Air cargo prices anticipated to surge amid intensifying Iran conflict

Middle East Conflict Disrupts Air and Ocean Freight

The recent military actions involving the United States, Israel, and Iran have already begun to impact air cargo operations across the Middle East. This region, which serves as a vital link for freight between Asia and Europe and is home to some of the world's largest cargo airlines, is experiencing significant disruptions. The situation is also likely to drive up air freight costs.

Airlines are responding by suspending flights, redirecting routes to avoid conflict areas, and steering clear of major transshipment hubs in Dubai, Abu Dhabi, and Qatar due to Iranian missile strikes. Further changes to flight schedules are expected in the near future.

With planes forced to take longer routes, fuel consumption increases, which in turn limits the amount of cargo that can be transported without exceeding weight restrictions. Some carriers are planning to introduce additional refueling stops to accommodate these changes.

“If widespread flight cancellations continue, we could see a notable increase in rates, particularly on Asia-Europe routes,” commented Neil Wilson, editor at TAC Index, a global air cargo pricing agency.

FedEx has halted flights to and from several countries in the region, including Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, the United Arab Emirates, and Saudi Arabia.

“Our top priority is the safety of our employees. Consequently, pickup and delivery services in Bahrain, Kuwait, Iraq, Qatar, and the UAE are on hold until further notice. Shipments to and from other regional markets may face longer transit times,” the company stated. “We are monitoring developments closely and will resume operations when it is safe.”

Qatar Airways, which operates a large fleet of Boeing 777 freighters and widebody passenger aircraft, has temporarily stopped flights to and from Doha due to the closure of Qatari airspace. The airline, which offers shippers 13 tons of daily cargo capacity, has warned of delays once flights resume. In the meantime, cargo is being held at its main hub and other locations worldwide.

Emirates Skycargo, the world’s fourth-largest cargo airline, has also suspended operations through Dubai. The carrier operates nearly a dozen Boeing 777 freighters and leases several Boeing 747-400s. The UAE has closed its airspace, and Dubai International Airport sustained minor damage from an Iranian strike, according to regional reports.

Bahrain’s main airport was also slightly damaged following a drone attack.

Further Airline Responses and Capacity Changes

Etihad Airways, which operates five Boeing 777 freighters alongside a large passenger fleet, has suspended all flights through Abu Dhabi until Monday at 2 a.m. Airlines continue to monitor the situation and may extend these suspensions as needed.

Oman Air Cargo has reported only minor disruptions to some regional services. The airline, which operates a mix of Boeing and Airbus passenger jets and one converted freighter, continues to serve Europe and Asia Pacific, though with some rerouting and minor delays. As a precaution, the transport of perishable goods has been temporarily limited, while general cargo shipments proceed as usual.

According to Netherlands-based consultancy Rotate, global air cargo capacity has dropped by 18% compared to the previous week, as Middle Eastern and other airlines suspend flights to the region. Some Asian cargo operators, unaffected by sanctions or Russian airspace restrictions, are now flying over Russia to reach Europe.

Air India has suspended all flights to the Middle East, as well as several routes to Europe and New York. United Airlines has cancelled all flights to and from Tel Aviv through March 6, and to Dubai through March 4. SWISS has also suspended flights to Dubai and Tel Aviv, and will avoid the airspace of several Middle Eastern countries until at least March 8.

Despite these disruptions, Freightos, a global cargo marketplace, reports that air freight rates in and out of the Middle East have so far remained steady.

Effects on Ocean Shipping

Major container shipping companies, including Maersk, Hapag-Lloyd, MSC, and CMA CGM, are suspending services to the Strait of Hormuz and nearby areas, rerouting vessels, and introducing emergency surcharges. CMA CGM has implemented a $4,000 emergency fee per forty-foot container for the region, while Hapag-Lloyd has announced a war risk surcharge of $1,500 per 20-foot container, with higher fees for refrigerated and special containers.

Maersk has also warned customers of potential service interruptions in the UAE, Oman, and Qatar.

Iranian Revolutionary Guards attacked two oil tankers on Sunday. Four crew members aboard the MT Skylight were injured and taken ashore for treatment after the vessel was struck in the Strait of Hormuz, according to officials from Oman and the Palau Ship Registry.

DP World has halted operations at Dubai’s Jebel Ali port following a fire caused by an aerial interception on Saturday night.

Meanwhile, Houthi rebels in Yemen, supported by Iran, have threatened to resume attacks. As a result, shipping companies that had recently restarted Red Sea routes are once again diverting vessels around the Cape of Good Hope, delaying plans to use the shortcut between Asia and Europe.

“Although the situation is still evolving, we can already anticipate major delays for both current and upcoming shipments to and from the Middle East. Delays are also likely on the Asia-Europe trade lane,” Scan Global Logistics advised its customers.

Global supply chains have faced repeated challenges from geopolitical events in recent years, including the conflicts in Ukraine and Gaza, as well as increased tariffs imposed by the United States.

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