Airfreight demand climbs amid Red Sea crisis

More than three months after the Red Sea crisis began, air cargo carriers are seeing demand spike from the Middle East and China. Shippers are turned from sea to air to avoid danger in the Red Sea, where Houthi rebels have been firing on ships since mid-November. [caption id="attachment_57139887" align="alignright" width="372"] (Courtesy/Can Stock)[/caption] While there was slower market activity after the Lunar New Year on Feb. 10, global demand is picking up as the first quarter draws to a close and shippers are trying to meet financial deadlines, Milena Milenkovic , regional airfreight manager Benelux at Flexport , said during the company’s market update webinar March 5. About 10% of shippers have shifted exports to a combination of sea and air, while 17.2% have shifted exports wholly from sea to air since the Red Sea attacks began, according to a survey conducted by logistics market research company TI Insights . This growing demand is affecting sea-air shipments and putting pressure on Dubai seaports and Dubai International Airport (DXB) especially, Milenkovic said. “More and more these days, especially in China and Hong Kong, we start to see the first — or actually the beginning — of some ocean shipments being converted into air,” she said. “So, this might put some challenges on the supply side.” From sea to air Geopolitical conflicts, increased capacity and pressure from the Red Sea crisis are challenges currently affecting freight forwarders, Joe Kronenberger , senior vice president of airfreight product for the Americas at Geodis , told Air Cargo Next . “Overcapacity on certain lanes is a challenge because it creates lower yields and makes it difficult to [know] where to invest in your company in the future,” he said. “We see the entrance of more e-commerce into the system. We see higher peaks and lower lows. We have geopolitical conflicts in Ukraine and Russia. We have the war with Hamas and Israel, which is now, you know, extended into the Red Sea with [attacks on] merchant ships. So, these are very big challenges. And if some of those wars expand, we could really see some struggles in the airfreight industry.” The Red Sea impact shows no signs of slowing and shippers need to plan accordingly, Dharshini Shegran , director of regional ocean management at Flexport, said during the webinar. Shifting airfreight rates Flexport reported that airfreight rates to Europe fluctuated in February. Rates from: China were down 20% year over year; The United States were down 6.6% YoY; and India and Bangladesh were up 63.5% YoY. “Retail customers are actually moving their production from China into India and Bangladesh more during the Lunar New Year holidays, because, of course, the production cannot stop,” Milenkovic said. “So, this is giving more and more demand into the market.” After a period of normalization in 2022 and 2023, the market is off to a strong start, with a projected growth of 3% to 4% YoY in demand in March, Kronenberger said. “In the short term, when we look at January, it was very surprising,” he said. “You know, we actually saw an 80% gain over January of last year, and we’ve come into February and February is traditionally [muted due to] the break in production in China that is brought about by Chinese New Year. So, we are starting to see the market coming back now.” Register here for Air Cargo Next ’s free webinar, “The Role of Drones in the Future of Air Cargo,” on Tuesday, March 26, at 11 a.m. ET .

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