Why Bangladeshi exporters increasingly choosing Delhi for air shipments

Over the past four months, Bangladeshi exporters and their buyers have been increasingly using Delhi's Indira Gandhi International Airport for airfreight to cut transportation costs.

According to industry insiders, Hazrat Shahjalal International Airport is struggling to keep pace with the recent surge in cargo volume. This, coupled with extended lead times on sea routes due to the ongoing Red Sea crisis stemming from the Iran-Israel conflict, has prompted some fashion brands to switch to airfreight to meet their tight delivery deadlines.

In addition, neighbouring countries hold a cost advantage due to airlines offering direct flights to various destinations, leading to lower overall shipping prices.

In a strategic move to enhance its logistical capabilities, Bangladesh has secured dedicated air cargo space at Delhi's Indira Gandhi International Airport, according to a report published by Construction World, an Indian business magazine, on 3 May.

With this arrangement, Bangladeshi exporters gain direct access to Delhi's extensive air connectivity network, enabling faster and more efficient shipment of goods.

Ashikur Rahman Tuhin, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told TBS, "This season witnessed limited order bookings initially, with buyers exercising caution following last year's sales performance. However, upon positive feedback from consumers, apparel buyers began to ramp up their orders with shorter lead times. Hence, these goods had to be exported via airfreight, incurring additional costs to meet the lead time requirements."

In some cases, apparel manufacturers opt for air shipments due to their own delays. Nevertheless, airfreight rates in Dhaka have surged from $2.4 per kilogram for EU routes to $5-$5.5 per kilogram, said Tuhin, who also serves as the managing director at TAD Group.

Echoing Tuhin's sentiments, Shovon Islam, managing director of Sparrow Group, said Delhi Airport currently provides more cost-effective rates than Dhaka Airport for both air cargo and passenger flights.

"The airfreight cost from Dhaka to New Jersey stands at $6 per kilogram, while it is only $4 from Delhi airport. Similarly, the airfreight cost from Dhaka to New York is $8 per kilogram, whereas it is only $5 from Delhi airport. Additionally, the airfreight cost from Dhaka to Madrid or London is $5.5 per kilogram, compared to only $4 from Delhi airport," he said.

Shovon mentioned that one of his American buyers, Mango, recently shifted to Delhi airport to transport some of their fashion goods due to the more economical route.

"Delhi can offer the most competitive prices due to its numerous direct flights and chartered cargo services across various routes," said Shovon Islam, who also serves as a director of BGMEA.

Dhaka airport swamped with air cargo

According to the Bangladesh Freight Forwarders Association (BFFA), the daily cargo handling capacity at Dhaka airport has surged to an average of 600 tonnes of goods, marking a substantial increase from the 150 to 250 tonnes recorded four months ago.

The BFFA also noted that the country's demand for air cargo stands at 1,000-1,200 tonnes per day, but the current capacity falls short, reaching less than half of this requirement.

Kabir Ahmed, president of the BFFA, said apparel manufacturers have faced significant pressure since late December to ensure timely delivery of goods, leading to a notable increase in export-cargo load at Dhaka airport.

Moreover, Dhaka airport's cargo handling capacity became strained with some air freighters — Turkish, Emirates, Qatar, and Saudi — reducing their cargo operations in Bangladesh. "In the absence of dedicated cargo flights, we often find ourselves relying on passenger flights," he said.

"In this scenario, many exporters are compelled to utilise Indian airports for shipments," Ahmed said, noting that the volume of Bangladeshi goods transported through their airports has risen significantly, from 150 to 250 tonnes per month to 350 to 500 tonnes.

The opening of Dhaka Airport's third terminal will substantially increase its cargo handling capacity. A Japanese company is expected to manage the ground and cargo operations for the new terminal, which will further enhance efficiency, said the BFFA president, expressing optimism that by the end of this year, Bangladesh may complete the remaining work on the new terminal.

Dhaka loses business to Delhi

According to India Sea Trade News, from April to December 2023, Delhi Airport managed 260,000 tonnes of export cargo, with Bangladesh contributing only 5,000 tonnes, accounting for less than 2%.

However, in the March 2024 quarter, Bangladesh's share rose to 8,000 tonnes out of the total 90,000 tonnes handled, representing 9%.

Israr Ahmed, vice president of the Federation of Indian Export Organisations (FIEO) in Bengaluru, said this surge in Bangladesh's share led to congestion and a significant spike in air freight rates, by nearly 300%.

Nasir Ahmed Khan, director of the Bangladesh Freight Forwarders Association, told TBS, "Dhaka Airport is incurring a loss of 16 cents for every kilogram of goods, which are now shifting to Delhi Airport. The total revenue loss would be higher if the volume is calculated."

Highlighting the airlines' reluctance to operate at Dhaka Airport, he said, "Once it is established that exports can be efficiently managed via Delhi, airlines may divert their services away from Dhaka Airport. Consequently, Dhaka Airport's cargo handling capabilities would significantly lag behind."

"Meanwhile, Indian freight forwarders will reap the benefits, leading to local businesses suffering losses and potential unemployment," Nasir said. 

"If we fail to address the security and operational concerns plaguing Dhaka Airport, the problem will persist," he added.

Freight forwarders alleged that only two out of four cargo scanners at Dhaka Airport are functioning. Additionally, they stress the need for smoother cargo handling by Biman Bangladesh Airlines, urging the adoption of modern equipment. They believe that resolving these issues could eliminate the need to route air cargo through Delhi.

Indian exporters not getting enough air space

Tonnes 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. 

Indian manufacturers told Sea Trade News that nowadays it is very difficult to get space in aircraft for their export consignments, which pushes them to pay a premium to get space.

Sudhir Sekhri, chairman of the Apparel Export Promotion Council (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.