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Asia-Europe Sea-Air Hubs Record Strong Surge In Tonnages

KUALA LUMPUR: Several key Asia-Europe sea-air hubs have recorded a strong surge in tonnages in the last few weeks, as shippers continue to seek alternative logistics solutions due to the disruptions to container shipping caused by the attacks on ships in the Red Sea.

Air cargo tonnages to Europe from Dubai, Colombo, and Bangkok have been at significantly elevated levels this year compared with the equivalent period last year.

According to a recent report by WorldACD Weekly Air Cargo Trends, freight sources have reported that some Asia-Europe sea-air hubs such as Dubai, Colombo and Bangkok have been inundated with air cargo in recent weeks, as cargo owners seek to replenish stocks in Europe that have run low because containerships that would normally transit via the Suez Canal have been forced make the longer voyage around the Cape of Good Hope.

Recent in-depth analysis by WorldACD Market Data can confirm that air cargo tonnages to Europe from Dubai, Colombo and Bangkok have been at significantly elevated levels this year compared with the equivalent period last year.

Analysis, based on the more than 450,000 weekly transactions covered by WorldACD’s data, reveals that in the first seven weeks of 2024, all three of those sea-air hubs have seen their respective flown tonnages to Europe rise by more than 50 per cent compared with the first seven weeks of 2023, with Dubai-Europe traffic up 71 per cent, Colombo-Europe tonnages up 61 per cent, and Bangkok-Europe volumes up 58 per cent, year-on-year (YoY).

But despite some reports of elevated traffic volumes to Europe via Singapore and Doha, Singapore-Europe and Doha-Europe tonnages were up, YoY, by just 10 per cent and 3 per cent, respectively, in the first seven weeks of this year.

“The later timing of the Lunar New Year (LNY) this year on February 10, compared with January 22 last year, makes precise and week-by-week comparisons difficult.

“Still, across the first seven weeks, there is a clear pattern of elevated tonnages to Europe from Dubai, Colombo and Bangkok.

“The patterns are less clear in pricing because of multiple variables at play, including LNY and the market-wide decline in pricing compared to last year,” the report noted.

And it’s unclear currently whether the elevated demand for sea-air solutions will continue significantly beyond the LNY period, with ex-Asia Pacific normally associated with a spike in demand leading up to LNY followed by a subsequent fall in tonnages and prices, it said.

Tonnages in week 7 (February 12 to 18) remained up, YoY, to Europe from Dubai, Colombo and Bangkok.

Dubai-Europe gains have almost tripled in week 7 to 161 per cent YoY, while the previous three weeks stood at 89 per cent, 93 per cent and 77 per cent.

Colombo-Europe volumes in week 7 were more than doubled to 112 per cent, the levels of week 7 in 2023, and Bangkok-Europe tonnages also remained highly elevated at 68 per cent.

Meanwhile, the global picture shows the effects of the traditional seasonal decline in demand ex-Asia Pacific in the days following LNY, with a big decline in tonnages ex-Asia Pacific pushing down overall tonnages in week 7 by a further
to 10 per cent, following a similar tonnage drop in week 6.

“Looking at average global rates, we see a week-on-week (WoW) drop of 6 per cent in week 7 this year, compared to an 8 per cent WoW decline in the equivalent post-LNY week (week 4) last year, consistent with a broadly similar seasonal pattern.

“Those average global yield declines can be explained as a ‘mix effect’, with reduced high-yielding volumes ex-Asia Pacific causing a drop in the global average, and not by individual rates decreasing,” the report said.

Expanding the comparison period to two weeks, total combined tonnages for weeks 6 and 7 this year were down by 14 per cent, globally, compared with the preceding two weeks (2Wo2W), with average rates stable and capacity down by 4 per cent.

The dominant effect of LNY on these figures can be seen in the 25 per cent drop in tonnages, 2Wo2W, from the origin region Asia Pacific.

Even after that 25 per cent drop, 2Wo2W, those tonnages are still at almost the same level as in weeks 6 and 7 last year (1 per cent), despite LNY occurring almost three weeks later this year, pointing towards a structural improvement compared with last year.

Meanwhile, tonnages from the Central and South America origin region were also down significantly by 27 per cent, 2Wo2W, but this was principally due to a spike in flower shipments from ex-Central and South America in previous weeks ahead of Valentine’s Day on 14 February.

The only origin region in weeks 6 and 7 this year to record an increase in tonnages on a 2Wo2W basis was the Middle East and South Asia (2 per cent), mainly driven by a 6 per cent rise in Europe.

And Middle East and South Asia were the only origin regions to show a significant rise (11 per cent) in average rates, 2Wo2W, with Middle East and South Asia to Europe the only major intercontinental lane to show a significant rise in average prices (18 per cent) – most likely a reflection of the surge in recent weeks of Asia Pacific to Europe traffic converted to sea-air, it said.

The report further said YoY comparisons show a 1 per cent decrease in total worldwide tonnages for weeks 6 and 7, combined, compared with last year, despite LNY occurring almost three weeks later this year, again suggesting a structural improvement in demand levels compared with last year.

With most origin regions showing a small to moderate YoY decline, the Middle East and South Asia were again the outliers, recording a YoY rise of 22 per cent – likely a further indication of the conversion of Asia Pacific to Europe ocean freight to sea-air volumes.

On the pricing side, average worldwide rates of US$2.24 per kilo in week 7 are 16 per cent below their levels this time last year, with rates from ex-Europe and ex-North America down by 32 per cent and 21 per cent, respectively.

Nevertheless, average global rates remain significantly above pre-Covid levels at 26 per cent compared to February 2019.

Overall worldwide air cargo capacity remains significantly up on last year’s 9 per cent, most notably with double-digit percentage increases ex-Asia Pacific (18 per cent) and ex-Middle East and South Asia (11 per cent), the report said.

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