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Suppliers Turning To Air Freight After Red Sea Attacks

Australian suppliers and distributors are moving to fly in more goods than ever before with airlines witnessing a surge in freight volumes that fell after an initial Covid period surge.

Also contributing to a surge in air freight is the growth in online ordering from the likes of Temu and Amazon overseas operations.

The decision to airfreight selects goods comes as European manufacturers move to avoid delays caused by longer sea voyages around Africa by containerships that usually travel through the Suez Canal.

The International Air Transport Association claims that Asia Pacific and Middle East-Europe trade was the world’s fastest-growing market in February, expanding 39.3% over the same month last year.

According to the Wall Street Journal Ocean shipping companies have been diverting containerships away from the Red Sea and around Africa since November, when Houthi rebels based in Yemen began attacking ships using helicopters, missiles and drones.

The move is helping boost international airfreight operators after a long period of sagging cargo volumes with manufacturers passing on the cost of airfreighting goods on to retailers.

The demand is contributing to “a surprisingly busy airfreight market” during what is traditionally a slow period, said Niall van de Wouw, chief airfreight officer at transportation data firm Xeneta.

The Norway-based firm says global airfreight volumes have grown at a double-digit pace in each of the past four months through March, amid signs that demand is particularly strong in trade lanes affected by the Red Sea crisis.

On lanes linking the Middle East and Asia Pacific to Europe, average spot rates rose 46% from February to March to $2.82 per kilogram, a 71% increase from last year.

The average global spot rate to ship cargo by air in March rose 7% from a month earlier to $2.43 per kilogram, according to Xeneta.

“Although the market didn’t benefit immediately, the Red Sea disruption was clearly a factor in these latest figures,” said van de Wouw.

While airfreight has been far more expensive than ocean freight transport in the past current low-cost airfreight pricing is helping manufacturers to avoid big delays.

The extended voyages have posed a challenge for some companies that rely on seasonal products and critical components.

Brian Bourke, chief commercial officer at Seko Logistics, a Schaumburg, Ill.-based freight forwarder, said manufacturers in particular are shifting high-priority goods from ocean to air “to meet production schedules and keep factories humming.”

Logistics specialists say global air cargo rates are also rising because of strong demand from growing Asian e-commerce companies, such as Temu and Shein, that rely on aircraft to ship goods to consumers. “We expect this heightened demand to continue,” said Asok Kumar, executive vice president of global airfreight at Germany-based freight forwarder DB Schenker.

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