY AT PAR WITH THE GLOBAL AIR CARGO INDUSTRY?

Indian air cargo industry has made remarkable strides in aligning its air cargo industry with global technological standards. India’s transformative journey over the past few years is evident in its rapid technological development and heightened industry awareness. Vohra claims that at present, the air cargo business in India stands as one of the most competitive and fastest-growing segments, projecting a bright future.

According to a recent report by Research & Markets, in a significant leap in India’s air cargo market, is estimated to reach $17.22 billion by 2028, growing at a commendable CAGR of 5.65 per cent. This surge is attributed to strategic initiatives focusing on the development of airport infrastructure, logistics parks, and extensive road connectivity projects across the nation. The production-linked incentive (PLI) scheme covering 15 manufacturing sectors further adds impetus to the growth of air cargo operations in India.

Technological advancements have played a pivotal role in streamlining previously cumbersome processes, rendering them efficient, swift, and virtually error-free. Vohra states that in today’s times traditional modes of cargo transportation are giving way to modern, technologically advanced methods, marking a significant shift in the industry landscape. Its influence spans from revenue management to the formulation of rules and regulations for warehouses.

Vohra further hails technology to reduce errors and places a heightened emphasis on customer-oriented operations and relations. However, going a step ahead, Gazder feels that India still has a long way to go, “While India has made commendable progress in adopting technology, we recognise the need for further advancements to align with global standards,” Gazder assets. Explaining his point with an example Gazder adds that initiatives like AI integration for predictive analytics, automation in cargo handling for efficiency, and robotics to streamline operations need to be integrated in India’s supply chain. He further goes on to advice India’s cargo players to collaborate with technology partners and increased investment in R&D as it will eventually be pivotal in ensuring that India remains technologically competitive.

Echoing Gazder views Bright confirms that although India has made significant progress in recent years in the air cargo sector, it still has a long way to go to be at par with the global air cargo industry. “India is facing challenges like outdated infrastructure, lack of automation, and complex regulatory procedures,” Bright adds. He further lays emphasis on various government schemes and initiatives to address the above issues.

With the implementation of recent technologies and process improvements, India is expected to catch up with the global air cargo industry in the coming years and carve a niche for itself on the global stage as an emerging leader in the air cargo industry.

CURRENT CHALLENGES GRAPPLING THE AIR CARGO SECTOR

In 2024, the air cargo sector in India faces several challenges that necessitate strategic attention. The challenges range from rising fuel prices to security concerns, inventory management policies, competition from other modes of transport, and industry consolidation.

• Some specific challenges facing the air cargo sector include inefficient infrastructure, lack of proper technology, high operational costs, and the need for a skilled workforce.
• Bright points the attention to regulatory challenges such as complex customs procedures and restrictions on exports and imports.
• The issue of grounded unsafe aircraft is a significant concern, impacting financial performance and operational reliability across the industry.
• Vohra signals one of the major challenges as supply chain disruptions that pose additional hurdles, affecting the timely delivery of aircraft and creating bottlenecks in meeting the increasing demand for air cargo services. Gazder also asserts that global supply chain disruptions and geopolitical uncertainties continue to impact operations.
• The emerging duopoly in the Indian aviation market, dominated by key players, raises structural concerns that may limit healthy competition and innovation.
• Moreover, India’s low per-capita penetration of domestic air cargo signals a gap in realising the full potential of the domestic air market compared to its global counterparts.
• Challenges such as inflated growth projections, tough entry barriers, high fuel prices due to excessive taxes, and outdated aviation regulations further impede sector growth. Addressing these multifaceted challenges collectively is crucial for the air cargo sector to thrive in the evolving landscape of 2024.

Addressing these challenges requires collaboration with regulatory bodies, investments in infrastructure, and a proactive approach to talent development. However, the Indian government and the industry have taken initiatives to address these issues coupled with recent technologies and process improvements, India’s air cargo industry is predicted to grow by leaps and bounds in the upcoming years, allowing it to catch up with the global market.

LATEST TRENDS IN AIR CARGO INDUSTRY

Indian air cargo industry is driven by high demand in allied sectors such as e-commerce, pharmaceuticals, manufacturing, electronics and agriculture and is currently experiencing a period of significant growth and transformation, with a strong focus on technology and innovation. Some of the common trends seen across the globe in air cargo space are

• One of the latest and most promising trends in the industry is the implementation of blockchain technology to increase transparency and security in the supply chain. This innovative technology has the potential to revolutionise the way cargo is tracked, monitored, and delivered, and is already being adopted by leading players in the industry.
• Bright places sustainability as one of the most trending air cargo practices. “There is a growing emphasis on sustainability, with a shift towards cleaner and more eco-friendly technologies including the use of electric and hybrid vehicles, adoption of green logistics practices such as carbon offsetting and waste reduction, green packaging initiatives, fuelefficient fleet management and much more,” Bright adds.
• The rise of drone delivery services,
• AI and automation integration like leveraging AI for predictive demand forecasting
• The industry is increasingly adopting automation and artificial intelligence to improve efficiency and reduce costs. This includes the use of advanced analytics, predictive modeling, and robotic process automation, among other technologies.
• Improved cargo tracking and use of advanced cargo handling technologies like robotic automation,
• Cybersecurity measures and revamped supply chain strategies are just some of the trends reshaping the skies of air shipping.

“Embracing these changes will not only drive economic growth but also ensure that the industry navigates toward a greener and more efficient future,” says Vohra. “We are at the forefront of industry trends and recent collaborations with digital platforms have ensured end-to-end visibility enhancing operational efficiency and customer satisfaction,” affirms Gazder.

Overall, the Indian air cargo industry is poised for continued growth and transformation, with a range of exciting and innovative trends driving the industry forward, and as consumers and businesses continue to demand faster, safer, and more sustainable shipping solutions, the air shipping industry must rise to the occasion and embrace innovation to stay ahead in this everevolving landscape.

EMERGENCE OF NEW FREIGHTERS IN INDIA

Interestingly India witnessed the rise of many new freighter airlines like Pradhaan Air Express, IndiGo CarGo (the cargo arm of IndiGo), SpiceXpress (independent cargo arm of SpiceJet) and QuikJet. “The emergence of new freighter airlines in India signals a positive trajectory for the air cargo sector,” Vohra exclaims excitedly while Gazder calls it a dynamic development.

The demand for efficient and reliable cargo services is on the rise, and these new entrants have the potential to cater to this demand. The success of these new freighters however hinge on their ability to navigate operational challenges, leverage modern technologies, regulatory compliances and adapt to market dynamics. Gazder shares his mantra for the success of these airlines. “We believe innovative service offerings, and operational reliability will set the foundation for success. As a mature player, we closely monitor these developments and remain adaptable to evolving market dynamics,” he adds. All-in-all, a strategic approach, customer-centric services, and agility will be key factors determining their success shortly.

Initiatives like AI integration for predictive analytics, automation in cargo handling, and robotics are essential for India’s competitiveness in the global market

Further there is no denying the fact that Indian market is ripe for the rise of new entrants in air cargo sector. “As more consumers turn to online shopping, the need for timely delivery of goods becomes increasingly crucial. This could create new opportunities for freighter airlines that can offer reliable and cost-effective services,” adds Bright.

However, the competition in this market is intense, with established players already holding a lion’s share of the market. “Therefore, it will be essential for new entrants to differentiate themselves and provide unique services if they hope to succeed in this area,” advises Bright. It will be fascinating to witness how this market will evolve over time and how new airlines will create a space for themselves in this competitive landscape.

THE ROLE OF GOVERNMENT IN PROMOTING INDIA’S AIR CARGO INDUSTRY

The Indian Government is taking ample steps to ensure that air cargo industry is getting the right leverage that it needs to expand and grow not just in domestic market but also globally. However, Vohra feels that a strategic and interconnected approach is vital. “Prioritise substantial investments in upgrading air cargo infrastructure andmodernising airports to meet growing demands effectively is the need of hour,” Vohra adds.

INFRASTRUCTURE DEVELOPMENT

Bright throws light on the development of Grade A warehouses that can significantly impact the logistics and supply chain industry in India. Grade A warehouse is a modern, high-quality facility designed to meet international standards for storage and distribution. These warehouses are typically equipped with advanced technologies such as inventory management systems, automated storage and retrieval systems, and temperature control systems to ensure the safety and security of goods while in transit.

“Investing in Grade A can help reduce the risk of damage or theft of goods during transportation, as these warehouses are designed to be more secure and equipped with surveillance systems. Secondly, it can help streamline operations by providing easy access to inventory, thereby improving efficiency and reducing costs,” Bright asserts.

“Moreover, developing Grade A warehousing can also attract more investors and businesses to the region, as it signals a commitment to modernising and upgrading logistics infrastructure. This can help boost the local economy by creating jobs and driving economic growth,” Bright further adds.

Overall, investing in Grade A warehousing can help improve the quality of cargo operations in India, making it a more attractive destination for businesses and investors alike. Vohra further adds that government should streamline customs procedures, minimise bureaucratic hurdles, and implement transparent policies for swift clearance. Bright echoes this sentiment, he says that government can implement reforms like reducing taxes and customs duties on cargo shipments making it more affordable and attractive for businesses to use air freight services, increasing demand for air cargo carriers.

“The government can play a pivotal role by investing in infrastructure development, streamlining regulatory processes, and offering incentives for the adoption of sustainable practices,” Gazder suggests. “I actively engage with government bodies to advocate for policies that foster industry growth. Our recommendations include incentivising investments in modern infrastructure, streamlining bureaucratic processes, and offering tax incentives for sustainable practices.”

“Public-private partnerships are crucial, and we collaborate with the government to create an environment conducive to the longterm development of the air cargo industry,” Gazder concludes.

Government should also provide financial incentives, adds Vohra. Vohra suggests the following steps to be taken by the government to make the sector financially strong and self-reliant.

• Introduce incentives for businesses contributing to air cargo infrastructure, technology, research and development and workforce training.
• Provide tax breaks to airlines and logistics companies supporting sector growth. Implement strategic policies for market access and open skies agreements.
• Negotiate open skies agreements with key partners and explore alliances with global cargo operators to enhance the reach and competitiveness of the Indian air cargo industry.

This comprehensive and efficient approach, blending infrastructure development, regulatory efficiency, technological innovation, financial incentives, and strategic partnerships, will foster the exponential growth of India’s air cargo industry and facilitate seamless global trade.

Going ahead, the exponential growth in the APAC e-commerce market, particularly in India, is a significant opportunity for air cargo operations. “We are aligning our strategies to cater to the specific logistics needs of e-commerce, ensuring seamless last-mile deliveries, and leveraging technology for real-time tracking and order fulfillment,” Gazder says. “Collaborative partnerships with major e-commerce players position us to capitalise on this booming market,” Gazder signs off.

All-in-all it is safe to say that air cargo industry’s prospects for 2024 are positive and encouraging. However, India still lacks in long-distance cargo shipments to US and Europe where foreign carriers have forged their mark. India’s air cargo stakeholders with new players and new orders need to break this trend and venture boldly into international space in times to come.