Date: 08.03.2024

Sea/Air growth undiminished

The latest air cargo data is showing a clear upswing in volumes at key sea/air hubs, as shippers from Asia seek to avoid the extended ocean freight transit that has resulted from the Red Sea shipping crisis.

Over the first two months of the year, volumes to Europe from Dubai, Colombo and Bangkok have increased between 60-70% year on year, while volumes from Singapore increased 10% and Doha by 3% year on year.

As reported in our last bulletin air cargo handlers in both Dubai and Bangkok had implemented a temporary embargo as they struggled to keep up with demand.

Our Sea/Air team are seeing massive volume increases out of Asia, with recent bookings passing the 400 ton mark, which is close to 3x what they would be typically processing at this time of year.

Traffic to Europe from Dubai almost tripled in week seven, having grown nearly 100% over the preceding weeks, while ex-Colombo volumes doubled and Bangkok-Europe tonnages were up 2/3rd’s.

The air freight leg from the hubs and particularly Dubai have become more complicated, with USA bound traffic offering greater yields, which means that many carriers are giving the higher earning cargo priority over 2nd Sea/Air volumes into the UK and Europe.

Metro work around the cherry-picking of higher yielding traffic with our airline block space agreements (BSA) and capacity purchase agreements (CPA) that protect space and capacity, or by using alternative hubs when appropriate.

While there is no certainty that demand for sea/air solutions will continue, there is clearly elevated tonnages to Europe from all the major sea/air hubs currently and it remains to be seen what impact the Lunar New Year holidays will have.

So far at least, volumes remain high out of Dubai, Bangkok and Colombo, but there could be be some lag as the effects of the LNY-related factory closures kick in. Time will tell.

Demand for air cargo
Air cargo demand increased by 18.4% year on year in January the second month of double-digit percentage increases, and the highest increase since summer 2021.

The newly released IATA data shows that cargo tonne kms (CTK) and available capacity both increased, the latter by 14.6% year on year, as belly space continued to be added to the market.

The increase is attributed to rising eCommerce demand and modal shift as a result of the Red Sea shipping crisis.

Looking at regional performance, Asia Pacific airlines saw their air cargo volumes increase by 24.6% year on year in January.

Carriers saw ongoing growth in international CTKs on three major trade lanes: Africa-Asia (+52.5%), Middle East-Asia (+29.5%) and Europe-Asia (+27.5%).

The air freight market is particularly challenging from India currently, with congestion on some routes/lanes leading airlines to increase rates significantly in recent weeks.

India’s economy is buoyant and exports are strong, rising over 3% in January despite the Red Sea crisis.

However, there are limited numbers of outbound flights, in particular cargo only flights, with much air cargo reliant on transhipment services moving through hubs including Dubai, Qatar and Kuwait Airways.

With high demand for first leg flights from India into the transhipment hubs carriers will take higher yielding freight as priority and with USA freight offering premiums of over 100%, UK and European freight becomes less attractive.

Approximately 80% of cargo from India tranships, but the same competition exists on direct flights. British Airways, as an example, will favour the much higher rate available for transhipment freight into North and South America, rather than lower paying cargo destined for Europe. This is a fact.

However we have our own BSA’s and CPA agreements with airlines protecting space and capacity over a fixed period which generally gets honoured from all main gateway airports in India.

For urgent, valuable and special shipments we have a range of air freight 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 routing 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.