Middle East conflict casts uncertainty over global air cargo market

The escalation of conflict in the Middle East has created fresh uncertainty for the global air cargo market, despite strong demand growth recorded in February 2026, according to a market update by Xeneta.

Global air cargo demand increased 6% year-on-year in February, continuing the rise seen over the previous two months and reflecting resilience in the market despite ongoing global trade and economic challenges. However, analysts said the outlook has become uncertain again as tensions in the Middle East intensified in early March.

Demand growth last month outpaced available capacity growth of 4% year-on-year, pushing the dynamic load factor up by two percentage points to 62%. Xeneta defines dynamic load factor as a measure of capacity utilisation based on the volume and weight of cargo flown alongside available capacity.

Air cargo spot rates also recorded their first monthly increase since May 2025, rising 5% to USD 2.58 per kg. The increase was driven by a short peak season ahead of the Lunar New Year and supported by the depreciation of the US dollar compared to a year earlier.

At a corridor level, Europe–North America recorded the largest year-on-year increase in air cargo spot rates in February at 21%. Demand for semiconductors also supported the Northeast Asia–North America corridor, which saw spot rates grow by 10% compared to the same period last year.

However, tariff impacts weakened air cargo demand from China to the United States, while volumes from China to Europe remained relatively stable. Neither corridor saw the typical pre-holiday cargo rush that was observed at the start of 2025. Some Asia-based airlines with strong exposure to e-commerce remain optimistic about growth prospects in 2026, while others are adopting a more cautious approach.

Industry indicators had already suggested a less optimistic outlook for 2026 even before the latest geopolitical developments. Some freight forwarders expected downward pressure on rates as market players compete for market share by lowering selling prices to shippers.

The situation changed significantly after military strikes on Iran by the United States and Israel on 28 February and Iran’s retaliatory actions in the region. The escalation brought commercial airspace across the Middle East close to a standstill. Airspace closures and flight cancellations immediately removed around 12% of global air cargo capacity from the market.

Major regional hubs, including Doha, Dubai and Abu Dhabi, temporarily suspended flight operations due to multiple airspace restrictions. This had an immediate impact on the Asia–Europe air cargo corridor.

Air cargo demand on the main Asia–Europe and Asia–Middle East routes fell sharply during the first 48 hours of the conflict. Inbound volumes to Europe proved more resilient than those to the Middle East. Some Asia–Europe freight could be rerouted or shifted to direct services into Europe to avoid the most affected airspace.

By origin, the steepest declines in demand came from South and Southeast Asia, where cargo capacity relies heavily on Middle Eastern carriers and hubs. Northeast Asia recorded smaller declines, partly because the period coincided with the Lunar New Year when demand was already subdued.

Airlines may now need to reroute freighters via Central Asia for technical stops or deploy more direct Asia–Europe services, depending on airspace availability, traffic rights and operational constraints. This could reduce the flexibility that shippers relied on during earlier disruptions such as the Red Sea crisis.

Security concerns have also intensified for shipping in the Strait of Hormuz, a route that accounts for around 20% of global oil shipments and about 30% of seaborne oil trade. Attacks on vessels in waters off the Persian Gulf have further raised risks in the region.

According to Xeneta, the duration and outcome of the conflict will determine the future direction of the air cargo market. If the conflict is brief and flights resume quickly, markets may stabilise sooner and concerns about a longer-term spike in oil prices could ease. However, prolonged disruption could push prices on affected routes significantly higher due to limited capacity.

Commenting on the developments, Niall van de Wouw, Chief Airfreight Officer at Xeneta, said the industry was expecting February’s key talking point to be the United States Supreme Court’s ruling on tariffs and its potential impact on air cargo.

“Then, on 28 February, we witnessed the strikes on Iran and the start of everything that has happened since. This is the world we are living in, and the reality for businesses facing one new challenge after another,” he said.

He added that if February’s data were considered alone, the start of the year would appear encouraging for the air cargo market. However, the latest geopolitical developments have significantly raised the stakes for the industry.

Van de Wouw said the global airfreight sector has historically shown strong ability to adapt to major macro-events. While solutions will likely be found, they are expected to come at the cost of higher logistics expenses for cargo owners. He added that shippers may accept such additional costs temporarily as long as they can continue serving customers on time.