Air Cargo Demand Increases As Red Sea Situation Swells

The dynamics of the Red Sea are nothing short of dynamic and complicated. Ever since the Israel-Hamas war started, the once highly charted waters have become a focal point of geopolitical tensions, with significant implications for global trade and supply chains. The year 2024 is witnessing transformative changes marked by disruptions in both domestic and international arenas, and avoidance of Red Sea shipping routes has led to a disruptive start to the year.

But what’s giving maritime shipping sleepless nights has turned into an opportunity for the air cargo sector. Bolloré Logistics reports a significant increase in airfreight demand attributed to the ongoing Red Sea conflict’s impact on Suez Canal shipping. The volatile situation has led to higher rates, extended transit times, and supply chain disruptions, putting pressure on airfreight capacity.

In response to increased ocean transit times, Bolloré Logistics anticipates additional airfreight capacity from mid-January to early February, particularly ex-China.

The conflict prompted shipping companies to reroute vessels away from the Suez Canal following Houthi Militia attacks on container ships in the Red Sea. This redirection, mainly via the Cape of Good Hope, elevated sea shipment prices and transit times, causing concerns about supply chain delays.

The situation also created opportunities for the air cargo charter business as shippers sought alternative transport for at-risk shipments. Operation Prosperity Guardian (OPG), a multinational defense force, was established to safeguard commercial shipping in the Red Sea.

Despite the formation of OPG, shipping companies remain cautious about operations in the area. Maersk temporarily halted transits through the Red Sea/Gulf of Aden after an attack on the Maersk Hangzhou vessel.

CMA CGM Group resumed some operations, intending to increase vessels traveling through the Suez Canal, while MSC’s vessels remain rerouted due to a second attack on December 26.

Woodland Group warns of continued disruption, citing drone and missile attacks affecting vessel movements. Carriers are increasing diversions, mainly around Africa, leading to significant impacts on global ocean freight management, with space tightening and rates increasing daily as January progresses.

According to Bolloré Logistics, the decision to reroute containerships through the Cape of Good Hope represents more than 350 vessels and close to 5 million TEUs over a two-week period.

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