Will Air Freight See a Volume Boost Due to the Red Sea Crisis?
With delays out in the Red Sea occurring and uncertainty remains on how long the crisis in the Red Sea may last, some think air freight may see a boost in volume, especially with Chinese New Year approaching. Air freight is of course the faster option, but it is also undoubtable more expensive.
Chinese New Year takes place on February 10th, but factories are expected to close around February 9th and not resume shipping, loading trucks until at least the 15th, perhaps even until the 20th.
With this uncertainty in the supply chain and some vessels diverting away from the Red Sea, this can cause higher transportation costs for shippers. As Freightwaves notes in an article, going around Africa to Europe is an extra 3,000 nautical miles, which can add additional transit times and fuel costs per vessel.
The U.S. announced last week the deployment of Operation Prosperity Guardian, which is a U.S. led operation working with a multitude of other nations to respond to attacks on shipping in the Red Sea.
Additionally, major shipping lines are continuing to weigh their options on whether or not to resume their transits in the Red Sea.
Hong Kong Sees Air Freight Volumes Continuing to Grow, Thanks to eCommerce
Hong Kong expects air freight volumes to grow expeditiously through the end of the traditional air cargo peak season, with experts pointing to ecommerce as the reason for this boost.
Shein and Temu – companies that sell products at significantly lower prices – have played a role as well. “China’s cross-border e-commerce, particularly from Shein and Temu to the U.S. and Europe, is driving a solid peak season for air cargo despite muted business to business volumes,” a market update report from banking company HSBC shows.
Estimated data from the Hong Kong Airport Authority shows their airport is on pace to handle a whopping 4.5 million tons of air cargo this year, which would be up 7% from last year.
This air cargo strength at the Hong Kong Airport has some industry stakeholders investing into the airport’s terminal handling infrastructure to support the volume growth, as the JOC notes in a recent article.