Global air freight charges have surged for the first time in seven weeks as Asia's Lunar New Year approaches and attacks on ships in the Red Sea drive companies to opt for pricier air transport.

According to data from TAC Index, the Baltic Air Freight Index, which tracks weekly transactional rates for general cargo across various routes, climbed by 6.4% in the week leading up to Monday. This marks a turnaround from the declines observed since the seasonal peak in mid-December.

Attacks by the Iran-aligned Houthi group from Yemen on vessels in the Red Sea, launched in solidarity with Palestinians in Gaza, have compelled shippers to choose longer routes, potentially adding weeks to delivery times.

The spike in rates aligns with expectations following disruptions to ocean shipping in the Red Sea. Additionally, rates often see an increase before Chinese New Year. With many factories in China closing for the eight-day holiday starting February 10, companies are rushing to dispatch stock to customers ahead of time.

Air freight rates from Shanghai surged by 8.8% week-on-week, particularly to Europe, while rates from Hong Kong rose by 5.9% and those from Southeast Asia jumped by 10%.

The Red Sea, a crucial route connecting Asia's manufacturing centers to Europe and the eastern coast of the Americas via the Suez Canal, has become a focal point due to recent tensions.

In response, freight companies are securing more air cargo space, and some customers are opting for air transport, either entirely or partially, to bypass delays.

Although air freight prices had remained relatively stable during the shipping crisis, coinciding with a post-Christmas demand slump, the recent events have disrupted this trend.

Since early 2022, air freight rates have been on a downward trajectory from the all-time highs witnessed during the pandemic. The Baltic Air Freight Index was approximately 24% lower year-on-year as of Monday.

Despite being pricier than sea freight, air freight accounts for less than 1% of global trade by volume, according to the International Air Transport Association (IATA).

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