Unstable Capacity + Surging Fuel Costs: Ongoing Middle East Tensions May Drive Escalating Rates in Air Cargo Market

“The Middle East air freight market is no longer about price; there are hardly any cargo flights operating, with flights flying one day and stopping the next,” a freight forwarding company executive told Cailian Press. If the situation in the Middle East continues or escalates further, jet fuel prices will be pushed higher, and some airports may face fuel shortages, leading to a continuous rise in air freight rates.

The ongoing situation in the Middle East is gradually impacting the air freight market. Cailian Press has learned through multiple interviews that current air freight rates are rising mainly due to two factors: first, the increase in international oil prices due to the Middle East situation, significantly raising jet fuel costs and prompting airlines to levy fuel surcharges; second, tight market capacity and supply-demand imbalance driving up rates.

As of 6:00 AM Beijing time on March 21, Brent crude oil futures were priced at $104.41 per barrel, up 42.62% since February 27.

Airlines suspend Middle East routes and impose fuel surcharges, shippers remain cautious

“Last week, we still had charter flights to Dubai, mostly full cargo, mainly general trade goods. Currently, a few flights are temporarily halted, and the aircraft deployment will be adjusted by the charter operators, but they are currently cautious,” a person from a listed airline logistics company said.

Another executive from a different listed airline logistics company also told Cailian Press that flights to the Middle East have not yet resumed.

Cailian Press also learned from Cathay Pacific that due to the ongoing situation in the Middle East, Cathay Cargo’s flights to Dubai and Riyadh will remain canceled until April 30. Meanwhile, Cathay Pacific Cargo and Hong Kong Express have announced fuel surcharges for departing cargo. From March 20 to 31, short-haul flights will charge HKD 3.5 per kilogram, and long-haul flights HKD 12.9 per kilogram.

Qatar Airways Cargo’s official website shows that due to the closure of Qatari airspace, its scheduled cargo flights remain suspended, with only limited Qatar Airways cargo flights operating that do not pass through Doha.

“Currently, we have no shippers switching from sea to air freight; in fact, air capacity recovery is very limited. Plus, the current high sea freight rates in the Middle East are generally unacceptable to customers, making air freight even less feasible. Therefore, most of our clients are just observing,” said an expert on the China-India Red Line at Yunquna.

The air freight manager at Yunquna revealed that the capacity on Middle East routes is highly unstable, affected by the situation, with frequent last-minute cancellations of cargo flights, resulting in very low overall cargo volume on these routes.

In addition to capacity reduction caused by suspended Middle East flights, rising jet fuel costs and airline fuel surcharges have also pushed up overall air freight rates. The aforementioned freight forwarder told Cailian Press that e-commerce cargo is somewhat resistant to high market rates, but general trade cargo is gradually accepting the increased rates.

According to Baltic Exchange data, as of March 16, the BAI index was 2,065 points, up 2.6% month-on-month.

Airfares on Europe-America routes are rising; “Flights are generally not short of cargo”

Affected by the suspension of flights to the Middle East and rising fuel prices, air freight rates on Europe-America routes have also increased.

The aforementioned freight forwarder told Cailian Press that current rates on Europe routes are higher than those on America routes. In February, rates on Europe routes were around 20 yuan per kilogram, now about 35 yuan/kg, while rates on America routes are around 32 yuan/kg. “Flights are generally not short of cargo.”

Liu Kaishi, Chief Customer and Business Officer of Cathay Group, recently stated that demand for European cargo has indeed increased amid the Middle East situation. However, many flights from Hong Kong to Europe usually first transfer cargo in Dubai and add fuel surcharges. Due to the situation in the Middle East, flights need to bypass Dubai and fly directly, requiring more fuel, which affects the aircraft’s cargo capacity per flight.

The aforementioned freight forwarder further said that if the Middle East situation eases, fuel prices fall, and Middle Eastern airlines resume normal operations, air freight rates will gradually decline until they return to rational levels. However, the duration of this process remains uncertain. “But from the current situation, in the short term, for freight forwarders with signed 2026 block space agreements, profit expectations are relatively good. Currently, it is the off-season, and rates have already exceeded the block space prices. The long-term outlook remains unclear.”

In the A-share market, two major airline logistics companies are China Cargo Airlines and China Eastern Logistics. Before the Middle East conflict, China Cargo Airlines launched a full cargo route from Chengdu to Dubai in April 2025; China Eastern Logistics launched a full cargo route from Shanghai to Riyadh and Budapest in November 2025. According to previous reports, both companies mainly focus on the Europe and America markets.

In terms of freight forwarding, publicly available information shows that Sinotrans has air freight agency services, mainly exporting to Europe, North America, and Asia; Huamao Logistics’ main business includes international air freight forwarding; they cooperate with airlines such as Air China, Shenzhen Airlines, Lufthansa, United Airlines, and Korean Air, establishing regular scheduled charters on Europe and America routes, including Zhuzhou-Liege and Hangzhou-Liege routes.