Historically, air freight has served as an equalizer during supply chain crises, notably the COVID-19 pandemic and the Red Sea disruption. When ocean freight shipping faltered, air cargo stepped in to fill the gap. This time is different, noted the Norway-based ocean and air freight rate benchmarking and market analytics platform.
Unlike previous shocks, the Iran war is hitting airlines and air cargo industry harder than ocean shipping amidst fears the worst may be yet to come, according to Xeneta.
Air freight rates are going up, and if this conflict continues in the longer term, then the increase in fuel prices will dampen demand for air freight, it noted.
An oil shock has nearly doubled jet fuel prices, squeezing carriers.
“Typically, at the start of each month, we report the global air cargo market’s performance for the previous 4-5 weeks—but, right now, whether demand was down 2 per cent or 4 per cent in March does not concern the industry greatly if we are on the verge of a global economic crisis,” said Niall van de Wouw, Xeneta’s chief airfreight officer, in a company release.
“There is clearly a lot of concern and unanswered questions about the market outlook, but we also see a current transparency and maturity in customer and supplier relationships, and a sense of solidarity that although the impact of the conflict is beyond their control, they will get through it together,” he noted.
“Air freight rates are going up, and we already see evidence of the Middle East conflict reshaping global airfreight pricing, but, for shippers, cost is only one of the variables. Protecting market share and service to customers also plays an important role,” Van de Wouw said.
“Will the increase in fuel prices dampen demand for air freight? Not immediately, but if this conflict continues in the longer term, then definitely yes because the world would be facing a much broader economic issue,” he said.
Until then, he expects the air freight industry will continue to find a way to transport goods, “but that will come at a cost”. He highlighted how capacity has shifted to safer airport locations such as Muscat and Jeddah to keep air cargo supply chains moving and expects to see more such flexibility
“Right now, we can see a lot of solidarity and trust between shippers, forwarders, and airlines to get goods moved. We see businesses respecting contracts as much as they can and sticking to what they have agreed as they wait to see what unfolds,” he added.
Air cargo stakeholders are pinning their hopes on a fast resolution to the current situation in the Middle East, according to Xeneta.
An oil shock has nearly doubled jet fuel prices, squeezing carriers that are already rerouting or grounding flights due to financial pressures.
Five weeks into the conflict, air cargo capacity in the region remains roughly 30 per cent below pre-conflict levels, and that squeeze in supply is showing up in rates. Global air cargo spot rates in March surpassed 2025 peak-season levels, reaching $2.86 per kilo—their highest point since December 2024.
The conflict escalated in the middle of tender season for annual airfreight contracts, accelerating a shift already under way: in the first quarter this year, shippers moved meaningfully towards three-month agreements over annual contracts, compressing rate validity across the market.
The rate impact has been sharpest on outbound corridors from South Asia and Southeast Asia to the Middle East.
Rising jet fuel costs have pushed air freight rates from Northeast Asia and Southeast Asia to North America up by mid-high double digits. South Asia-North America rates surged even higher, up by approximately 75 per cent, again driven by Middle Eastern carriers’ significant share of that corridor.
Fibre2Fashion News Desk (DS)
