Global economic slowdown and Red Sea crisis have resulted in exporters moving towards air cargo for faster deliveries. But it seems the industry is finding it hard to tackle the issues of capacity crunch, high costs and operational efficiency. Airlines, terminal operators, ground handlers, and freight forwarders must re-work their logistics strategies and come up with solutions, investment in technology and operational efficiencies.
Ritika Arora Bhola
The ongoing geopolitical tensions such as Russia-Ukraine war, Red Sea conflict, port closures from Cyclone ‘REMAL’ in Bangladesh, and international recession have sent shockwaves to the global air cargo and logistics sectors. The ongoing disruptions have impacted the global trade flows and disrupted the fluidity of the international supply chains, questioning the security, and integrity of cargo transportation.
Specifically with the sea routes experiencing continuous disruptions and diversions, leading to over 15 to 20-day delays resulting in delays and losses, the demand for air cargo services has escalated. Cargo towards Europe and North American cities has become more expensive as the ships are taking a longer route—around the Cape of Good Hope. So, exporters of mainly high-end fashion brands, automotive companies and consumer durable firms are exploring newer options and moving towards air cargo as a preferred option as buyers are demanding faster delivery of goods.
Dedicated freighters or belly holds of wide-space passenger aircraft are being utilised over the decks of ships and container vessels. But this sudden increase in global air cargo demand has resulted in airlines and freight forwarders facing capacity crunch, increased air fuel prices, and inflated air freight costs.
No doubt, air cargo is increasingly being preferred over sea cargo, particularly for high-value and time-critical shipments, but it seems the industry is finding it difficult to meet the sudden surge in demand. The airlines are veritably struggling to accommodate the increased volumes, leading to scarcity crunch for cargo, while the exporters complain about the high rates.
This imbalance between supply-demand is significantly impacting the global air cargo trade flows. Experts suggest it is high time to make the best use of the opportunity that has occurred due to the crises and consider it as a blessing in disguise.
The airlines, terminal operators, ground handlers, freight forwarders and the like must re-work their supply chain and logistics strategies and come up with innovative solutions, investment in technology and operational efficiencies in a bid to combat the challenges. The airlines and cargo carriers may also need to adjust and reassess their flight routes in order to navigate the geopolitical challenges.
Firms turning to air cargo for supply chain continuity
Satyaki Raghunath, COO, BIAL
Shift from sea cargo to air cargo is the latter’s ability to offer faster transit times. Even if it involves a few transshipments, air cargo will ensure timely delivery of goods. Air cargo provides reliability and security, making it a preferred choice for high-value and time-sensitive shipments. The air cargo ability to provide better temperature-controlled transport is beneficial for perishables, ensuring they arrive in optimal condition. BLR Cargo has recorded a total throughput of 439,524 MT in 2024, reflecting 7.1 per cent in the previous year. Firms are turning to air cargo to maintain supply chain continuity.”
Fostering resilience & sustainability in air cargo
Vikram Mansukhani, Chief Operations Officer, Blue Dart Express
The current disruptions in the air cargo market encompass COVID’s impact on volumes and capacity, shifts in global trade patterns, and surge in e-commerce demand. Blue Dart seamlessly links its fleet of eight Boeing aircraft for express connectivity across India. The company’s extensive network spans 55,600 locations nationwide, ensuring accessibility and reliability. Capacity constraints, geopolitical events, labour shortages, and environmental concerns add to the complexities. Balancing these issues requires adaptability, innovation, and strategic planning. Blue Dart’s leadership and ‘people first philosophy’ support its pillars, fostering resilience, sustainability, and competitiveness in air cargo.”
Geopolitical chaos results in supply chain bottlenecks
Prediman Koul, Executive Director & COO, Jeena & Co.
Airlines halted flights to conflict zones and planned detours, resulting in longer routes and reduced payload capacity. Current port congestion and the Red Sea conflict has led to ocean freight shipments being ferried in air cargo. Changes in airline networks catering to demand impact capacity. Freighters are in demand, but they are limited in numbers. Since converting pax planes into freighters is time-consuming, the rise in demand for products such as pharma in India has poor handling facilities and ground infrastructure, which has caused supply chain issues. Rising fuel, handling costs and high demand have led to increased air cargo rates.”
Firms opt for lesser cargo loads to mitigate risks
Huned Gandhi, Managing Director, Air and Sea Logistics, Indian Subcontinent, Dachser
There has been a preference for air cargo over ocean cargo during the poast some months due to Red Sea crisis, which has caused delays and increased transit time. The industry has no choice, but to bridge the gap with air freight—this has caused a capacity crunch and increased costs for air freight. Much of the overflow seen into air freight is sea shipments getting diverted by air cargo. Amidst supply chain crisis, some businesses opt for smaller shipments to manage inventory levels and mitigate risks. Freight rates have seen
spiked on certain routes. With the rise in volume, ensuring operational efficiency has become paramount.“
Due to Red Sea, airlines facing capacity crunch
Kunal Maheshwari, Chief Growth Officer, Softlink Global
Demand for air cargo is outpacing available capacity, creating a squeeze. This imbalance leads to difficulties in securing space, raising freight rates. When volumes are high, specific routes might face limitations due to logistical constraints. The air cargo market navigates crisis in volumes, capacity, and transportation. Congestion in cities such as Delhi and Mumbai, is coupled with high rates in Southasia due to supply-demand imbalances. Cargojet’s new China-Canada charter services aims to address rising demand. To ensure smoother ops, leveraging advanced analytics and enhanced cargo management systems is essential for predicting demand shifts and optimising capacity utilisation.”
Air cargo preferred due to its speed, reliability
Satish Lakkaraju, Senior VP and Global Head-Air freight and Pharma, WIZ
The ongoing Red Sea crisis include fluctuating air cargo volumes, limited capacity, and logistical challenges. Factors such as geopolitical tensions, fluctuating fuel prices, and labour shortages contribute to these disruptions. Despite these issues, air cargo is preferred over ocean cargo due to its speed, reliability, and better access to remote destinations. Ongoing sea trade crisis in areas such as the Red Sea and Panama Canal have caused significant delays, making the faster and more reliable air freight an attractive option for businesses needing timely delivery of products. The containers shortage has only begun with longer transit time through Cape of Good Hope.”
Firms prefer air cargo to cut losses, meet deadlines
Jasraj S. Chug, Co-founder & Director, CargoFlash Infotech
Air cargo is favoured for several reasons. Firstly, it offers speed and ensures that goods reach their destinations faster than sea cargo. This includes perishables, pharma, and high-tech products, where delays could result in losses. Secondly, air cargo provides reliability and security, reducing damage or theft. Crisis, such as port congestion, labour strikes, and supply chain issues, have exacerbated delays and uncertainties due to the Red Sea crisis and the Suez Canal incident. The ability to bypass such crises ensures supply chains remain intact, and firms can meet their deadlines. While sea cargo remains the dominant mode of transport, air cargo is preferred for its speed and reliability.
It is time traders rework on supply chain strategies
Samir J Shah, Director, JBS Jeena Logistics
Red Sea chaos alone cannot be looked at in isolation. This apart, there are many geopolitical tensions that have resulted in change from sea routes to air. It is only a question of time when the problem may get solved. The trading community will have to re-work the supply chain strategies, including time frames, costs and manage it in a manner that the two modes get what is due to them. Air cargo is benefitted as large volumes are coming in, but as a mode of transportation it is more expensive than sea cargo. Air cargo does not account for large quantities, while sea accounts for very large shipments. So, the disruption is going to remain a very dynamic area and would continue for a long time.”
Air cargo crisis due to demand-supply imbalance
Dipen Lalsodagar, Deputy Director, Cargo Sales, Global Aviation
Due to sea trade crisis, exports are being moved to air between Asia to Europe and other routes. Main reason for air cargo demand is vessels detour around Africa resulting in delay and longer transit time. There is a huge demand for apparels and other consumer products, which needs faster connectivity. Main demand is from South Asia to Europe and quite a lot of cargo moves through Indian airports giving a boost to air cargo. Demand in e-commerce, perishables, mobile phones and pharma add to higher volumes. Disruption in air cargo is due to demand-supply imbalance. Reasons such as reduced workforce, delayed aircraft and its spares delivery delay airlines from resuming full operations.”
Safety of products takes priority over costs
Sunil Kohli, Managing Director, Rahat Cargo
Majority exporters of garments, machines, engineering goods, destined to Europe, USA, Canada do not take risk by shipping their goods via Red Sea. The safety and a timely delivery of products takes precedence over high costs via air freight. The firms, industries and global economies are seeking alternative solutions to ensure continuity of trade and minimise economic fallout and hence are switching to air cargo. Diversion of tonnage from ocean cargo to air has caused an imbalance between the availability of capacity vis-à-vis an inflated demand. The inflated air tariff has resulted in getting Indian exporters’ orders pruned by buyers who look at other countries to fulfil their needs.”
