December 2 - The recent US west coast port congestion issues have temporarily reversed the long-term modal shift from air to ocean as shippers seek alternative ways to ensure their goods hit the stores in time for the US holiday season, said Drewry in its
But it added that whilst the issue will help to inflate air rates and demand temporarily, it will not reverse the longer-term trend towards the ocean.
However, whilst Drewry says that the long-term trend from air to ocean transport is not expected to be reversed, it questions whether supply issues in the container sector, including poor reliability, rolled cargo, missed voyages in peak cargo months and port congestion is starting to slow the modal shift. Its report notes that more recent numbers show that international air freight growth is starting to keep up with container traffic growth and even overtake it in certain months.
In light of events on the US west coast, Drewry notes that some shippers pre-empted the disruption in the container sector by moving cargo earlier and via the longer all-water route to the US East Coast, but as the countdown to "Black Friday" and the start of the holiday season got ever closer, more expedient solutions were required.
The USWC port slowdown could not have been designed to cause more disruption or extra cost. Shippers converting to air freight are doing so at a time when air rates are at their seasonal high point of the year.
Drewry expects air freight rates will continue to show a rise for November as the shopping season hits full swing, while tighter capacity will also support stronger pricing on certain trades. The backlog at US west coast ports has the potential to soften the traditional drop in Asia to US rates in December and depending on how long the issue remains unresolved could prop up air rates through until Chinese New Year.
World air cargo growth has, for a number of years, lagged behind container shipping growth due to a combination of factors, including higher demand for commodities that are typically shipped by ocean freight, faster growth at the low-value end of commodities such as t-shirts that reduces air cargo's overall share, and finally the sea conversion of "mature" products.
Air cargo's eight year CAGR of -1.4 percent for the said commodities is the near mirror-opposite of the same items moved by container ship.
Drewry says congestion at the US west coast ports is a costly reminder to shippers of the need for risk planning, particularly in peak seasons.