Shipping capacity shortage and port congestion have limited impact on air transport
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Container shipping business outside Asia has unexpectedly worsened in recent weeks, but the development is expected to have a limited impact on air cargo.
Congestion has returned to ports over the past few weeks and a shortage of container shipping capacity outside Asia has pushed up ocean shipping prices.
Data from analyst Xeneta shows that ocean freight rates from Asia to Europe are currently up 198% year-on-year, and ocean freight rates from the Far East to the US West Coast are up 214%.
DSV said this "significant development" "came as a surprise to most people".
However, while shipping capacity shortages and port congestion tend to lead to higher demand for air cargo, Niall van de Wouw, chief air cargo officer at Xeneta, said the impact on air cargo this time was likely to be limited.
He explained that in Xeneta's view, the main reason for the surge in demand is that shippers are preparing for possible disruptions during the peak shipping season, rather than rushing to transport cargo.
"We believe the spike in ocean freight rates is due to shippers loading ahead in anticipation of tight capacity in the third quarter, which is the peak shipping season," he said.
"If that's the case, then it's a safety measure, not an emergency measure, and I think the impact on air cargo will be limited.
"They're moving inventory around, and if that's delayed, you don't need air freight to make up for it."
The move could even lead to less urgency in supply chains in the second half of the year, he added.
He said: "If they are shipping peak season cargo now, it means they will have quite a lot of inventory at the destination, which will limit the need for emergency airfreight because their inventory will be higher than usual to avoid potential Capacity is tight.”
In a market update, freight forwarder DSV said there were several reasons for rising pressure on ocean freight.
The company said that despite adding extra capacity to the market, the impact on capacity levels of longer sailing times around Africa to avoid missile attacks in the Red Sea was starting to worsen.
“Weekly capacity from Asia to Europe is down around 10% year-on-year, despite more vessels and more capacity being used to operate a network,” the forwarder explained.
“Perhaps the most important factor contributing to the pressure we face in the market is congestion in many central ports around the world.”
Data from market analysis agency Sea-Intelligence shows that the on-time performance of all ships from Asia to Europe is only about 37%, which is the lowest level in more than a year.
Port congestion could cause ships to be delayed and miss their next flight from Asia, exacerbating shipping woes.
DeSway said it expects the problems to continue until at least July.
In a Xeneta webinar earlier this week, Tiaca director general Glyn Hughes also highlighted the issues facing the marine market this year.
"A sea voyage from Asia to Europe (around Africa) can add two weeks to the sailing time and also add additional costs," he said.
“Fuel consumption, operating costs, so in some cases, the price (of containers) has more than doubled.
“It has also had a secondary effect, as the return of empty containers now takes up to four weeks.
"We're also hearing reports that there's actually a shortage of containers, which means they can't even get containers to some ports in China and Southeast Asia.
“This is the second push to move to the air because they can’t wait to get containers back into the distribution cycle.”
He added that rising shipping costs also make air cargo a more attractive option.
"These are very positive signs for the air cargo industry, but it is a shame for the overall disruption to the supply chain in the coming months," he said.
