An East Coast Port Strike Means Spiking Air Freight Rates, Space Scarcity
A looming East and Gulf Coast port strike is forcing more ocean freight out to the West Coast, but more retailers are likely to squeeze some product into the U.S. via air in the coming weeks.
A Sept. 6 report from air cargo market data provider WorldACD indicated that the potential work stoppage could lead to further conversions of sea to air cargo, on top of the already occurring shifts due to the disruptions to Red Sea shipping.
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For a crash course in what to expect in the remaining weeks of September, look back to previous labor talks at the ports, such as during the West Coast port negotiations of 2014-2015 or the East Coast port negotiations of 2012-2013, which required federal intervention to avert a strike.
“Many shippers shifted goods from ocean to air, and at the end of the day, that, of course, resulted in rate spikes and capacity shortages, especially for urgent shipments,” said Thomas Kempf, senior director of global air freight at Flexport. “The lesson we could learn is that strikes usually slow down and stop those shipments at major ports.”
According to Kempf, the sectors that would be most likely to shift to air include consumer goods and household items, electronics and essential commodities like agricultural products. Additionally, time-sensitive cargo like high-value perishable goods and pharmaceuticals are usually prioritized for air shipments.
In a Monday advisory to customers, third-party logistics (3PL) provider Crane Worldwide Logistics said shippers should consolidate smaller shipments into larger consignments to optimize space and reduce costs.
For European shippers looking to air cargo into the U.S., Crane says it has secured space availability from London Heathrow and Frankfurt as well as other major European airports.
“If the strike does come to fruition, we would expect heavy demand on airports such as Boston, New York, Charlotte, Washington and Miami,” the post said. “If this is the case, alternative airport hubs such as Atlanta, Chicago and Houston could be utilized with our own domestic trucking service to support road freight movements.”
However, Christian Nielitz, vice president of global air services at Crane Worldwide Logistics, told Sourcing Journal that as of Wednesday, his company hasn’t observed “a significant demand for transitioning from ocean freight to air freight.”
Any such shutdown of the East Coast ports, or concern of one, is likely to force the shippers to pay premium prices for air freight.
“This will be especially true for the last-minute shipments,” said Robert Khachatryan, CEO of Freight Right Global Logistics.
Air freight prices have already been increasing steadily throughout 2024 without the labor concern facing shippers. After all, total demand for air cargo has increased at a double-digit pace for eight straight months, says the International Air Transport Association (IATA).
In line with the swelling demand, rates from the week of Aug. 26 to Sep. 1 increased 13 percent to $2.51/kg from the year ago period, and 15 percent from the week of Feb. 19-25, according to WorldACD.
Nielitz told Sourcing Journal that Crane has observed a gradual increase in rates on the trans-Atlantic route. While the 3PL did not directly attribute the increase to the upcoming contract deadline, Nielitz did say the firm anticipates further rate increases on trans-Atlantic routes as European shippers transition to air freight, “which is expected to tighten capacity.”
Additionally, some freighter operators are withdrawing capacity from the trans-Atlantic market to redirect it toward Asia, further impacting availability, according to Nielitz.
“When you take that already, and then you combine it with potential further spillovers from these labor union strikes, that’s, of course, a really, really dangerous mix,” Kempf told Sourcing Journal. “Space is just already scarce.”
According to his conversations with Asia-based carriers in recent weeks, Kempf said 80 to 90 percent of available capacity was already full. He now estimates that depending on the carrier, that number might be “closer to 95 percent.”
Freight Right’s Khachatryan said that in the past, disruptions like the potential port strike would result in capacity being added quickly via additional charter flights. But the current market environment is different, particularly considering the growth of e-commerce in recent years.
“Unlike past strikes, this year the charter market does not have a lot of available capacity to deploy thanks to the consistent demand from e-commerce shippers like Temu and Shein,” said Khachatryan.
Shein and Temu, according to February research from Cargo Facts Consulting, jointly dispatch 9,000 tons of air freight each day from airports across southern China.
Kempf said these players have already procured some air cargo capacity into the second half of 2025. However, one other e-commerce giant could potentially make room for more shipments in the coming weeks.
“The wild card this time around may be Amazon’s Prime Air which recently started chartering their aircraft out to the market,” said Khachatryan. “It would be very interesting to see what kind of role they take on as their internal demand for air freight has stabilized well below their available capacity.”
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