Date: 17.04.2024

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

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.  

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.