SGL: Lunar New Year break set to cool “red hot” air cargo market
14 / 02 / 2024
Photo: Jaromir Chalabala/ Shutterstock
Scan Global Logistics has described the current airfreight market as “red hot”, but it expects the situation to cool now the Lunar New Year holiday in Asia is underway.
The forwarder reports that over the last few weeks, there has been a rush in demand ahead of the 14-day Lunar New Year holiday in Asia, which this year began on February 10.
Meanwhile, the Red Sea crisis has triggered a rise in the use of sea-air transport with hubs such as Colombo, Singapore and Dubai experiencing “massive congestion”, SGL said.
Other hubs that can offer a sea-air option such as Doha and Bangkok have also reported a similar situation.
Indeed, handlers dnata in Dubai and Bangkok Flight Services this week put in place temporary embargos on import shipments as they struggle to deal with backlogs created by a surge in volumes.
Dnata, which will lift its embargo tonight, said that in January its air cargo volumes have increased by 45% year on year.
BFS, which has now lifted its embargo, said the situation was the result of “unprecedented volumes of cargo due to the Red Sea crisis, resulting in a modal shift from sea to air, and a higher than expected surge due to the Chinese New Year”.
SGL is not expecting the situation to last but does think that it indicates an underlying improvement in demand.
“We do not expect this to be a sustained situation, and our assessment remains that the development in recent weeks more so pertains to a last rush ahead of the Lunar New Year, and not least the effect from Red Sea delays, prompting shippers across Europe and US to utilise airfreight to avoid empty shelves and stock-outs,” the company said.
It added: “Considering that the traditional airfreight peak season in November and December also came in stronger than expected, this all points to the conclusion that the cargo airfreight market is steadily improving from a volume perspective following a tough landing after the pandemic.”
Analyst WorldACD also reported rising demand out of Asia, but said it was difficult to separate out how much of this increase was down to the Lunar New Year or Red Sea shipping crisis.
“WorldACD data continues to indicate strong traffic demand levels from China to Europe, as well as to North America, and also ex-Gulf to Europe, whereas this time last year traffic was slowing down, although it is impossible to measure the extent of the Red Sea impact on this traffic due to the huge impact of Lunar New Year,” the analyst said.
“Indeed, the magnitude of the Red Sea impact on air freight will probably only become clear well after LNY, when it may be possible to identify whether we have structurally different flows, depending also on the development of that crisis and many other factors.”
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Dubai backlogs prompt dnata to add a temporary cargo embargo
