Rising ocean freight rates and fuel surcharges are threatening sea-air cargo volumes on Asia-Europe lanes.
     John Cheetham, Regional Commercial Manager of Asia Pacific British Airways World Cargo, said sea-air was becoming less attractive because shippers were not prepared to pay fuel surcharges for both modes. “The savings are smaller now than in a low-fuel environment,” he added.
     Shippers and forwarders use sea-air options on both Asia-Europe and Transpacific trade lanes with airports such as Dubai, Kuala Lumpur, Incheon, and Miami used to deliver exports from China into the major consuming markets on the air-leg. While some shippers build their entire supply around sea-air deliveries, others move between modes depending on relative costs and their ability to cope with changing lead times.
     Spot rates on Asia-Europe have almost tripled to USD $1,934 per TEU in early May from the record lows of USD $490 per TEU in the first week of December 2011. According to shipping analyst company Alphaliner’s latest survey, Bunker Adjustment Factor surcharges levied by lines increased from an average of $606 per TEU in March 2011 to $827 per TEU this month.
     Airline fuel surcharges have also seen significant increases over the same period, with most carriers increasing surcharges by at least 10 percent.
     Claus Schmidt, Managing Director for the Middle East at Swiss forwarding giant Panalpina, which uses the sea-air model via Dubai extensively on Asia-Europe routes, said that the impact of double fuel surcharges had previously been negated by low sea-freight rates to Dubai, but rising sea rates had changed the equation with sea-air now mostly used as an upgrade on ocean to shorten transit times.
     “This is in comparison to the past when high air freight costs forced shippers to look at sea-air as a cost effective alternative,” he added.
     However, Schmidt said that although the double fuel surcharges were having an impact, General Rate Increases by shipping lines remained the biggest threat to the sea-air mode of transport, which he still insisted offered time and cost savings to customers as well as access to new markets in the Middle East and Africa.
     “Transit times for sea-air shipments are almost halved when compared to moving the goods via sea only, whereas from the costs side, savings can be between 25 and 50 percent depending on origin when compared to pure air freight.
     “Sea-air volumes greatly depend on the level of direct air freight rates and capacity. That is, in times of high air freight rates and limited capacity combined with slow-steaming ocean carriers, the volumes of sea-air will generally increase.
     “Due to the volatility in air freight rates during the past years, sea-air volumes have varied greatly, and we believe they will continue to do so.”
SkyKing