Industry News

Cargo owners may consider air freight as an alternative to Red Sea shipping delays


Logistics experts say companies around the world are scrambling to offload some seaborne cargo to airlines amid uncertainty about how long the Red Sea shipping crisis will last and an impending shortage of ships needed for China's pre-New Year export boom.

Major container shipping lines have rerouted ships around the Horn of Africa or docked in safe locations to avoid the threat of drone and missile attacks by Iran-backed Houthi rebels in Yemen in the Red Sea and Gulf of Aden. The Houthis say they are targeting Israeli-linked vessels in support of besieged Palestinians in the Gaza Strip. 30% of container traffic passes through the Red Sea and Suez Canal, the shortcut between Europe and Asia.

The commercial shipping strike comes as drought forces another trade chokepoint, the Panama Canal, to restrict transit because there is not enough water to operate the large locks. Some ship operators, who recently switched services to the Suez route to avoid Panama transit delays, are now in a dilemma.

With no end in sight and rising tensions in the Gaza war, shipping and freight suppliers are likely to see a surge in business after a long-term market slump that only eased in recent months as China's e-commerce exports There is an increase during the holidays.

Shipping experts say the passage around the Cape of Good Hope has triggered a series of knock-on effects, including ships failing to arrive as planned, ships clustering at ports, terminal congestion and difficulty repositioning global containers. The Cape of Good Hope passage adds seven to 14 days to sailing times to Europe and five to seven days to the U.S. East Coast. In some cases, transit times can be longer, as the tip of Africa often has rough seas and storms.

Lars Jensen, chief executive of consultancy Vespucci Maritime, told a webinar hosted by freight forwarder Flexport on Wednesday that ships loading goods in Asia will now arrive several days late due to seasonal pickups ahead of the Chinese New Year. weeks, which will result in insufficient shipping capacity.

Chinese New Year falls on February 10, but factories will begin slowing down production in mid-January, then shut down completely during the Spring Festival, and then slowly resume production - a pause that could last more than a month. Companies push forward shipping needs every year, leading to congestion at China's ports, shipping delays and higher freight rates.

According to analysis by Flexport, some 540 ships are allocated to Suez Canal services, of which 136 are currently diverted around Africa and 42 have suspended navigation.

Chicago-based Seko Logistics had some inquiries about switching from sea to air ahead of the Chinese New Year holiday, "but that will likely extend into 2024," Chief Commercial Officer Brian Burke Brian Bourke said in an email.

About 97% of container trade by weight is carried by sea, so slight changes in shipping methods can have a huge impact on shipping freight volumes.

If supply chain disruptions in the Red Sea persist, demand for wide-body freighters may soon increase.

“I was on the phone with a global appliance company with offices around the world. Air freight is cheaper than sea freight. We expect shipping in the manufacturing sector to increase as the automotive, electronics and other supply chains assess their inventory needs in the coming days. Freight will surge."

Jensen pointed out that a new European maritime emissions trading scheme due to come into effect on January 1 will be very expensive because carriers will have to pay a carbon tax on their emissions across Africa.

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