Yemen’s Houthi rebels claimed responsibility on Tuesday for a missile attack on a Malta-flagged cargo ship in the Red Sea as the US says it has launched a new strike on Houthi targets amid soaring tensions around the key waterway.
The recent Houthi attacks in the Red Sea have not only escalated sea freight charges but are also poised to drive up air freight rates due to increasing disruptions in global trade. In recent weeks, ocean freight rates have witnessed a significant rise, increasing up to US$10,000 per 40-foot container. Many container ships seeking to avoid the attacks have embarked on long detours around the Cape of Good Hope in South Africa instead of the shorter route via the Suez Canal, which connects the Mediterranean Sea to the Red Sea.
This shift is causing considerable delays in maritime trade, leading some retailers to consider air freight as an alternative. Analysts indicate that companies, traditionally reliant on sea freight, are now seeking faster delivery options. Matthew Burgess, Vice President of Global Ocean Services at C.H. Robinson, noted that some shippers are adopting a survival strategy, prioritising the movement of freight by any available means.
Anticipated shift from ocean to air freight
C.H. Robinson is proactively securing additional air capacity on key trade lanes in anticipation of a shift from ocean to air freight. DHL Global Forwarding Americas' Air Freight Head, Andreas Von Pohl, confirmed to CNBC that while conversions are currently minimal, this is expected to change if the situation in the Red Sea persists.
HSBC’s Global Head of Shipping and Ports Research, Parash Jain, anticipates a surge in air freight rates in the coming weeks, particularly with the Chinese New Year holiday in February. During this period, exports from Asia typically increase as businesses prepare for a two-week shutdown.
Xeneta, an ocean and air freight analytics platform, reported that overarching air cargo spot rate recorded a 18% year-on-year decline in December. Global average air cargo spot rate peaked at about US$2.6 per kilogram in December, according to Xeneta data.