Pakistan's airspace block unlikely to rattle India's cargo routes

Time of India

29-04-2025

India is assessing the impact of Pakistan's airspace closure on air cargo, though exporters say disruption will be limited as most goods move by sea. Air shipments of garments, gems, perishables and electronics may face pressure before the July 9 tariff deadline. Falling freight rates and a temporary pause in US tariffs have offered some relief.
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In response to Indian government downgrading diplomatic ties with Pakistan in the aftermath of the gruesome terrorist attack in Pahalgam in India's Kashmir, the neigbour country had shut its airspace to Indian airlines.Shutting airspace to foreign airlines can backfire economically, as it leads to a loss of lucrative overflight fees, risks tit-for-tat retaliation that hurts the national carrier, and disrupts tourism and trade flows. Such bans also increase operational costs for global airlines forced to take longer routes, potentially straining broader diplomatic relations.Now, while India is also considering closing its airspace to Pakistani airlines, according to a report in ET that quoted people familiar with the matter, Pakistan may not have dealt a sigificant cargo hit for India.The Indian government is currently assessing how Pakistan's decision to shut its airspace may affect air cargo heading from India to regions such as the Gulf, Europe, and the United States. Exporters have said the disruption is unlikely to be significant, ToI reported.Although the closure could require rerouting for certain flights, most Indian exports move by sea, keeping air-based cargo at a minimal level. According to exporters, only around 3-4% of garments are flown abroad, whether on passenger aircraft or dedicated freighters. A small quantity of gems and jewellery is also transported by air, alongside some perishables and electronics. Exporters believe the volumes of these air-based exports are not large enough to cause major disruptions.The government's recent move to ban cargo transshipment from Bangladesh is also expected to help ease pricing pressures in the Indian market.However, some stress may emerge towards the end of May, as exporters rush to send shipments ahead of the July 9 deadline for reciprocal tariffs. A similar situation unfolded when US President Donald Trump announced tariff hikes in early April. At that time, companies rushed to move products before the new duties came into effect. Apple alone reportedly shipped five plane-loads of goods in response. Exporters of garments as well as gems and jewellery also resorted to significant air freight volumes.Following Trump's decision to pause the reciprocal tariffs for 90 days, pressure on freight eased. The effect was further supported by a steep drop in shipments from China. During the week ending April 24, the Drewry World Container Index (WCI) composite dropped 2% to $2,157 for 40-foot containers, with the sharpest rate reductions seen in routes from China due to the tariff conflict.On a year-on-year basis, container shipping rates between New York and Rotterdam rose by 32%. However, rates fell by 36% on the Rotterdam-Shanghai route and by 24% on the Shanghai-Rotterdam route. Freight rates from Shanghai to New York dropped 3%—or by $95—to $3,611 for a 40-foot container. Prices from Shanghai to Los Angeles and Rotterdam to Shanghai decreased 2% to $2,617 and $481 respectively for 40-foot containers.Meanwhile, the rate for containers moving from New York to Rotterdam edged up 1% to $825, while prices on the Shanghai-Genoa and Los Angeles-Shanghai routes held steady.'Drewry expects rates to continue to decline in the coming week due to uncertainty stemming from reciprocal tariffs,' maritime research and consulting firm Drewry said.(with ToI inputs)