Balancing cost and speed: Is airfreight a viable alternative to sea freight

Sea freight is generally much cheaper and air freight. In DHL’s white paper, unlock the true value of your supply chain, they report the experience of one company in the study who shifted from air to sea freight for their services between Hong Kong and South Korea. This change led to a 27% improvement in logistics costs, despite the increased lead time. However, the growing tension between cost and speed is pushing businesses to reevaluate their logistics strategies, especially when choosing between ocean and air freight. According to DHL’s Ocean Freight Market Outlook, demand for sea freight remains robust. This is fueled by China’s export surge ahead of potential U.S. tariffs and the early Lunar New Year preparations. Despite this, capacity challenges are becoming more evident. Transatlantic carriers have reduced capacity by closing loops and replacing larger ships with smaller units, while adverse weather conditions continue to delay vessels and create equipment imbalances.According to DHL, capacity is also tightening. Larger containerships operating at near-full utilization and annual dry container production at record highs. Freight rates, meanwhile, have soared across the board—up 245% for intra-Asia routes and 147% to the U.S. West Coast. Air freight is no different. According to the International Air Transport Association (IATA), the industry faces all the challenges common to logistics.But air freight has grown more than expected. While it was forecasted to grow by 5% in 2024, IATA reported that Asia-Pacific airlines saw a 17.6% year-on-year demand growth for air cargo in June, the strongest growth of all regions.This growth is indicative of a broader trend in logistics, where demand for faster, more reliable delivery is creating new opportunities for air freight, despite its higher costs. The shift toward air freight highlights the importance of timely delivery for certain industries, such as electronics, pharmaceuticals, and high-value consumer goods, where speed often outweighs cost concerns.This growth for the air freight industry was driven by a perfect storm. IATA reports that disruptions in maritime shipping, like the Red Sea Crisis, caused a sharp drop in relative air cargo rates over maritime shipping in 2024. This is because disruptions reduced the availability and reliability of sea freight making air cargo a more attractive alternative.Moreover, the year’s e-commerce boom also increased the demand for air freight services, as retailers sought faster delivery options to meet customer expectations.The surge in e-commerce is not just a temporary phenomenon. With consumer expectations for faster shipping continuing to rise, businesses are being forced to adopt more flexible logistics strategies to remain competitive. This trend is expected to persist well into the future, as consumers become accustomed to next-day or even same-day delivery.DHL also reports solid growth in the air freight industry, driven by the holiday shopping season and increased consumer spending. E-commerce continues to be a major driver of air cargo demand, especially for high-value and time-sensitive goods.

However, much like ocean freight, bottlenecks are still evident in air freight. According to DHL, air cargo is facing tightening capacity amid high demand and limited freighters as 2024 comes to a close. This is due to the extremely high demand outpacing available air cargo capacity, especially on key trade routes. Capacity constraints are further exacerbated by reduced belly cargo capacity on passenger flights and a limited supply of widebody freighters.Moreover, following Trump’s victory in the 2024 U.S. elections, air cargo inbound to the United States has surged as importers rush to prepare for anticipated tariff increases. Retailers, already front-loading inventory due to a shortened holiday season and global shipping bottlenecks, are now accelerating their purchases in response to the looming threat of a mid-January port strike and the tariff hikes.

Weighing the Benefits and Trade-Offs: The difference between air freight and sea freight is a decision that hinges on industry needs. This is crucial because logistical considerations significantly impact businesses operations. In the Philippines, one of the primary methods of logistics is sea freight. However, there has also been big investments in developing the air transportation industry within the region. Both to cater to domestic and foreign logistics needs.

Transit Time: Air freight shipments typically take two to four days to deliver. This is seen especially in e-commerce transits, pharmaceuticals, plant products and other time crucial cargo. Sea freight usually takes more time and may last from one week to one month depending on the schedule. However, both can still experience significant delays.Cost: Air freight generally costs more because they are calculated based on the size and weight of your cargo as well as the cost for the jet fuel consumption. The cost of fuel is a main factor driving the price of transportation. The cost of sea freight on the other hand is dependent on the space occupied by your cargo. This is because the space available for cargo for airfreight is different versus seafreight. For larger size cargo, sometimes seafreight is the only option as the large shipment can only be carried in transport containers which goes on ships but not planes. While air freight can utilize both dedicated freighters and passenger flights, freighters are less widely available and do not cover all routes or origin-destination pairs, limiting their accessibility. Weather Conditions: For countries in Southeast Asia, typhoons are extremely prevalent. When this happens, flights get cancelled, causing delays for millions of air cargo shipments. Sea freight ships on the other hand can sustainably handle bad weather. Moreover, Sea shipping companies can reroute before ships leave ports. Port closures due to weather are also generally rare.Cargo Accommodation: Air freight is normally more ideal for smaller, time-sensitive or high value cargo. This includes cargo like food, jewelry, cosmetics, for e-commerce products from flash sales. Sea freight however tends to have more space to move high volume goods and equipment.

The premium to pay for air freight is significant, however numerous industries are already opting for this option. This is mostly due to businesses who ship perishables with shorter lifespans, temperature sensitive items, high value goods that require careful handling and e-commerce products. However, certain limitations exist in air freight that does not happen in sea freight. According to DHL, air freight capacity is struggling to keep up with growing demand. Because of this, air freight cargo is moving to commercial passenger flights which have less weight and space capacity and regular cargo planes.This shift has significantly limited the type of products air freight can ship. This is because goods that include lithium-ion batteries, items that are toxic, corrosive or flammable can’t be transported on passenger flights. These restrictions are becoming more stringent and complex.Sustainability is also a huge cause of concern. International freight platform Freightos reports that on average, air freight pollutes 20-30 times more than sea freight. Cargo ships emit approximately 10-40 grams of carbon dioxide per kilometer, while air freight produces 500 grams per metric ton per kilometer.Air freight then produces an estimated 80 times more carbon than shipping by sea. In 2024, air freight operators increased their greenhouse gas emissions by 25% compared to 2019. This amounts to almost 94 metric tons overall, while belly cargo emissions have bounced back to almost 90% of pre-pandemic levels. Moreover, geopolitical conflicts and new regulations are severely disrupting global air cargo operations. According to DHL’s 2024 state of the airfreight industry report, new security regulations in the west are driving operational challenges and higher rates. This is due to new pre-screening and compliance demands.The report also noted that there are currently numerous flight cancellations to and from Lebanon by most airlines due to ongoing Middle East conflict. This has led to industry backlogs, constraining exports. However, a cargo rush is also underway in Asia as businesses try to avoid incoming threats of increased tariffs from the United States.

As global trade evolves, airfreight is playing an increasingly prominent role in supply chains. For businesses, the decision to choose airfreight or seafreight hinges on factors such as cost, speed and sustainability. Airfreight’s ability to deliver goods quickly makes it an attractive option for industries where time is critical. According to IATA, air traffic is expected to grow in 2025, albeit at a slower pace, as all regions surpass pre-pandemic levels. In 2024, the cargo market boosted airline traffic, driven by booming cross-border e-commerce and ongoing challenges in ocean shipping. With global air cargo yields stabilizing around 30% above pre-pandemic levels, the outlook for 2025 remains strong.Moreover, ongoing investments in infrastructure and sustainability are bolstering its appeal. While seafreight remains indispensable for transporting large volumes at lower costs, airfreight offers a valuable complement, providing flexibility and resilience in navigating today’s complex logistics landscape.