Data released Friday reveals that air freight rates have surged by 70% on certain routes since the outbreak of the U.S.-Israeli war on Iran. The conflict has imposed flight restrictions, obstructed maritime shipments, and driven jet fuel costs to record highs.
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Industry experts noted that routes between South Asia and Europe are the hardest hit due to airspace closures and security concerns in the Middle East. The conflict has left over 100 container ships stranded in the region surrounding the Strait of Hormuz, a vital global transit point.
Swiss logistics giant Kuehne+Nagel stated today that global carriers are prioritizing shipments of healthcare supplies and perishables, such as food, to the Middle East.
Shift from Sea to Air for Pharmaceuticals
Pharmaceutical supply chain expert Prashant Yadav noted that some low-cost generic drugs and active pharmaceutical ingredients (APIs) from India, typically shipped via sea through the Strait of Hormuz to Europe and Africa, are being rerouted.
"The primary shift I’m hearing about involves companies moving generic medicines from ocean freight to air freight," said Yadav, a fellow at the Council on Foreign Relations. This shift is significant as air freight handles approximately one-third of global trade by value; rising costs here serve as a major catalyst for inflation in sectors ranging from fresh produce to electronics.
Steve Blue, a strategic supply chain expert at Invius, added: "Customers are shifting cargo from sea to air, but it is extremely expensive—typically 5 to 10 times higher. These costs rise further as capacity shrinks. Most shippers are only moving limited quantities by air to fill immediate gaps."
Jet Fuel Prices Double
Jet fuel prices have doubled since the start of the conflict. Danish shipping giant Maersk announced this week that its air freight service is now implementing fuel surcharges and war risk fees. Maersk has also expanded surcharges for certain maritime shipments from the region.
Operational Challenges and Rerouting
Airspace closures have significantly reduced cargo capacity in both dedicated freighters and passenger aircraft (belly cargo). Airlines are forced to take longer routes to avoid conflict zones, increasing fuel consumption and price pressure.
Major global hubs like Dubai and Doha, usually among the world's busiest, have seen operations severely curtailed. Ronald Lam, CEO of Cathay Pacific, explained that many of their Europe-bound cargo flights usually stop in Dubai to refuel and pick up additional freight.
"Due to the situation in Dubai, we are now bypassing that stop and flying directly from Hong Kong to Europe. This comes with payload restrictions because we can no longer refuel mid-route," Lam stated.
Freight Rate Indicators (Spot Prices)
According to the Freightos air freight index, spot rates have seen the following increases:
South Asia to Europe: Up 70% ($4.37/kg, from $2.57/kg).
South Asia to North America: Up 58% ($6.41/kg).
Europe to the Middle East: Up 55% ($2.79/kg).
Source: Reuters
