International trade takes to the skies

International trade takes to the skies to navigate Chinese New Year and Red Sea disruption

Key express air cargo routes are experiencing severe delays and rising rates. Confronted by China’s Lunar New Year holiday and continuing Houthi attacks on shipping, some global companies are switching to air transport. This is disrupting global air freight, warns the international delivery expert ParcelHero.

The international delivery expert ParcelHero is warning that localised severe air cargo congestion is continuing to increase. It says global companies have taken to the skies to avoid the Red Sea crisis and Chinese port closures because of the Lunar New Year two-week celebrations.

David Jinks M.I.L.T., ParcelHero’s Head of Consumer Research and former Editor of ‘Lloyds Shipping Index’, says: ‘Attacks on ships heading for the vital Suez Canal shortcut continue in the Gulf of Aden and the Red Sea. In addition, Chinese New Year (which started on 10 February) has caused its annual global logjam, with many ports and manufacturing companies shutting up shop for up to a fortnight. It’s no wonder many shippers are diverting from maritime services to air freight, especially for more time-sensitive cargos.

‘This switch is having an impact. There was a 10% increase in air freight last month, with global air cargo tonnages rising 24% in one week in January. As a result, air cargo spot rates from China to the US rose 14% in the first week of February. At the same time, China to Europe air freight saw an 8% spot rate increase, with prices averaging 20% higher than mid-January.

‘The reason for this increase in demand for air freight is not hard to understand. Just this week, a Belize-flagged, British-registered cargo vessel, the ‘Rubymar’, was attacked with missiles and the crew was forced to abandon ship.

‘The Houthis’ attacks on global shipping on this vital route between Asia and Europe are forcing many shipping companies to divert from the Red Sea-Suez Canal route to the Cape of Good Hope, adding around nine days on a typical voyage between China and Europe. That means delays and increased fuel and insurance costs. With this in mind, air freight has been looking more competitive.

‘On top of this crisis comes the traditional logistics crunch that is Chinese Lunar New Year. China is marking the arrival of the Year of the Dragon. Celebrations culminate in this Saturday’s Lantern Festival (24 February).

‘Initially, there was a scramble for aviation services as businesses rushed to get products out before the festivities began. Now the continuing demand for air freight on this route is because many ships are birthed for the duration and containers are stuck firmly in Chinese ports until manufacturing ramps up enough to restore full services. Air freight enables those companies manufacturing and operating in Asia to leapfrog the Chinese bottleneck.

‘Handler Bangkok Flight Services was forced to suspend services for a while due to overwhelming demand, saying it experienced “unprecedented volumes of cargo due to the Red Sea crisis, resulting in a modal shift from sea to air, and a higher than expected surge due to the Chinese New Year.”

‘One of the key industries that is clearly unwilling to wait for supply chains to return to normal is fast fashion. Global Forwarding reports retailers and fashion brands are already shipping more goods by air freight, with air cargo volumes from Vietnam spiking 62% in one week in January, up 16% on the same week in 2023.

‘Increased demand for air freight from companies that traditionally use maritime services may well squeeze established regular air freight and parcel services, resulting in decreased capacity and increased costs.

‘The true crunch will come after the impact of the Chinese Lunar New Year subsides – and it usually takes global logistics a good month to return to normal patterns after the festival. Then we’ll see if demand for airfreight continues to build or falls away, even if the Red Sea crisis is ongoing.

‘One piece of good news is that the surge in air cargo costs is unlikely to significantly impact those UK-US air freight services that don’t originate in Asia. However, we do advise everyone sending parcels to the US to regularly check ParcelHero’s USA page, which gives full details on any changes in prices, Customs advice, and details about sending food etc.

‘The US is ParcelHero’s biggest individual overseas market. For expert advice on UK-US shipping, including useful frequently asked questions (FAQs), help for exporters and prohibited items details, see: https://www.parcelhero.com/en-gb/international-courier-services/usa-parcel-delivery

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