News / Shipper switch to air freight will see rates take off next week

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Shippers are eyeing “surgical” use of airfreight to mitigate the increasing delays caused by the Red Sea crisis.

Airfreight data is not yet showing any real change in rates, despite the disruption at sea – but this is likely to change next week.

“The Red Sea delays are not reflected in rates just yet, but it is to be expected,” said Niall van de Wouw, chief airfreight officer for Xeneta.

“Last week was the week after new year, which is typically dormant. But shippers are switching to air – it’s happening,” he told The Loadstar.

In the week up to 8 January, the TAC Index’s Baltic Air Freight Index fell another 6.6%, with rates out of Shanghai down 7.3%, week on week, and down 5.5% out of Hong Kong.

Mr van de Wouw said the move to air would begin to be reflected in rates next week, adding: “It will take a while for the goods to get into the hands of forwarders. People are definitely switching from sea to air.”

A forwarder in South-east Asia agreed the disruption had not yet hit airfreight rates.

“There is a slight increase, but nothing too drastic as the price disparity between air and ocean is still quite large,” he explained. “But for ocean, we have seen shippers rushing to the gate earlier, ahead of the expected increase in ocean freight rates.”

TAC Index noted, however, that: “Though rates to Europe were edging up, there were signs of some shippers switching to combined sea-air transport options, using sea lanes from Asia to the Middle East and then on by air to Europe to meet delivery deadlines.

“Some sources expect to see more of that in the coming weeks, as many factories have only just started to spool up again since new year.”

Mr van de Wouw was less convinced that sea-air will see the demand boom predicted. He said:  “Sea-air comes up and goes down again. Forwarders are currently offering all sorts of alternatives. But the shippers I’ve spoken to are fully switching to air, rather than using sea-air.”

He noted that one garment shipper was going “all-in” on air. But another shipper said it would use airfreight only “surgically”, depending on its exact needs.