With disruptions to ocean freight services in the Red Sea contributing to the growth in air cargo spot rates this year and the reliability of ocean freight container schedule remaining low, average ocean container spot rates from Northeast Asia to the US West Coast in the first week of May were more than double the level 12 months earlier, according to Xeneta.

In March, ocean freight container schedule reliability for services from Asia to the US West Coast was just 49 per cent. Into the US East Coast, it was even worse at 38 per cent.

As any improvements in ocean freight container service reliability will be slight at best in the coming months and rates remain elevated, it is not surprising some shippers have turned to air freight to protect their supply chains, the Norway-based ocean and air freight rate benchmarking and market analytics platform said on its website.

There has also been significant movement in the cost difference between ocean container and air cargo services.

For example, in the first week of May, the average air cargo spot rate on the Trans-Pacific trade was just under nine times more expensive than ocean container spot rates. Back at the start of December before escalation of conflict in the Red Sea, air cargo was around 22 times more expensive.

After a temporary dip in March post-Lunar New Year, the eastbound corridor from Northeast Asia to the United States has seen spot rates rebound by more than 30 per cent year on year.

The resilient US economy is another factor which could bolster the air cargo market, Xeneta noted.

Air cargo rates from prominent e-commerce origins–Southern China and Hong Kong–have been elevated since the end of last year's peak season.

Due to the slow recovery of belly capacity from China to the United States, the average spot rate from Southern China to the US exceeded that of Hong Kong to the US during both the peak season at the end of last year and the Red Sea crisis.

This reverses the traditional rate levels between the two regions seen prior to the e-commerce surges. This sentiment extends to neighbouring air cargo hubs as shippers seek out other available capacity.

For instance, the average general cargo spot rate from Vietnam to the United States in the first week of May surged by nearly 60 per cent from the same period in 2019.

Conversely, general cargo spot rates on other routes from Eastern China, Taiwan, Singapore, Thailand, South Korea, and Japan were less expensive. They were around 15 per cent to 50 per cent below those from China’s e-commerce hubs during the first week of May.

Therefore, shippers and freight forwarders could explore these additional routes to optimise capacity utilisation and improve cost management, Xeneta added.

Fibre2Fashion News Desk (DS)

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