As global supply chains continue to adapt to post-pandemic recalibrations, the latest Asia-Pacific Logistics Highlights H1 2025 by Knight Frank reveals a contrasting trajectory in regional logistics performance. While average logistics rents across Asia-Pacific (APAC) fell 0.4 percent year-on-year—the first annual decline since 2020—India posted a notable 3.4 percent increase, signalling diverging fundamentals in warehouse demand, manufacturing momentum, and freight flows. This divergence carries significant implications for the air cargo sector, especially as shippers and carriers reassess network strategies across a volatile trade and geopolitical landscape.
Amid macroeconomic headwinds and tariff realignments, India’s continued rental growth—particularly in cities such as Mumbai, Bengaluru, and Delhi NCR—points to a strengthening role as a regional export node. For air cargo planners, this shift translates into increasing pressure on India’s gateway airports and growing appetite for time-sensitive, high-yield freight handling solutions.
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India’s logistics momentum
India’s logistics market appears to be bucking the broader APAC deceleration. The country’s S&P Global Manufacturing Purchasing Managers’ Index (PMI) surged to a 14-month high of 58.4 in June 2025, underscoring strong factory output, a record rise in employment, and international sales acceleration. According to Knight Frank, this manufacturing rebound directly supported sustained warehouse demand, allowing Indian logistics markets—especially in Mumbai, Bengaluru, and Delhi NCR—to post a 3.4 percent increase in rents, up from 2.1 percent in H2 2024.
This momentum is translating into downstream pressure on air cargo infrastructure. With export-intensive industries—automotive components, electronics, pharmaceuticals, and textiles—ramping up volumes, Tier 1 airports like Mumbai (BOM), Hyderabad (HYD), and Delhi (DEL) are experiencing higher utilisation of bellyhold and freighter capacity. According to IATA, India’s international air cargo traffic grew by 6.9 percent year-on-year in Q2 2025, outpacing the global average of 5.3 percent.
“The rental growth seen in this period reflects not just occupier confidence, but also the country’s potential to evolve as a key logistics hub in the Asia-Pacific region,” noted Shishir Baijal, Chairman and Managing Director of Knight Frank India.
From China to India
The shift comes as occupiers across APAC reassess operational footprints. The Knight Frank report cites strategic front-loading of shipments ahead of tariff deadlines—particularly in response to ongoing US–China tensions and EU carbon border adjustments—as a driver of short-term warehouse demand. However, beyond this temporary spike, a longer-term reconfiguration is underway.
Christine Li, Head of Research for Asia-Pacific at Knight Frank, explains: “India, with a more competitive tariff structure as well as lower costs, is emerging as an important node in China-plus-n strategies. Occupiers in the region can be expected to remain agile in adapting and evolving their supply chain strategies.”
Air cargo networks, traditionally focused on hubs in Hong Kong, Guangzhou, and Shanghai, are thus likely to diversify toward Indian gateways. The change is already reflected in freight forwarding data: WorldACD reported a 3.1 percent year-on-year rise in air cargo tonnage originating from India to the EU and the UK in H1 2025, while volumes from mainland China to those destinations declined by 2.7 percent.
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Occupier strategy
Despite increased demand, India’s logistics vacancy rates have ticked up modestly due to new speculative supply entering the market. For air cargo players, this represents both a challenge and an opportunity. The availability of space adjacent to key multimodal hubs offers scope to develop cold chain warehousing, bonded storage, and last-mile distribution for pharma, perishables, and electronics sectors.
Tim Armstrong, Global Head of Occupier Strategy at Knight Frank, stated: “Real estate portfolios are increasingly being reconfigured to support more resilient, regionalised supply chains. This includes proximity to ports or multimodal transit networks, and the integration of logistics infrastructure with office and support functions.”
For air cargo operators, this suggests a potential shift in freighter routing, cargo consolidation points, and third-party logistics (3PL) partnerships. Moreover, as new Indian airports such as Jewar (Noida International Airport) and Navi Mumbai Airport come online post-2025, air cargo capacity and cross-border e-commerce logistics are poised for structural growth.
