India’s air cargo squeezed as gulf capacity vanishes, costs soar

India’s air cargo market is reeling as Middle Eastern carriers, responsible for 20 percent of its international capacity, scale back flights, leaving exporters facing space shortages, soaring freight rates, and mounting backlogs. With Emirates SkyCargo, Etihad Cargo, and Qatar Airways Cargo dominating India’s outbound lanes, their absence has disrupted flows to Europe and the US, doubled costs on Middle East routes, and put many cargo categories, including perishables, at risk, exposing India’s deep reliance on Gulf hubs for global trade.

Tim van Leeuwen, Vice President and Head of Consulting at Rotate, wrote on LinkedIn that whilst Gulf carriers account for 13% of international air cargo capacity, that share varies significantly across countries. “Expect the results of the ensuing capacity shortages to be felt most keenly in these markets, significantly affecting yields,” he writes.

Rotate Live Capacity data shows Sri Lanka most exposed, with other major exposed markets including South Africa, India, the Netherlands and Saudi Arabia.

Xeneta’s Chief Air Freight Officer, Niall van de Wouw, also took India as a key example in an interview published by the company on Wednesday. “The numbers hide the more dramatic impact, because 16-18% (global air cargo capacity removed due to conflict) on average might sound like quite a lot, but not that dramatic. But that’s the average. It’s very localised. In certain markets, the impact is far more dramatic.”

van de Wouw points out that the capacity out of India is dominated by Qatar, Emirates, and Etihad combined. “If you told people a week ago that Emirates and Etihad would not be serving the Indian market, that’s the reason for panic,” he adds.

Judah Levine, Freightos’ Head of Research, also points out that South and South East Asian air exports are also heavily dependent on transit through the Middle East for movements west, and there are already reports of “shippers on these lanes facing disruptions, delays and scrambling for alternatives.”

The Rotate Live Capacity data from the top eight Indian airports shows a sharp drop in actual cargo volumes, particularly on Wednesday (Mar 4) and Thursday (Mar 5) of Week 10, compared to the Wed-Thu average.

The eight airports collectively recorded 19% decline in volumes. The fall is concentrated at secondary gateways as Kolkata (CCU) plunged 84%, Cochin (COK) 78%, Ahmedabad (AMD) 59%, and Hyderabad (HYD) 41%. Major hubs still handled the bulk of traffic, with Delhi (DEL) down 19%, Mumbai (BOM) down 4%, Chennai (MAA) flat (0%), and Bengaluru (BLR) down 18%.

Middle Eastern capacity in India
"It would be unfathomable to think of the Indian skies without Middle Eastern carriers," says Chaitaly Mehta, Director of the Mumbai-based logistics company EKF Global Logistics.

She also confirmed that there is a huge space vacuum. "Middle Eastern airlines have capacity, flights, good connections and most importantly, the rates that are accepted by the trade, so shippers use a lot of these airlines. For certain products, shippers definitely prefer these carriers."

"Does this create dependency? Maybe yes, but it is undeniable that the Middle Eastern carriers are a very important part of the logistics ecosystem," she adds.

Kaushal Khakhar, CEO, Kay Bee Exports, points out that Middle Eastern airlines were carrying almost half the capacity for Europe. “The Middle East was not really for Middle East cargo; it was really to connect cargo all over the world. Those flights are not operating out of airports like Dubai or Doha. Because of this, a lot of cargo capacity to Northern Europe and also North America has completely vanished from the market.”

“European carriers and Indian carriers like Air India or IndiGo are operating, but they now have to carry cargo that would otherwise have gone on Middle Eastern carriers. So there is a lot of pressure on them.”

Khakhar says there is not enough capacity available even if shippers are willing to pay the increased price. “Because capacity is so limited, airlines are not only increasing prices but also restricting capacity. If we want to ship, let’s say, 20 tonnes a day, we are getting capacity for only 10 tonnes a day.”

Khakhar also noted that it is a difficult time for shippers and exporters. “Because,” he said, “our customers have contracted volumes and prices with us. With those kinds of arrangements, it’s very difficult for us to convince them to agree to these ad-hoc prices. That is where exporters do suffer.”

With limited capacity, they have obviously increased their pricing.

Freight prices are going up
For the Middle East, cargo is going at double the price. “The very restricted flights that Emirates is operating these days are carrying cargo at double what the normal Dubai price would have been. For Europe, the price increase is 50 to 70 percent,” says Khakhar.

“We are witnessing a sharp hike in freight costs and mounting backlogs across the board,” says the representative of a global freight forwarder operating in India, who chose not to be identified.

“This is likely to put added pressure on EU- and US-based carriers, as demand for their services grows,” the representative adds. 

Meanwhile, John Peyton Burnett, Founder and Managing Director of TAC Index, reported that their indices are trending upwards on the new BAI SPOT daily indices, “but” he adds, “not as high as expected, at least not yet.”

Dharmesh Rami, Country Head - Operations, The Global Group, confirms the trend that the freight rates from India are firming up, particularly on the Europe and US sectors.

“The capacity squeeze, combined with longer routings and operational adjustments by airlines, is pushing spot rates upward. If the situation persists, further upward pressure on rates is likely.”

Richard Theknath, Chairman & Managing Director, Jet Freight Logistics, notes that the situation is very bad due to low payloads and decreased capacity in the market.

“Air cargo rates for the US and Europe are already going up, nearly doubling.”

Congestions, backlogs at Indian airports?
He also informed that there is so much offloading and backlog with all airlines flying to Europe and the US.

Rami noted that cargo buildup at origin airports has started to some extent due to limited uplift, while also pointing out that the worst-affected segment at present is perishables, fruits, vegetables, seafood, flowers and meat, as they cannot withstand delays.

“Exporters in this category are facing rollovers, higher freight costs and increased pressure on cold storage facilities. If disruptions continue, perishables will remain the most exposed segment in India’s air export basket,” he says.

On a positive note, despite the disruption, cargo terminals in Mumbai have not yet experienced significant congestion, according to Pramod Pereira, General Manager, Mumbai Cargo Service Center. “Whatever backlog was there from a few flights that were taken away. The remaining is moving out on other carriers.”

He added that forwarders are unlikely to flood terminals with cargo without confirmed bookings.

The capacity gap is already being absorbed by airlines outside the Middle East. “The European and Far East carriers will pump in more flights and take whatever cargo is available,” Pereira said.

According to him, this shift is already visible in the market. While airlines have not yet increased frequencies to Mumbai, they are adjusting cargo priorities. “Carriers have increased the uplift for vegetable products compared to what they were doing earlier.”

With capacity unchanged, airlines are focusing on higher-yield shipments. “They are carrying more high-yield products rather than general cargo.”

Yuvraj Sharma, Cluster Head - Sales & Marketing India, Srilanka and the Maldives, for Kuehne+Nagel, points out that they are also working with customers in India to reroute cargo through alternative transhipment hubs.

"We are working closely with global airline carriers and our customers to find solutions to keep cargo moving. These solutions include implementing Air-Road solutions via airports in Saudi Arabia and Oman with cross-border trucking to the UAE, Qatar, Bahrain, and Kuwait," he says.  

Meanwhile, Khakhar and Burnett warned about probable modal shifts from sea to air soon, which would increase the pressure on air cargo and freight rates further.

“That is what happened during the Red Sea incidents a couple of years back. When the Red Sea abruptly closed, sea cargo moved to air. That is already happening,” says Khakhar.