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Red Sea conflict sees Air cargo demand rise

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PUTEAUX (FRANCE): Airfreight demand is rising as a result of the Red Sea conflict impact on Suez Canal shipping, according to Bolloré Logistics.

The international transport and logistics company said that the “volatile” situation, which has resulted in higher rates, increased transit times and supply chain delays, will squeeze airfreight capacity.

“The increased ocean transit times shall put pressure on inventories and have an immediate repercussion on airfreight capacities, with significant price hikes expected on major trades,” said the company on Friday December 29.

Bolloré added that it anticipates additional airfreight capacity between mid-January and early February ex-China.

Last month saw shipping companies reroute vessels away from the Suez Canal in Egypt following attacks by Houthi Rebels on container ships in the Red Sea, off the Yemen coast.

Many shipping companies rerouted vessels via the Cape of Good Hope in southern Africa or temporarily ceased shipping operations via the Suez Canal altogether.

This pushed up the prices and transit times for sea shipments and resulted in concerns about supply chain delays and congestion.

Meanwhile, the conflict created an opportunity for increased air cargo charter business as shippers and forwarders looked to secure alternative transport for at-risk shipments.

A multinational defence force, Operation Prosperity Guardian (OPG) was set up last month to try and safeguard commercial shipping in the Red Sea.

Now, weeks on from the start of the conflict, shipping companies remain cautious about operations in the area.

An update on January 2 Maersk confirmed the company had made the “decision to pause all transits through the Red Sea/Gulf of Aden until further notice” following an attack on its Maersk Hangzhou  vessel.

Meanwhile, CMA CGM Group has resumed some operations in the area and on December 26 said that it would increase the number of vessels travelling through the Suez Canal.

However, MSC’s vessels remain rerouted. The carrier suffered a second attack on one of its ships on December 26.

Woodland Group warned of continued disruption. On December 29, the company said: “Despite the recently formed multi-national coalition to increase security in the Red Sea, drone and missile attacks targeting commercial shipping continue to interrupt vessel movements on this busy route.

“As a result, carriers are increasing the number of vessel diversions, rerouting mainly around Africa at this time.

“The effect on global ocean freight management has been significant, with space becoming increasingly tight and rates increasing daily as we head into January.”

According to Bolloré Logistics, the decision by major shipping lines to reroute a majority of containerships through the Cape of Good Hope “represents more than 350 vessels and close to 5 million TEUS over a two weeks’ period”.

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