In January 2024, the container shipping crisis triggered by conflicts in the Red Sea did not lead to significant changes in air freight rates; in fact, year-over-year comparisons from the Baltic Air Freight Index (BAI) even showed a decrease. This is attributed to an increase in demand matched by a rise in capacity, particularly in belly space, and stabilization of fuel prices. However, the situation could evolve depending on the developments in the Red Sea crisis.
According to the BAI, air freight rates from Hong Kong and Shanghai to Europe in January fell by 16% and 26% year-over-year, respectively, though they were up 46% and 21% compared to pre-pandemic levels. A similar trend was observed for rates from these Asian hubs to North America, which decreased by 18% and 26%, respectively, with an increase of 36% and 23% against pre-pandemic levels.
Analysts at the Baltic Air Freight Index do not foresee substantial increases in air freight rates in the short term, despite the ongoing negative situation in the Middle East. Hence, a scenario similar to the Suez Canal blockage caused in 2021 by the Ever Given container ship is unlikely, as both maritime and air capacity have become much more flexible.
However, several factors could destabilize the situation in the short term. Beyond the Middle East conflict, considerations include drought lowering the Panama Canal's water levels, impending labor contract disputes on the US East Coast, and the US presidential elections. These factors could lead to an increase in air freight rates, though analysts believe such a phenomenon may only become significant in 2025.
