Congested ports contribute to sea-air shift this summer

Unreliable schedules, inclement weather and holidays are contributing to port congestion in Southeast Asia, prompting shippers to pivot toward a sea-air approach as peak season gets underway. [caption id="attachment_57139560" align="alignright" width="300"] (Photo/Air Cargo Next)[/caption] Between December 2023 and March of this year, sea-air shipments increased 17.2%, according to research analytics company TI Insights . This was largely due to Houthi attacks in the Red Sea making ocean freight undependable This is “why we have seen a lot of congestion in airports, [specifically] Singapore (SIN) and Dubai (DXB),” Camille Carenton , senior regional airfreight manager at Flexport, told Air Cargo Next during a June 25 market update webinar. “So, the routing is extremely, extremely important ... because most of the biggest gateways are getting congested” Air cargo capacity is limited and demand remains strong, with e-commerce and sea-air shipments contributing to a 20% year-over-year increase between January and May in chargeable weight from the Asia Pacific region, and a 22% YoY increase in the Middle East and South Asia region, according to a June 24 WorldACD report. The report also stated that in the first five months of the year, the global air cargo industry saw: 25% YoY increase in high-tech cargo shipments; 25% YoY increase in meats; 10% YoY increase in fruit and vegetables; 6% YoY increase in valuables and flowers; 2% YoY increase in dangerous goods; and 1% YoY increase in temperature-controlled goods. Some congestion at ports can be attributed to the crisis in the Red Sea , which began in November and has caused major delays in transport, Carenton said during the webinar. “On a global level, we have seen, year on year, the [air cargo] demand increase of 12% [in May] and we also have seen a very strong demand for sea-air product, which is pushing some on the main gateway, especially on far east-westbound, to be congested,” Carenton said during the webinar. While air cargo capacity increased globally 5% YoY, it is still not meeting the demand forecast, she said. Rising rates Global air cargo rates have increased 6.8% YoY in the first five months of the year, Carenton said. “If we are looking a bit forward [to] what to expect for [the fourth quarter], the demand in Q4 is going to be strong,” Carenton said. “And we know already that the capacity is going to be limited, which is going to translate with very high spot market rates and also a very high e-commerce demand that is already pre-reserving most of the space.” Retail e-commerce sales for Q4 2023 increased 7.5% to $285.2 million from Q4 2022 and total sales increased 28.18% in Q4 2023 from Q4 2022, according to the U.S. census data. E-commerce is expected to grow 7% to 9% this year in the U.S.-China trade lane alone, Derek Lossing , senior adviser and founder of Cirrus Global Advisors , previously told Air Cargo Next . “E-commerce demand is lending to the market increase and has been occupied, especially on trans-Pacific and on the Far East,” Carenton said during the webinar. “So, outside of Asia, to the U.S. and to Europe, between 60% to 70% of the total capacity available in the market” is for e-commerce shipments. “This is also [causing] smaller gateways to be congested, and we can see, especially in Southeast Asia, a lot of secondary airports starting to also have rates increase and capacity issues,” she said.

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