Shippers look to the sea as airfreight rates remain sky high

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Shippers are increasing looking to switch from airfreight to ocean as air rates continue skywards and congestion at airports around the world, according to the Freightos International Freight Index.

In its Freightos Index Update W49 2017 report, it says rates are sky-high, with significant congestion in the run-up to Christmas affect domestic and international freight movements at US airports.

Air cargo hit capacity in Europe two weeks ago, with Heathrow Airport experiencing severe backlogs, and bad weather is affecting other European airports including Frankfurt, Zurich and Amsterdam.

Freightos reports that airlines are not expecting congestion to abate and prices to return to normal until 15 January, just in time for the next rush with shipments vying to get out of port before the Chinese New Year shutdown.

This congestion, it says, appears to have encouraged shippers to switch modes to sea, which is not suffering the same capacity issues.

Freightos WebCargo chief executive officer, Manel Galindo says: “I expect this auction-like market behaviour to continue. I’ve seen forwarders paying more than 18€ per kg (over $20/kg) for Europe to South America, and even one offer around 30€ per kg. These prices aren’t realistic – or at least they shouldn’t be!”

“Excepting pharma and tech products, which have enough margins to absorb high air freight costs, many shippers are no doubt reviewing their mode mix and looking to shipping by ocean next year.”