Date: 03.04.2024

Red Sea update

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.