Logistics companies say that there is an increase in the number of manufacturing companies seeking to transport their products by air in the next few weeks, after attacks on cargo ships in the Red Sea forced them to search for alternative routes, in a shift that may benefit the air freight sector, which suffers from weak demand. Following the Covid-19 pandemic and from excess capacity.
And it falls The Red Sea And the Suez Canal It is a major trade route through which about 12% of global shipping traffic passes. The Suez Canal is also the shortest sea route between Asia and Europe.
The attacks launched by it affected Houthi group Yemeni ships in the region for more than two months have affected companies and raised concerns among the major powers, in light of the escalation of Israel’s war on Gaza.
Air freight prices remained relatively stable due to the shipping crisis coinciding with a seasonal lull in demand, but data from the reservation and payment platform for international shipping, “Fretos,” showed an increase in shipping prices from China to Europe by about 91% on a weekly basis last Sunday.
The slowdown in the global economy helped mitigate the impact of Houthi attacks on trade flows.
Envy Rudd, head of air logistics at global logistics company Kone + Nagle, said they had “already spoken to several customers about increasing air capacity… In January we have about 20-30% more discussions and proposals than usual.”
Air freight is expensive compared to its sea counterpart, and is not competitive for large goods with a low profit margin.
These factors contributed to reducing the contribution of air freight to global trade movement to less than 1%, according to data from the International Air Transport Association (IATA).
But air freight has become an attractive option since the attacks forced shipping companies to use sea routes that affect delivery times due to the long distance.
Several German, French, and American logistics companies said they are working to provide additional space for air freight.
Logistics sources added that customers are studying multimodal shipping opportunities, such as shipping by sea to the Middle East, then by air to Europe.
Kone + Nagel reported that some customers have already begun sending containers to Dubai and Los Angeles, then transporting the goods by air to the next destination.
Demerco Air Cargo, which focuses on Asia, said that customers are studying the cost of combining sea and air freight through Dubai, in addition to direct air freight services.
Shipping companies expected an increase in the number of manufacturers resorting to air freight if the Red Sea crisis continues.
