Gradual increase in airfreight expected as Red Sea crisis could last months

Scan Global Logistics expects a slow but steady increase in airfreight volumes amid predictions that the Red Sea conflict could last months.

The logistics company said in a January 12 market update that there hasn’t been a drastic increase in airfreight volumes as a result of the impact of the Red Sea – Suez Canal conflict on ocean shipping supply chains, but there is a clear growth.

“While an uptick in volumes on the airfreight side has been visible, a tsunami-like volume surge has not been the case. It is though expected that this will gradually increase, considering that the challenges in the Red Sea by now are considered longer lasting,” said Scan Global Logistics.

“With this seemingly projected to be the latter, the coming weeks will surely spell busier than usual times for airfreight during the month of January.

“Accordingly, we expect some form of upward rate level pressure up until the Lunar New Year period, however also here, it is not expected that it will surge overnight but rather increase progressively.”

This slow but positive impact on airfreight could well be the case, given the anticipated timeline of the conflict.

Peter Sand, chief analyst at Xeneta, said on January 12 that in the short term “things will get worse before they get better for ocean freight supply chains”. He warned that a resolution could take “months rather than weeks or days”.

And Vincent Clerc, chief executive of shipping giant Maersk also told the Financial Times the disruptions could last for months.

Meanwhile, forwarder DB Schenker also expects more demand for air cargo soon.

The subsidiary of German railway company Deutsche Bahn said that it has arranged extra capacity to prepare for increased business.

“Schenker has secured additional air freight space to be able to service the expected switch from shipping to airfreight. We expect the impact on air freight to occur in around two to three weeks,” the company said in a statement to Reuters.

The forwarder said that a combination of sea and air transport may be the most suitable solution. Ocean shipping for part of a route could help reduce additional costs.

Bolloré Logistics also recently said airfreight demand is rising as a result of the Red Sea conflict.

In comparison, Amazon said it has not seen much of a shift to airfreight.

“Shipping over the ocean makes up 90% of global commerce so even a small change would have an impact, but we haven’t seen much yet,” FedEx chief executive Raj Subramaniam said at the National Retail Federation event in the US on January 14.

Subramaniam said air cargo rates have remained stable, reported Reuters.

Many shipping companies rerouted their operations  via the Cape of Good Hope last month to avoid the Red Sea following attacks by Houthi Militia on container ships off the Yemen coast.

Since then attacks in the area have continued. Xeneta said there has been 27 attacks on ships since November 19.

Last week, the US and UK carried out air strikes on Houthi forces in Yemen to deter the attacks.

Following the strikes, shipping association, The Baltic and International Maritime Council (BIMCO) advised its members to avoid the Red Sea area for 48-72 hours.

The Suez Canal Authority issued a press release on January 12 that said the navigation through the Canal is continuing as normal.

“There is no truth to the suspension of navigation through the Canal as a result of developments in the situation in the Red Sea.. Navigation is going as per normal in both directions,” said Ossama Rabiee, chairman and managing director.

However, Scan Global Logistics said in an update, also on January 12: “While smaller vessels still traverse the canal, all major container carriers continue to bypass the Red Sea and, consequently also, the Suez Canal.”

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