(Photo : 4 air cargo psd)
4 air cargo psd

• India's air cargo industry is projected to grow by 9-11% YoY to approximately 3.6-3.7 million tonnes in FY25.
• This growth is expected to be driven by an 11-13% expansion in international cargo and a 4-6% increase in domestic cargo.
• The Red Sea crisis has significantly impacted seaborne cargo traffic, benefitting international air cargo traffic.
• The future of the air cargo industry in India looks promising, with a strong recovery from the Covid-19 pandemic and a positive impact from the Red Sea crisis.

India's air cargo industry is poised for a significant surge, with volumes projected to grow by 9-11% year-on-year to approximately 3.6-3.7 million tonnes in FY25, according to a recent report. This robust growth is expected to be driven by an 11-13% expansion in international cargo and a 4-6% increase in domestic cargo, as per the credit rating agency ICRA.

The report also suggests a stable outlook for airport infrastructure, with revenues likely to grow by around 12-14% YoY in FY25. This growth is anticipated to be supported by a sustained improvement in both domestic and international passenger traffic, an increase in tariffs at some of the major airports, and a ramp-up in non-aeronautical revenues.

Interestingly, the international cargo volumes have seen a healthy expansion of 18% in the second half of the last fiscal year (FY24), amid the Red Sea crisis, which began in October 2023.

Impact of the Red Sea Crisis on Air Cargo

The Red Sea crisis had a significant impact on seaborne cargo traffic, which in turn benefitted international air cargo traffic. Vinay Kumar G, Vice President and Sector Head-Corporate Ratings, ICRA, highlighted that the cargo volumes were relatively less impacted due to Covid in FY21, compared to passenger traffic. Moreover, the recovery was relatively swifter with cargo volumes recovering to 95% of pre-Covid levels in FY22 compared to 55% in passenger traffic, he stated.

This recovery was supported by higher growth in international cargo due to the export of Covid-related vaccines and higher merchandise exports in FY22. While the growth in cargo volumes slowed down during the FY2023-H1 FY2024 period, it bounced back impressively in the last 12 months, since the start of the Red Sea crisis.

The report further indicates that the international cargo volumes have increased by 18% YoY and 20% YoY during the first five months of FY25. They are expected to increase by a further 11-13% YoY to reach new highs in FY25.

Future Outlook and Historical Similarities

The credit profile of airport operators is projected to remain strong, supported by healthy accruals and comfortable liquidity, Kumar added. In a similar vein, the coastal movement of coal along the eastern coast, complemented by added capacities and synergistic benefits, is expected to be the main driver of growth for Indian container cargo, which is projected to grow at 8% in FY25 amid the Red Sea crisis.

Historically, crises such as the Red Sea crisis have often led to shifts in cargo movement patterns. For instance, the Suez Canal blockage in 2021 led to a temporary surge in air cargo volumes as companies sought alternative routes to bypass the blocked canal. Similarly, the current Red Sea crisis seems to be having a similar effect, leading to a surge in air cargo volumes.