Imran, who is in charge of logistics at a leading leather goods manufacturing company in Ambur, a town in western Tamil Nadu, is struggling to send shipments to Europe and the US for several days now. He never imagined that the garment industry in distant Bangladesh could be a source of worry for him.
Tons of Bangladesh-made garments transiting via Indira Gandhi International (IGI) airport in Delhi are cornering space in aircraft bound for Europe and the US, leaving little room for Indian exporters. India has a trade agreement allowing sealed export cargo from Dhaka to arrive directly at Delhi airport with minimal border checks. Due to the geopolitics-related disruption in cargo movement via the Red Sea, Dhaka’s garment exports to third countries are being routed by air via Delhi since February 2023. Earlier, it was only through Kolkata airport.
“Nowadays it is very difficult to get space in aircraft for our export consignments,” says a leather goods manufacturer. “If we pay a premium, we get space,” he adds.
Costly diversion
From April to December 2023, Delhi airport handled 260,000 tonnes of export cargo, with Bangladesh accounting for just 5,000 tonnes or less than 2 per cent. However, in the March 2024 quarter, of the 90,000 tonnes handled, Bangladesh’s share was 8,000 tonnes or 9 per cent. This led to congestion and spikes in air freight rates by nearly 300 per cent, says Israr Ahmed, Vice President of Federation of Indian Export Organisations (FIEO), Bengaluru.
To prioritise the country’s air cargo and reduce the freight burden on Indian exporters, FIEO wants the government to bring in corrective measures, including a “landing charge” on Bangladeshi cargo. The government could also engage with airlines and freight forwarding companies to increase capacity, which would help lower freight costs and prevent delays in shipments, Ahmed says.
The country’s Apparel Export Promotion Council (AEPC), too, recently urged the Centre to suspend transshipment of Bangladeshi export cargo via the Delhi air cargo complex, claiming it was hurting the local industry’s competitiveness.
Airlines making hay
Sudhir Sekhri, Chairman, AEPC, says Indian exporters are already bearing the brunt of costly freight charges due to the prolonged Red Sea crisis, which has also forced them to divert cargo from sea routes to the more expensive air mode. The movement of Bangladeshi export cargo via the Delhi air cargo terminal will worsen the logistical challenges and transportation costs for Indian apparel exporters, he says.
Nearly 30 loaded trucks arrive in Delhi from Dhaka every day. This slows down cargo flow and airlines are taking undue advantage of the situation, Sekhri alleges. Apart from the loss of competitiveness due to higher air freight rates, Indian exporters are grappling with delays in the handling and processing of cargo, and severe congestion at IGI airport’s cargo terminal, he says.
The space crunch for air cargo in Delhi is having a spillover effect at other Indian airports, too, says J Krishnan of S Natesa Iyer Logistics LLP, a leading freight forwarder in Chennai.
Double jeopardy
The disrupted access to Suez Canal has impacted all Asian exports, sending air freight rates out of Asia, including India, spiralling upwards.
It’s a double jeopardy — space constraint and steep freight rate increases — that confronts Indian air exports, Krishnan says.
As airlines lack enough belly space to accommodate the cargo diversion caused by the Red Sea crisis, many airports across the world face congestion, says Mahesh Fogla, Executive Director, Patel Integrated Logistics.
“On an average we have witnessed a 10 per cent surge in demand for air freight services, consequently driving up the rates imposed by airlines. To the UK, the rate increased to ₹170 per kg from ₹125 before the Red Sea Crisis, while for the US it increased to ₹260 from ₹225,” he informs.