Regional Pulse: Russian airspace closure drives pharma demand through India

With Russian airspace closed, shippers have turned to other destinations like India to move cargo as the pharmaceutical and express markets continue to grow. Expanding capacity with the return of passenger flights alongside falling rates are making India an attractive choice, airfreight stakeholders said. [caption id="attachment_57065453" align="alignright" width="422"] Photo / Finnair[/caption] Cargo verticals driving movement Pharmaceuticals are the main market driver, followed by chemicals, machinery parts and seasonal fruits, Pasi Nopanen, sales director for Asia at Finnair Cargo, told Air Cargo World . “Pharmaceuticals represent over 25% of the market, mainly supplied from the neighboring states of Guraja and Goa — even from Hyderabad,” Nopanen said. Recent shortages in semiconductors stalled automobile manufacturing and in turn airfreight needs from the region, but the sector has rebounded and grown since, Yashpal Sharma, managing director of India-based forwarding company Skyways Group, told Air Cargo World. The express market is also staking a claim in India’s airfreight market. In July, UPS expanded its footprint at Bengaluru (BLR) , adding regular flights and a new cargo facility. UPS has also partnered with Interglobe to create MOVIN and expand B2B, day-finite, express and time-definite solutions for customers. India reported merchandise exports at $235 billion in the first half of the year and imports at $361.1 billion during the same period. Expanded connectivity Connectivity in India took a huge hit during the pandemic, Sharma said, with passenger aircraft providing 70% of India’s capacity in 2020. Since March of this year, belly capacity has returned to about 80% of pre-pandemic levels, with significant growth month over month, he said. “India clocked 3.14 million tonnes in 2021-22, which is about 95% of pre-pandemic level,” Sharma added. “We do expect air cargo volumes in India to top the 2019 volumes as connectivity continues to grow globally.” Finnair Cargo began direct flights between Helenski (HEL) and Mumbai (BOM) on Aug. 6. The carrier expressed interest in having regular flights to India during the pandemic but waited until the easing of passenger travel in late 2021 to begin regular service, Nopanen said. Mumbai was always on Finnair’s radar but was naturally boosted by the closure of Russian airspace due to the war in Ukraine, he said. Rates and capacity “Airfreight rates had their rollercoaster ride, as with other modes like ocean and road,” Sharma said. “As the passenger capacity is coming back and with it comes the cargo … the rates are coming down.” Sharma predicted rates would not fall to 2019 levels soon, but will continue to decline over the next 12 months. In India’s export market, Chennai International Airport (MAA), Indira Gandhi International Airport (DEL) and BOM all have available space, but rates vary by location, with falling rates at BOM, stable rates at DEL and volatile rates from MAA, according to an August market analysis from Crane Worldwide Logistics. Rates from India to Europe and the U.S. stand at $2.59/kg and $5.80/kg, respectively, according to the TAC Index. Both routes’ rates are around 1% lower compared with the same period in 2021. [caption id="attachment_57131867" align="aligncenter" width="1221"] Source: Crane Worldwide Logistics[/caption] For imports, India is experiencing backlogs and delays between DEL and BOM, according to Crane’s report. Dimerco forecasted similar capacity upturns ex-India into Europe, North America and Asia Pacific, according to the group’s biweekly freight market report. Join Air Cargo World for our next webinar, “Forward Thinking: Best practices for freight forwarder success,” on Tuesday, Sept. 13, at 11 a.m. ET. Click here for more information and to register.

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