Red Sea conflict sees air cargo demand rise

10 January 2024

Red Sea conflict sees air cargo demand rise

Bolloré Logistics has observed a spike in airfreight demand attributed to the aftermath of the Red Sea conflict impacting shipping through the Suez Canal. The unsettled situation has resulted in escalated rates, prolonged transit times, and disruptions in the supply chain, exerting pressure on airfreight capacity. The company foresees substantial price increases on major trades as extended ocean transit times place strain on inventories. Bolloré Logistics foresees an augmentation in airfreight capacity from mid-January to early February, originating from China.

In the previous month, attacks by Houthi Militia in the Red Sea prompted shipping companies to redirect vessels away from the Suez Canal. This led to heightened prices and transit times for sea shipments, causing apprehensions about delays in the supply chain. The conflict provided an opportunity for expansion in the air cargo charter business, as shippers sought alternative transportation for vulnerable shipments.

Operation Prosperity Guardian (OPG), a multinational defense force, was established to protect commercial shipping in the Red Sea. However, several weeks into the conflict, shipping companies, such as Maersk and MSC, remain cautious about operations in the region. Maersk suspended transits through the Red Sea/Gulf of Aden following an attack on the Maersk Hangzhou vessel, while MSC's vessels continue to be rerouted due to ongoing security concerns.

Woodland Group has cautioned about ongoing disruptions, citing drone and missile attacks on commercial shipping. Carriers are increasing vessel diversions, primarily around Africa, leading to significant repercussions on global ocean freight management. Major shipping lines rerouting through the Cape of Good Hope represent over 350 vessels and close to 5 million TEUs over a two-week period, according to Bolloré Logistics.

By: Rebecca Jeffrey
Source: Air Cargo News