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Possible Spike In Air Freight Rates As Shipments Via Sea Disrupted By Red Sea Attacks

Possible Spike In Air Freight Rates As Shipments Via Sea Disrupted By Red Sea Attacks
In addition to raising maritime freight, the Houthi attacks in the Red maritime are also expected to increase air freight due to the disruption of global commerce flows.
Due to container ships taking lengthy diversions around South Africa's Cape of Good Hope in an attempt to evade the attacks, which resulted in the diversion of more than $200 billion worth of cargo from the vital trade route, ocean freight charges have increased by as much as $10,000 per 40-foot container in recent weeks.
Some shops who typically transport their goods by water may decide to move to air freight in order to ensure speedier delivery as a result of the delays to marine traffic, according to analysts.
This indicates that air cargo will soon have a larger role in the ecosystem of the supply chain. When compared to weeks required by ocean carriers, air freight can reduce delivery times to just a few days.
“Some shippers are already in survival mode with one goal on their mind: ‘Make sure my freight moves by whatever means possible,’” Matthew Burgess, vice president of global ocean services at C.H. Robinson said.
The transportation logistics company is already obstructing extra air capacity on key trade lines to maintain freight movement in preparation for a surge of ocean to air conversions, according to Burgess.
The massive German logistics corporation DHL reported that while it has had some inquiries, not as many conversions as it has experienced.
“We expect that to change should the situation in the Red Sea continue,” said Andreas Von Pohl, air freight head for DHL Global Forwarding Americas.
Rates will unavoidably rise even farther if that occurs.
The global head of shipping and ports research at HSBC, Parash Jain, predicted a spike in air freight rates. He stated that observers in the sector anticipate the hikes to occur within the next two to three weeks, particularly with the approaching Chinese New Year holiday in February.
Historically, enterprises aim to ship more items out of Asia over the yearly holiday season in order to make up for the two weeks when businesses are closed.
Ocean and air freight analytics platform Xeneta stated in a recent analysis that "the industry stands to benefit from escalating international disruption due to the predictability of air cargo."
The analytics company reported that in December, the overall air freight spot rate decreased by 18% on an annual basis. Xeneta data shows that the global average air cargo spot rate peaked in December at roughly $2.6 per kilogramme.

Christopher J. Mitchell

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