Air freight rates will rise as shipping companies enter survival mode

DHL Cargo aircraft are unloaded at Leipzig Halle Airport on February 28, 2014 in Leipzig, Germany. The soon-to-be-expanded center handles 2,000 tons of cargo, or 100,000 parcels and documents every working day. Up to 60 cargo planes land every weeknight.

Marco Brosh | Getty Images

Not only will Houthi attacks in the Red Sea lead to an increase in sea shipping, but air freight rates will also rise, with global trade flows increasingly disrupted.

In recent weeks, sea freight rates have soared by as much as $10,000 per 40-foot container, as container ships seeking to avoid attacks embarked on long detours around South Africa's Cape of Good Hope, shifting more than $200 billion in… Goods away. A critical artery of trade.

Delays in sea trade may prompt some retailers to switch to air freight, as companies typically ship their goods by sea Want to ensure faster deliveryAnalysts said.

This means that air freight is about to play an expanded role in the supply chain ecosystem. Air shipping can cut delivery times to Only a few days Compared to the weeks it takes ocean carriers.

“Some shippers are already in survival mode with one goal in mind: making sure my freight moves by any means possible,” said Matthew Burgess, vice president of global ocean services at CH Robinson.

In anticipation of the influx of ocean-to-air remittances, the transport logistics company is already blocking additional air capacity on key trade lanes to keep freight moving, Burgess said.

German logistics giant DHL told CNBC via email that the company has received many inquiries but there have not been many conversions so far.

“We expect this to change if the situation in the Red Sea continues,” said Andreas von Pohl, head of air cargo at DHL Global Forwarding Americas.

If this happens, it will inevitably push interest rates to higher levels.

“We will see air freight rates rise,” said Parash Jain, global head of shipping and ports research at HSBC. He said industry observers expect to see increases in the next two or three weeks, especially with the Chinese New Year holiday approaching in February.

Traditionally, there is an increase in exports out of Asia during the annual holiday period as companies try to move more goods before business shuts down for two weeks.

“The predictability of air freight means the industry will benefit from heightened international disruption,” said the Sea and Air Freight Analytics Platform Zenita wrote in a recent report.

The analytics firm noted that the all-in spot price for air freight registered a 18% year-on-year decline in December. The average global spot price for air freight peaked at about $2.6 per kilogram in December, according to Zeneta data.