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Asia–Europe airfreight: Growth and vulnerabilities

Jan 23, 2025 | , , , , , , , , , , ,

Despite growth and robust demand airfreight faces significant challenges, including reliance on eCommerce, capacity pressures, and geopolitical disruptions.

Airfreight demand on the Asia–Europe route saw a strong performance in 2024, bolstered by eCommerce, automotive parts, pharmaceuticals, garments and high-value electronics. Despite a slowdown in Europe’s domestic electric vehicle (EV) market, manufacturers have maintained steady shipments of EV-related spare parts to ensure regional stock levels. Meanwhile, high-value and time-sensitive automotive components remain key drivers of growth.

Pharmaceuticals and perishable goods have seen consistent demand on routes from Europe to Asia, with semi-conductor equipment and machinery playing a significant role. Electronics, one of the region’s most valuable cargo types, continues to move in high volumes, reflecting growing technological and consumer demands across Europe and Asia.

eCommerce slowdown exposes dependency

Despite surging demand for general cargo like electronics, automobile parts and garments out of India, Vietnam and Thailand, the airfreight sector’s strong reliance on eCommerce has been a double-edged sword. While the pandemic initially spurred a boom in eCommerce shipments, recent months have seen a sharp decline, with eCommerce volumes dropping significantly since the start of the year,, particularly from China.

Retailers’ full inventories and softer consumer demand have exacerbated this trend, leaving carriers grappling with reduced activity levels. While other verticals, such as pharmaceuticals and automotive, remain stable, the gap left by diminishing eCommerce volumes presents an ongoing challenge.

Capacity challenges and geopolitical pressures

Capacity remains a key issue on the Asia–Europe route. Airlines have deployed additional resources, including charter flights, to manage peak-season bottlenecks. However, this has come at a premium, with carriers competing for limited space amid strong demand for specific commodities.

Geopolitical factors have further complicated operations. The closure of Russian airspace forced carriers to reroute flights, leading to longer journey times, higher fuel consumption, and increased costs. European carriers also face competition from new Chinese entrants and Middle Eastern airlines have added another layer of complexity. This competition, while offering more options, has compressed margins for traditional carriers.

Balancing resilience with adaptation

Looking ahead, the Asia–Europe airfreight trade lane must strike a balance between resilience and adaptation. While commodities such as automotive parts, pharmaceuticals, garments and high-tech goods provide a stable foundation, diversification across more verticals will reduce vulnerabilities.

Capacity pressures and geopolitical disruptions will require innovative solutions, from optimising routes to strengthening partnerships with supply chain stakeholders.

Metro is here to help you navigate these complexities with tailored solutions that ensure reliability, cost-efficiency, and resilience.

Our airfreight, charter, and sea/air services are designed to handle urgent and sensitive shipments with precision. By leveraging block space agreements (BSA) and capacity purchase agreements (CPA), we lock-in space and competitive rates on the busiest trade lanes.

Whatever you’re shipping, Metro’s expertise and strategic carrier partnerships can optimise your supply chain while saving you money.

EMAIL Elliot Carlile, Operations Director, today to explore how Metro’s solutions can support your business on the Asia–Europe trade lane and beyond.

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Shipping routes likely to remain diverted until August

Jan 8, 2025 | , , , , , , , , , , , , , , ,

The diversion of container shipping around the Cape of Good Hope is expected to continue well into 2025 as carriers prioritise stability over the potential risks of returning to the Red Sea, despite recent advancements in the Suez Canal’s infrastructure

The reluctance to return to the Red Sea stems from attacks on commercial shipping by Iran-backed Houthi forces, which have created a precarious operating environment. Earlier incidents prompted carriers to divert ships around the Cape of Good Hope, and the industry remains cautious about resuming transits until the risks are fully mitigated.

Efforts by carriers like CMA CGM to reintroduce Suez services under naval protection have met resistance from shippers who fear both financial and operational uncertainties. As a result, even if the Red Sea crisis were resolved, it is likely that diversions around the Cape of Good Hope would persist for several months while confidence is rebuilt.

The logistical complexity of reconfiguring networks, combined with the risk of potential attacks, has led carriers to maintain their Cape of Good Hope detours and with the lines set to phase in new networks over February and March, further adjustments to accommodate Suez transits are unlikely before August at the earliest.

Shippers, too, are hesitant to support a return to the Red Sea. The concern is not just the extended transit times around Africa but the financial risks associated with general average (GA). If a ship were to be attacked and damaged, resulting in environmental cleanup or other liabilities, insurers may not cover GA in such high-risk zones.

Egypt has successfully tested a new 10 km extension of the Suez Canal, which allows for two-way traffic and increases the canal’s daily capacity by an additional 6 to 8 ships. This improvement also reduces the likelihood of severe disruptions, such as the grounding of the “Ever Given” in the single-lane section of the canal.

As conditions stabilise, the Suez will likely regain its position as the preferred route, but for now the added capacity is not required.

With geopolitical risks casting uncertainty over the industry, building resilient supply chains, securing comprehensive cargo insurance, and managing budgets effectively will be essential for shippers navigating the complexities of the 2025 sea freight landscape.

In this volatile market, our marine insurance cover and fixed-rate agreements on key shipping routes help minimise risk and provide budgetary stability.

To discover how Metro’s insurance solutions and fixed-rate options can support your business in 2025, please EMAIL Managing Director Andy Smith.

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Preparing for Chinese New Year: Avoiding supply chain disruption in 2025

Dec 11, 2024 | , , , , , , , , ,

Chinese New Year (CNY) is a time of celebration across China but presents significant challenges for shippers and careful planning is essential to navigate the disruption effectively.

In 2025, the holiday officially runs from 29th January to 4th February, with its effects on production and logistics stretching weeks before and after these dates.

Production and logistics in China begin slowing well before the official holiday period. Workers start taking leave in early January, significantly reducing manufacturing output by mid-month. During the official CNY public holidays, factories, ports, and freight services shut down entirely. Although operations resume after the Lantern Festival on 12th February, it can take until mid-March for production and shipping networks to return to normal capacity.

This extended downtime creates a ripple effect across industries dependent on Chinese manufacturing, including electronics, textiles, toys, and automotive parts. The period is characterised by delayed production schedules, increased freight costs, and severe supply chain bottlenecks.

Key challenges during CNY
1. Severe delays: Factory closures lead to delayed production and delivery schedules, particularly for industries with complex supply chains.

2. Increased costs: Freight rates spike before the holiday due to high demand, often including peak season surcharges. Post-CNY, container shortages and port congestion further inflate costs.

3. Labour shortages: Even after the holiday ends, the staggered return of workers impacts production capacity, causing additional delays.

4. Inventory challenges: Businesses relying on “just-in-time” manufacturing face stock shortages as lead times lengthen significantly.

Mitigation strategies for businesses
To minimise disruption, businesses must adopt proactive strategies to maintain continuity during and after the CNY period.

Plan shipments early: Secure carrier bookings well in advance to avoid delays or last-minute surcharges. Less-than-container loads (LCL) can offer flexibility if full container capacity is unavailable.

Diversify suppliers and routes: Reduce dependency on single suppliers or ports. Consider alternative shipping methods, such as air freight, to mitigate delays.

Optimise inventory management: Build up stock levels for high-demand products before January to account for production slowdowns.

Enhance communication: Collaborate with suppliers, logistics providers, and customers to align timelines and contingency plans. Clear communication ensures all parties are prepared for potential delays.

Post-holiday recovery: Prepare for a gradual return to normalcy by staggering production schedules and allocating resources to handle delayed shipments.

Key dates to consider
22nd January to 9th February 2025: Potential for reduced production.
29th January to 4th February 2025: Official public holidays.
12th February 2025: Lantern Festival; operations typically resume.

Metro’s proactive strategies, powered by our advanced MVT technology, keep your supply chain running smoothly during Chinese New Year.

With our MVT technology, vendor management is seamless and fully transparent down to SKU level. This powerful tool empowers you to monitor every milestone in your supply chain, enabling timely and informed decisions to effectively navigate challenges.

Chinese New Year doesn’t have to disrupt your operations. With Metro’s expertise, global partnerships, and cutting-edge MVT technology, you can avoid delays, optimise costs, and maintain critical inventory levels.

EMAIL Andrew Smith, Chief Commercial Officer, today to discover how Metro can support your supply chain through Chinese New Year 2025.

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Shipping lines blank sailings from Asia to support rates

Nov 27, 2024 | , , , , ,

Container carriers operating between Asia, Europe, and the United States are leaning heavily on blank sailings to manage capacity and stabilise freight rates amidst ongoing market challenges.

With a significant proportion of scheduled sailings cancelled, this strategy has become a defining feature of the current sea freight landscape, impacting reliability and operating across key trade lanes.

Capacity cuts to sustain rates
Over the next five weeks, approximately 10% of scheduled sailings on major East-West trade lanes have been cancelled. These blank sailings, which represent 70 cancelled voyages globally, are concentrated on the transpacific eastbound trade (50%), followed by transatlantic westbound (27%) and Asia-Europe westbound routes (23%).

This strategic capacity reduction reflects carrier efforts to curb the downward pressure on freight rates, with alliances such as THE Alliance, OCEAN Alliance, and 2M each cancelling 14 voyages. Additionally, non-alliance services have contributed to 28 blank sailings during this period. However, this comes at the cost of declining schedule reliability, with around 10% of vessels expected to miss their planned departures.

Freight rate trends and challenges
Despite capacity cuts, Asia-Europe rate hikes have struggled to gain traction, with carriers introducing new general rate increases (GRIs) and freight all kinds (FAK) rates which have pushed spot rates higher.

While some Asia-Europe rates showed modest gains—with increases of over 20% on certain legs—the overall impact of GRIs has been limited, with transpacific routes struggling. We remain sceptical about the sustainability of further December hikes, as past increases have often dissipated quickly.

Evolving dynamics
The annual contract cycle for Asia-Europe routes is shifting from a January-December framework to a more flexible Q1-to-Q1 arrangement, with some carriers delaying agreements until after the Chinese New Year in late January, in the expectation of some stability.

The heavy reliance on blank sailings highlights the precarious balance carriers are attempting to strike between capacity management and rate stabilisation. While this strategy has mitigated some downward pricing pressures, it has also introduced operational disruptions and diminished schedule reliability.

As carriers continue to adjust capacity in the coming weeks, further blank sailings are expected, underscoring the importance of sharing shipping forecasts, to ensure resilience in the supply chain.

We recommend talking to us now, if you have high-priority orders and sharing your shipping forecasts, so that we can secure your space, on the services that meet your deadlines, at the best possible rates.

To learn how we can safeguard and enhance your ocean supply chain, please EMAIL our Chief Commercial Officer, Andy Smith. 

Category: China

China | Sea | Supply Chain

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