RED SEA CRISIS PROMPTS SWITCH TO AIR CARGO TO AVOID OCEAN FREIGHT DISRUPTION

Retailers are turning to air freight to protect supply chains and keep their products on shelves amid the ongoing crisis in the Red Sea and Suez Canal, according to a new analysis by Xeneta.

 

The Oslo-based ocean and air freight rate benchmarking platform said businesses across the consumer retail and apparel sector relayed that delays and disruption caused by Houthi militia attacks on container ships in the Red Sea had forced them to take action and move their shipments to air.

 

The latest data released by Xeneta shows air cargo volumes from Vietnam to Europe — a major trade route for apparel — spiked 62% in the week ending January 14.

 

Xeneta noted that this is also 6% higher than 2023's peak week in October and a 16% increase on the volumes recorded in the same week 12 months ago.

 

"This is the first signal in Xeneta data that the Red Sea crisis is impacting air freight," said Niall van de Wouw, chief airfreight officer at Xeneta.

 

He noted that this is typically a quieter time of year for air freight, so to see increases of this magnitude, with higher volumes than at any point in 2023, is significant.

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"Routes from Vietnam to Europe are used heavily for apparel, a sector we have been told is switching more goods from ocean to air due to the Red Sea crisis, so it is particularly noteworthy we are seeing volumes increase to such an extent on this trade," he added, although noting that the upcoming Lunar New Year may also be contributing to the increase in volumes.

 

Air freight rates from Vietnam to Europe have increased by 10% compared to last week, but with increasing volumes putting pressure on capacity and load factor, costs could be set to rise further.

 

"When the Red Sea crisis escalated in December, we stated that once the impact starts to be felt in air freight, things could happen very quickly," van de Wouw said.

 

"In the next two weeks, we should know for sure if this represents a genuine and significant shift from ocean to air freight due to the Red Sea crisis," he added.