Red Sea crisis. Demand for multimodal transport is growing

Author: Greg Gowans

Not long after passage through the Red Sea became unsafe at the turn of the year, forecasts emerged that some shippers would turn to a combination of sea and air freight in order to mitigate the disruption caused by container ships being diverted around the Cape of Good Hope.

According to Xeneta, on the week ending 14 January, China to Europe air freight spot rate for general cargo stood at USD 2.95 per kg, which was down 43% from its peak in early December. The market analytics platform nonetheless says there are signs of shippers with valuable, time-sensitive shipments switching to air freight due to the longer ocean freight transit times. Xeneta adds that demand for Dubai-Europe air freight rose 11% in early January. Industry media reports back this up, with Kuehne+Nagel among others declaring higher than than normal demand for Asia-Europe sea+air freight.

The sea+air option results in a significant increase in emissions, and is also noticeably more expensive. However, according to OOCL logistics, the sea-air route takes between 16-19 days. Given that Maersk normally allows for 30–45 days for Asia-Europe transport, and this is now being delayed by 10-15 days, some shippers will see value in paying extra to ensure their valuable cargo can arrive on time.

Other alternatives include the Asia-Europe rail freight, for which OOCL Logistics estimates transit times of 2-3 weeks. In January, Codognotto also launched a new China-Milan service, which takes 22 days in total. In addition, some forwarders are implementing road freight land bridges in the Middle East. These services see goods transported across Saudi Arabia and into Egypt, where they can then be shipped into Europe.