Air Archives | Page 20 of 31

State of the air freight market

May 1, 2024 | Air, eCommerce, India, International Trade, Middle East, News, Sea/Air, Supply Chain

The effective closure of the Red Sea and the Suez Canal to container ships is adding around two weeks to supply chain transit times and creating a backlog of manufacturing components, late shipments and inventory replenishment, with critical consignments reliant on air solutions. While Iran’s attack on Israel has led to major carriers rerouting or cancelling flights and causing potential bottlenecks and price hikes.

Traffic ex-South Asia has been particularly driven by the Red Sea push to air, with spot rates climbing significantly.

Contributing significantly to demand has been a massive spike in eCommerce volumes out of China, which is pushing prices well above typical levels for non-peak periods.

Average spot prices to North America have nearly doubled since mid-December, while Europe rates have climbed over 120%.

The eCommerce spike has seen Heathrow (LHR) imposing restrictions on ad-hoc freighters and charters from Shanghai, which has resulted in diversions to alternative gateways, including Birmingham International, with at least one charter operator transferring their slots away from LHR to Birmingham (BHX).

Traffic ex-South Asia has been particularly driven by the Red Sea push to air, with spot rates climbing significantly. Average spot prices to North America have nearly doubled since mid-December, while Europe rates have climbed over 120%.

The recent loosening of US restrictions on the number of weekly flights to the US allotted to Chinese carriers will increase China to US air capacity and could ease some pressure on rates.

The closure of Iranian airspace, due to safety concerns, following Iran’s attack on Israel has led to major carriers rerouting or cancelling flights and causing potential bottlenecks and price hikes for shipments from India.

Carriers operating to Europe are using alternative routes; primarily through Turkey and Azerbaijan, for Middle-East and Chinese carriers or via Egypt and Saudi Arabia for European/Western carriers. While major carriers, including Air India, Emirates, Qatar Airways and Lufthansa Cargo are temporarily suspending flights to Israel and other affected destinations.

The need to carry (and buy) additional fuel for the extended flights means that there will be a payload impact to passenger flights operating from India to Europe and vice versa, as they will need to significantly restrict the cargo payload, which reduces capacity and increases cost.

The seizure of the MSC Aries by Iran in the Strait of Hormuz raises concerns about the accessibility of the Dubai port, a crucial hub for sea-air transshipments, because if Hormuz is considered a high-risk area, it could mean sea-air shipments being diverted to alternative hubs like Colombo or Bangkok.

Whether rates will soften, or supply vs demand become an issue in the next quarter and beyond depends on world geopolitical events improving, the Red Sea re-opening up and no other global crisis occurring.

If there are no further global events then the market is very likely to soften, however, if the Israeli/Iran situation deteriorates airspace could be closed for the foreseeable future and that will cause huge issues to all logistics activities including airfreight, sea/air, ocean and rail.

For urgent, valuable and sensitive shipments we have a range of airfreight and sea/air solutions, with block space agreements (BSA) and capacity purchase agreements (CPA) that protect space and capacity on the busiest routes.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.

Red Sea, garments and eCommerce among factors driving up airfreight rates

Apr 17, 2024 | 4PL, Air, eCommerce, Retail

Traditionally airfreight rates would soften at this time, as the start of the airline passenger summer season adds significant amounts of belly-hold airfreight capacity on long-haul routes, but pockets of high volumes are pushing rates up.

Globally, the air cargo market is experiencing rising rates, particularly from vital global regions such as the Asia Pacific, the Middle East and South Asia, driven by disruptions in container shipping and increased demand for cross-border e-commerce shipments.

Ex-India, Bangladesh, and Sri Lanka spot rates experienced significant increases, rising by 81%, 40%, and 55% respectively last month, driven by strong demand for apparel products.

Airfreight is congested across all India origin airports and transhipment points, with space overbooked at origin and hubs, which means that rates are increasing, often without any notice.

Space is really critical to the US and EU, with transit times for the US regularly extending to seven days and six days for Europe, with booking timelines up to nine days before carrier handover.

There has been severe backlog and congestion in Chennai, Mumbai, Delhi and Bengaluru, with off-loading badly delayed and minimum times for off-loading trucks reaching 44 hours.

Air France’s decision to cut Chennai from its summer schedule, plus cancellation of a key freighter service, had led to a capacity crunch out of the southern Indian city, with the dynamic load factor from India to Europe reaching its highest level since April 2022.

Traditionally, larger cargo volumes are charged at a cheaper per kg price than smaller volumes, but that dynamic is currently reversed, for the first time since the onset of the COVID19 pandemic, when the air cargo market encountered a massive capacity squeeze.

Average spot rates from the region reached levels nearly 160% higher than before the crisis in the Red Sea, but they are expected to fall back from these excessive levels.

While Indian volumes are thought to be high owing to garment exports, combined with the Red Sea challenges, Hong Kong’s sustained traffic levels are being sustained by eCommerce volumes, though merchants are concerned over high freight rates and the threat of economic sanctions.

Despite the merchants’ fears, freighter operators are investing in new aircraft, to expand their fleets and operations outside Asia, with flights to Europe, the Middle East and USA, in large part to capitalise on eCommerce.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.

Strengthening global partnerships: India

Apr 17, 2024 | 4PL, Air, India, Metro, Sea, Sea/Air, Supply Chain

Metro’s main board recently completed a multi-city tour across India, as part of a strategy to fortify existing partnerships with key suppliers and to carve out new avenues for growth, by direct engagement with prospective customers.

The visit spanned several major cities including Mumbai and Bangalore, with multiple engagements and discussions focused on exploring opportunities within this key market.

The carefully curated itinerary and interactions were aimed at reinforcing the supply chain robustness, quality and continuity of the products and services offered.

Positive engagement with Jeena, Speedmark, 20Cube and Hapag-Lloyd strengthened existing relationships and laid the groundwork for future collaborations. The agenda was clear: to reinforce Metro’s commitment to its partners and to explore avenues for mutual growth and development.

India, with its vast industrial landscape, is a pivotal market in key verticals including automotive, industrial, retail, and fast-moving consumer goods (FMCG) and it is the potential for growth in these areas that triggered discussions on long-term strategies and partnerships that would benefit all parties.

Signalling the board’s intent to expand Metro’s regional footprint, meetings were held with several large prospective customers, which focused on understanding their needs and aligning the business to support their success in the longer term.

The visit is a testament to the company’s proactive approach to business development and recognition of the importance of strong partnerships. By investing time and resources into these face-to-face interactions, the company is setting the stage to drive continued growth and success in the economically vibrant market in India and the wider sub-continent.

As a business we have several promising leads and look forward to further developing these opportunities through strengthened relationships that solidify Metro’s presence in these key global markets. The road ahead is promising, and with the insights gained from this tour, the company is well-positioned to navigate the complexities of this market with confidence.

We look forward to sharing future updates.

Our commercial and operations teams work closely with our partners across India and surrounding regions, processing air, sea and sea/air shipments.

If you have any questions, rate requests or would like any further information on our capability in India, please EMAIL our Chief Commercial Officer, Andy Smith.

Red Sea update

Apr 3, 2024 | 4PL, Air, China, International Trade, Retail, Sea, Supply Chain

The last three months of 2023 were some of the worst for liner shipping’s finances in recent years, while early volume indications for this year suggest the coming months could bring stronger trading conditions for shipping lines, especially with the Red Sea diversions and capacity management techniques learned during the early phase of the pandemic.

Amidst the Red Sea crisis, global schedule reliability continued to decrease, dropping over 5% in January, but it does seem that schedule reliability may have improved slightly in February and the delays experienced for vessels arriving late were also reduced.

Performance overall is still very poor, but this does indicate that the new round-Africa services are beginning to slowly normalise, making supply chains slightly more predictable, albeit obviously with longer transit times. We would expect to see further improvements once we get the March data.

After eight consecutive days without incident, in the Red Sea on Monday the master of a vessel reported being hailed on the radio by an entity claiming to be the Yemeni Navy, while a crew member reported having heard gunshots and US naval forces destroyed a drone boat.

Despite the ongoing attacks, the US said it would consider revoking its recent designation of Yemen’s Houthis as terrorists if the Iran-backed militants cease their shipping attacks in and around the Red Sea.

Joe Biden’s special envoy for Yemen, Tim Lenderking, said the Houthis’ could “show good faith” and an “intent to de-escalate” if they released the 25-member crew of the Galaxy Leader, the RoRo car carrier that they hijacked in November.

Russia has sent several naval vessels from the Pacific Fleet into the Red Sea, though the purpose of the Russian vessels in the Red Sea area is unclear.

Air freight volumes jump

As a result air freight volumes have jumped up. February was the third consecutive month of double-digit year-on-year demand growth for air cargo, according to data released by IATA, with air cargo demand up 12% compared to 2023.

The rise comes as the market stabilises amid improved economic performance worldwide, with capacity up over 13% due to the continued return of belly capacity.

The strong start for 2024 could see demand surpass the exceptionally high levels of early 2022, with booming eCommerce and increased demand for sea/air services linked to Red Sea concerns.

If you have any questions or concerns about the impact of the Red Sea crisis on your Asia supply chain, or would like to discuss its wider implications, please EMAIL our Chief Commercial Officer, Andy Smith.

For questions about air freight, sea/air and our suite of time-sensitive solutions EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.