Awery reports Red Sea-related rates rise
07 / 02 / 2024
Tristan Koch, chief commercial officer, Awery. Photo: Awery
There are conflicting opinions about the extent to which the Red Sea shipping crisis is impacting airfreight, but airfreight rates have risen, according to Awery Aviation Software.
Tristan Koch, chief commercial officer at Awery told Air Cargo News that the software company’s CargoBooking platform “has shown average rate increases of 10-50% on routes affected by the Red Sea issues”.
He added: “Cargo bookings have increased by a similar margin on those routes, suggesting that more shippers are looking to move their goods via air or multimodal transport to avoid congestion and extended transit times along so many maritime routes due to the Red Sea crisis.”
Koch predicts further rate rises in line with demand, which he says does appear to be increasing in connection with Red Sea shipping supply chain issues.
“Demand for airfreight is increasing, especially along routes where Sea-Air transport can be used to avoid delays caused by the Red Sea Crisis, and as supply for airfreight is limited this will cause prices to rise.”
However, the cost of airfreight compared to oceanfreight for large volumes aside, there is a practical reason why shippers cannot easily switch from ocean to air shipping.
Koch points out that “planning cycles for ocean freight are inherently longer due to transit times (3-4 weeks from Asia to Europe), contrasting with the faster 3–4-day transit time of airfreight, meaning shippers cannot easily shift their supply chains from ocean to air.”
He elaborates: “As such, the perceived increase in airfreight as a substitute for ocean freight is a minor part of the overall transportation landscape. It would be impossible for airfreight to replace ocean freight in terms of volume and total equivalent units (TEU)!”
Live data tracking and transparency is particularly important during periods of time when the market is impacted by an unusual event and Koch says technology “has enabled the air cargo industry to navigate volatile markets”.
He adds: “Instant access to information on rates and capacity through platforms like CargoBooking (open-access online online booking and quoting marketplace allowing airlines and GSAs to provide freight forwarders with real-time air cargo rate distribution, quotes, and booking options) facilitates quick pricing adjustments, this adaptability enables the market to be more agile and resilient to volatile markets, which are looking more and more likely to become the norm rather than the exception in 2024 and beyond.
“Some airlines are actually using Awery’s CargoBooking data to make informed pricing decisions based on market dynamics. The data provided by CargoBooking helps them adjust pricing immediately, resulting in increased yields.”
Companies including Kerry Logistics have said they have seen more airfreight and sea-air enquiries since the Red Sea shipping crisis began, but other, such as DSV, have said customers have yet to resort to a major shift to air.
Xeneta said in a market update this month that the Red Sea disruption will not result in a longer term shift to airfreight.
