U.S. port strike sees shippers opting for air cargo
U.S. port strike sees shippers opting for air cargo
Maritime News
02 Oct 2024

U.S. port strike sees shippers opting for air cargo Should strike last for one week, air freight costs will likely rise in mid-October and may last until end of November.

Shippers, especially of perishable goods, in anticipation of the strike across the U.S. East Coast ports, have already moved from ocean to air cargo, according to Judah Levine, Head of Research, Freightos. 

"Freightos Air Index data for Latin America - N. America and N. America - Europe rates don't reflect an uptick in air cargo prices yet, though Europe - N. America rates have increased four percent to $1.73/kg since early September. "China - N. America air rates increased nine percent last week to $5.91/kg. 

This climb could reflect the beginning of air peak season, with prices already above typical peak season levels from the ongoing surge of e-commerce volumes. Though hubs in China are not reporting operational slow downs yet, some congestion is forming in Singapore and Vietnam, with the Philippines experiencing severe backlogs.

" Should the strike last for one week, air freight costs will likely rise in mid-October and may last until the end of November, according to Flexport. "If the strike continues into next week, then rates could continue to spike until the end of the year, with November rate levels comparable to what we saw at the peak of the pandemic.

" Dan Morgan-Evans, Group Cargo Director, Air Charter Service adds: “The strike causes real headaches for shippers, particularly from Europe. Unless President Biden changes his mind and steps in, the delayed cargo and the backlog will have to be flown in. Scheduled freighters will get booked up extremely quickly, so the charter industry will need to step in to help. We are already receiving enquiries, and we expect the first few to book soon as some cargo shipments simply cannot wait. During the West Coast port strike in 2012, we saw a huge amount of charter flights to, but mainly from, Asia, both during and after, to ease the backlog.” 

Drewry Airfreight Insight, a new online air freight market intelligence service launched by Drewry’s Supply Chain Advisory division, confirms air freight’s growing popularity among international shippers as cost and congestion issues continue to impede ocean transport. 

"2024 has been a year of continued supply chain disruption for ocean freight shippers, and has forced many to think and act creatively to alleviate the pressures on their global transport networks. With unreliable transit times and a myriad problems in ocean transport, airfreight has stepped in and aided procurement teams at a time of need," according to the latest update from Drewry. 

As congestion has plagued the ocean freight sector, Drewry has seen double digit growth in air freight volumes, particularly out of Asia, but freighter capacity has remained buoyant enough to sustain this growth, the update added. "Although rates have gone up, they have not matched the steep increases in ocean spot rates. Despite the demand boom in air freight, between December 2023 and September 2024, the cost ratio between air freight and ocean freight spot rates has narrowed from 25.9x to 5.6x

Source: By STAT Times
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