Global air freight is facing renewed pressure as the ongoing Middle East conflict disrupts capacity, pushes up costs, and adds uncertainty to market growth in 2026, according to a Xeneta media release.
The report said the resilience of the air cargo market is being tested once again, with concerns over the wider economic impact if the conflict continues. While past crises such as Covid-19 and Red Sea disruptions saw air freight step in to support weakened ocean supply chains, this situation is different as the conflict is directly affecting airlines and air cargo operations.
Niall van de Wouw, Chief Airfreight Officer at Xeneta, said the industry is less focused on short-term demand fluctuations and more concerned about the risk of a broader global economic crisis. He noted that despite uncertainty, there is greater transparency and cooperation between shippers, airlines, and forwarders, with all parties working together to manage the disruption.
Air freight rates are already rising, reflecting the impact of the conflict on global pricing. However, van de Wouw said cost is not the only concern for shippers, as maintaining service levels and protecting market share remain key priorities. He added that higher fuel prices are unlikely to reduce demand immediately, but a prolonged conflict could weaken demand over time due to wider economic challenges.
To maintain operations, capacity has shifted to safer locations such as Muscat and Jeddah, showing the industry’s flexibility in keeping cargo moving. At the same time, businesses are largely honouring contracts and maintaining commitments as they wait for further developments.
Air cargo stakeholders are hoping for a quick resolution to the conflict, as key hubs in the Middle East, including Dubai and Doha, play a critical role in connecting global trade routes. These hubs, which have supported the growth of major international carriers, are now facing disruption due to their geographic position.
The impact is already visible in market data. Five weeks into the conflict, air cargo capacity in the region remains around 30% below pre-conflict levels. This has pushed global spot rates in March to $2.86 per kilogram, the highest since December 2024 and above peak-season levels in 2025.
The timing of the disruption has added further pressure, as it coincides with the annual airfreight contract tender season. Shippers have increasingly shifted towards shorter, three-month agreements instead of long-term contracts, reflecting the uncertainty in the market. Xeneta has also advised delaying tenders until conditions stabilise.
Spot market activity has increased, with 52% of global volumes shipped under spot rates in March, approaching levels seen at the start of the Covid-19 pandemic. This shift highlights growing volatility and reduced confidence in long-term pricing.
Rate increases have been most significant on routes from South Asia and Southeast Asia to the Middle East, where spot rates rose between 50% and 100% in the week ending 29 March compared to four weeks earlier. The surge is driven by reduced capacity, higher jet fuel costs, and additional war-risk surcharges.
The disruption is now affecting global trade lanes beyond the Middle East. The region accounts for a significant share of capacity on Asia–Europe and South Asia–Americas routes, and the reduction in capacity is reshaping flows across these corridors. While Southeast Asia and South Asia to Europe routes have seen similar rate increases, Northeast Asia to Europe has remained more stable due to increased direct flights.
Other regions have also experienced changes. Europe to Africa rates rose by around 31% due to reduced transit capacity through the Middle East. Rates from South Asia to North America increased by approximately75%, while Northeast and Southeast Asia to North America saw mid to high double-digit growth. In contrast, Europe to North America spot rates declined by around 10% as additional passenger flights increased cargo capacity.
Despite rising spot rates, longer-term rates have increased only slightly on some routes, as factors such as US tariffs and changes to trade policies continue to affect demand. Not all corridors are moving in the same direction, with some routes remaining stable or showing moderate growth.
Van de Wouw said the current disruption could temporarily boost air freight demand if ocean shipping faces further challenges, but any gains are likely to be short-lived. He added that the impact of the conflict is greater than that of tariffs due to rising fuel costs, the risk of an energy crisis, and inflation.
He emphasised that the current challenges are largely driven by supply constraints, which are expected to ease over time. However, the duration of the conflict will determine whether the situation develops into a broader demand issue.
According to Xeneta, global air cargo demand declined by 3% year-on-year in March, while capacity was down 6% compared to the same period last year. The dynamic load factor, which measures capacity utilisation, increased to 65%.
The report concludes that the future direction of the air freight market will depend on how long the conflict lasts and its wider economic consequences.
