Air Cargo Rates Climb Following Middle East Airspace Closures

Air cargo markets are experiencing rising rates following disruptions caused by Middle East airspace closures. The impact has been most visible on routes connecting South Asia and Southeast Asia with Europe and North America.

The closures have affected operations for major Gulf carriers including Emirates SkyCargo, Qatar Airways Cargo, and Etihad Airways. Together these airlines account for roughly 13% of global air cargo capacity and play a key role in connecting east–west trade lanes.

Freightos Air Index data shows rates from South Asia to North America have increased by approximately 50% to around $6.00 per kilogram, while rates from South Asia to Europe have climbed to about $4.00 per kilogram. Southeast Asia to Europe prices have risen roughly 20% to above $4.00 per kilogram.

China to North America air cargo rates also increased, rising 11% week over week to $7.11 per kilogram. However, some of this increase is believed to be driven by seasonal demand following the Lunar New Year.

While air cargo markets have faced the most significant disruptions, impacts on the container shipping sector remain more limited.

Few vessels have passed through the Strait of Hormuz since the start of the conflict. The closure has mainly affected containers already bound for Gulf ports, with some volumes backing up at ports in India and Bangladesh and increasing yard utilization at Far East transshipment hubs.

Carriers have introduced contingency plans for cargo destined for the Gulf, including routing shipments through alternative regional ports and transporting cargo to final destinations by road.

Rising oil prices may create broader impacts for container shipping in the coming weeks. Some carriers have already announced emergency fuel surcharges of up to $150 per TEU on long-haul routes starting March 23.

Ocean freight rates have also moved higher in recent weeks. Asia–U.S. West Coast prices increased 10% to $2,022 per FEU, while Asia–North Europe rates climbed 6% to $2,614 per FEU and Asia–Mediterranean rates rose 2% to $3,717 per FEU.

Despite the geopolitical developments, analysts suggest the recent increase in container rates is more closely tied to post-Lunar New Year demand rather than the situation in Iran.

By: AJOT