Air freight rates spike amid Red Sea crisis and in run-up to Lunar New Year
Companies are turning to more expensive air cargo as Houthi rebels up shipping attacks in the Red Sea and to stock up before eight-day holiday next month
Seoul — Global air freight rates have climbed for the first time in seven weeks as Asia prepares for the Lunar New Year and attacks on shipping in the Red Sea prompt companies to secure costlier air cargo space.
The Baltic Air Freight Index, which lists general cargo weekly transactional rates across a number of routes, rose 6.4% in the week to Monday, price reporting agency TAC Index said, reversing declines since a mid-December seasonal peak.
Attacks by Yemen’s Iran-aligned Houthi group on vessels in the Red Sea, launched to express solidarity with Palestinians in Gaza, have forced shippers to take longer routes that can add weeks to delivery times.
“The increase is in line with expectations that rates may spike after disruption to ocean shipping in the Red Sea, though sources also point out that rates often rise in the run-up to Chinese New Year,” TAC Index said.
Many factories in China close for the eight-day holiday which starts on February 10 this year and companies push to get stock out to customers before then.
Air freight rates out of Shanghai rose 8.8% week on week on Monday, led by big increases to Europe. Rates out of Hong Kong gained 5.9% and those rates out of Southeast Asia jumped 10%.
The Red Sea, which leads to the Suez Canal, lies on the critical east-west trade route from Asia’s manufacturing hubs to Europe and then on to the east coast of the Americas.
In recent weeks freight companies have been securing more air cargo space and some customers have begun shipping goods wholly or partially by air to avoid delays.
However air freight prices had remained relatively stable as the shipping crisis coincided with a post-Christmas lull in demand.
Global Air freight rates been on a downward trend since early 2022 from all-time highs during the pandemic. The Baltic Air Freight Index was down about 24% year on year on Monday.
Air freight, more costly than sea freight, represents less than 1% of global trade by volume, according to airline industry association IATA.
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