The recent downturn in the ocean shipping market, exacerbated by the Red Sea crisis, is driving more cargo to opt for airfreight solutions.
According to the latest market update from data provider WorldACD, demand and rates for air cargo originating from Asia Pacific have surged significantly, surpassing last year’s levels.
WorldACD‘s data reveals that, over the past two weeks, tonnage from the Asia Pacific region has increased by 20% year-over-year, while rates have risen by 16%. However, the increase is not uniform across all origins.
This surge coincides with a strained ocean shipping sector, which is grappling with unseasonal capacity shortages and port congestion, further intensified by the Red Sea crisis.
“Shippers face substantial shortages in both air and ocean freight capacity due to high demand and disrupted seafreight services,” WorldACD reported. “The disruptions in container shipping, partly due to attacks on vessels in the Red Sea, have been compounded recently by port congestion and vessel capacity shortages in key markets, prompting more cargo owners to turn to air cargo solutions.”
These disruptions were also highlighted by Marc Zeck, a senior research analyst at investment bank Stifel, in the monthly Baltic Exchange newsletter. Zeck noted that ocean freight rates on the China-Europe trade lane soared by 324% year-over-year in May, while the China-US west coast route saw a 309% increase.
However, Zeck cautioned that it remains uncertain whether this shift will lead to an increased reliance on air cargo.
“Carriers and freight forwarders report that an unexpected spike in ocean volumes, driven by the early arrival of peak season trading, has led to port congestions and container shortages in the Asian trading region. As a result, shippers struggling to secure capacity have driven up freight rates. It is still unclear if the surge in demand is due to shippers pulling forward orders to avoid potential bottlenecks later in the year or a genuine rise in end customer demand. While the former scenario may not overflow into the airfreight market, a genuine increase in customer demand could potentially lift air cargo volumes beyond the e-commerce segment, which is currently the primary driver of air cargo volumes,” Zeck explained.
These sentiments were echoed by Xeneta’s Chief Airfreight Officer, Niall van de Wouw, who recently told Air Cargo News that the spike in ocean demand was primarily due to shippers moving peak season volumes early to avoid potential disruptions and thus would not impact air volumes immediately.
Meanwhile, WorldACD highlighted a rapid rise in rates from Vietnam. From Southeast Asia to Europe, rates have doubled compared to the same time last year, averaging $4.19 per kg over the past seven weeks.
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Source: WorldACD
Young Chiu is a seasoned logistics expert with over 15 years of experience in international freight forwarding and supply chain management. As CEO of Dantful International Logistics, Young is dedicated to providing valuable insights and practical advice to businesses navigating the complexities of global shipping.