Red Sea shipping diversions are boosting airfreight volumes and rates

OSLO : Retailers and manufacturers are flying more goods around the shipping crisis in the Red Sea, industry experts say, helping boost international airfreight operators after a long period of sagging cargo volumes.

The strategy, the latest sign of how companies are adjusting their supply chains in response to geopolitical shock waves and disruptions, comes as European importers are seeking to avoid delays caused by longer voyages around Africa by containerships that usually travel through the Suez Canal.

The demand is contributing to “a surprisingly busy airfreight market” during what is traditionally a slow period, said Niall van de Wouw, Chief Airfreight officer at transportation data firm Xeneta.

The Norway-based firm says global airfreight volumes have grown at a double-digit pace in each of the past four months through March, amid signs that demand is particularly strong in trade lanes affected by the Red Sea crisis.

On lanes linking the Middle East and South Asia to Europe, average spot rates rose 46% from February to March to $2.82 per kilogram, a 71% increase from last year. The average global spot rate to ship cargo by air in March rose 7% from a month earlier to $2.43 per kilogram, according to Xeneta.

“Although the market didn’t benefit immediately, the Red Sea disruption was clearly a factor in these latest figures,” said van de Wouw.

Asia-Europe sea-air hubs such as Dubai; Bangkok; and Colombo, Sri Lanka, have been particularly busy since the start of the year, according to data provider WorldACD, with Dubai-to-Europe tonnages doubling in recent weeks compared with a year ago.

The International Air Transport Association said Middle East-Europe trade was the world’s fastest-growing market in February, expanding 39.3% over the same month last year.

Ocean shipping companies have been diverting containerships away from the Red Sea and around Africa since November, when Houthi rebels based in Yemen began attacking ships using helicopters, missiles and drones. The Iran-aligned group says it is responding to Israel’s war in Gaza.

The U.S. and its allies have launched airstrikes on the rebels, but they haven’t been able to secure safe passage for cargo vessels. In February, the Houthis struck a British-owned bulk carrier, the Rubymar, which later sank. In March, the rebels killed three sailors in an attack on another bulk vessel, the True Confidence.

The number of commercial ships sailing through the Suez Canal fell 45% during the first quarter of this year compared with a year ago, according to the International Monetary Fund.

Airfreight is far more expensive than ocean freight transport, but the speed of delivery can be crucial for some companies, particularly with ocean vessels now taking up to 10 additional days to go around the Cape of Good Hope in South Africa.

The extended voyages have posed a challenge for some companies that rely on seasonal products and critical components. Manufacturers including Tesla and Volvo Cars paused production at some car factories in January because of parts shortages.

Mr. Brian Bourke, Chief Commercial Officer at Seko Logistics, a Schaumburg, Ill.-based freight forwarder, said manufacturers in particular are shifting high-priority goods from ocean to air “to meet production schedules and keep factories humming.”

Logistics specialists say global air cargo rates are also rising because of strong demand from growing Asian e-commerce companies, such as Temu and Shein, that rely on aircraft to ship goods to consumers. “We expect this heightened demand to continue,” said Mr. Asok Kumar, Executive Vice President of Global Airfreight at Germany-based freight forwarder DB Schenker.