((Updated: 10:45 pm ET)
The war launched by the United States and Israel against Iran on Saturday is already disrupting air cargo traffic in the Middle East, a key shipping corridor between Asia and Europe where two of the world’s largest cargo airlines are based, and raising the possibility of an increase in air freight rates.
Airlines are suspending flights, diverting traffic around the conflict zone and unable to use key transshipment hubs in Dubai, Abu Dhabi and Qatar due to retaliatory missile strikes by Iran. More schedule changes are expected in the coming days.
Longer routes require more fuel, reducing the size of cargo planes that cannot exceed weight limits. Some airlines are expected to add fuel stops.
“We expect some potentially significant movement in prices, particularly Asia-Europe, if the situation continues with large-scale flight cancellations,” said Neil Wilson, managing director of global price reporting agency TAC Index, in an email exchange.
FedEx (NYSE: FDX) suspended flights from Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, United Arab Emirates and Saudi Arabia.
“The safety and well-being of our team members is our highest priority. As a result, pickup and delivery services in Bahrain, Kuwait, Iraq, Qatar and the United Arab Emirates have been temporarily suspended until further notice. Shipping and delivery to other markets throughout the region may experience longer transit times,” the company said in a service notice. “We are monitoring the situation closely and will resume services as soon as it is safe to do so.”
UPS has not announced any operational changes, but said in a statement provided to Freightviews, “We are closely monitoring this fluid situation and utilizing contingency plans to manage our operations safely and efficiently.”
Qatar Airways, which operates 29 Boeing 777s and a wide range of passenger and bulk cargo aircraft, has temporarily suspended flights to and from Doha due to the closure of Qatar’s airspace. Qatar Airways offers cargo carriers 13 tons of capacity per day. The airline has warned customers to expect flight delays when the airport reopens and resumes operations there. At the same time, tender cargo is carried out at its hub and at other stations around the world.
Emirates SkyCargo, the fourth-largest cargo airline by traffic, has similarly suspended flights through Dubai. It operates approximately a dozen Boeing 777 freighters and leases several Boeing 747-400s from third-party carriers. According to reports from the region, the United Arab Emirates has closed its airspace and a convoy of passengers at Dubai International Airport suffered minor damage due to an Iranian attack.
Bahrain International Airport was also slightly damaged in the drone attack.
Etihad Airways, which operates five Boeing 777 freighters in addition to a fleet of widebody passenger planes, suspended all flights through Abu Dhabi until 2 p.m. Monday.
Oman Air said it was experiencing limited disruption to some services in the region. According to data from Flightradar24, Oman Air is a small carrier, with nine Boeing 787, 10 Airbus 330, and 32 Boeing 737-800/MAX8 passenger jets, and one 737-800 converted freighter. Services to Europe and Asia Pacific continue to operate as scheduled, with rerouting and minor delays in effect. As a precautionary measure, destructive cargo loading has been temporarily restricted, while general cargo operations continue as normal.
Hong Kong-based Cathay Group, a hybrid carrier with 20 Boeing 747 cargo jets, suspended all operations in the Middle East, including passenger services to Dubai and Riyadh as well as cargo services to Dubai Al Maktoum International Airport. He said that flights normally fly through the affected area.
Data from Netherlands-based consultancy Rotit showed that global air cargo capacity fell 18% from the previous week due to flight cancellations by Middle East carriers and other carriers that do not serve the Middle East. According to Rotit, cargo operators in Asia are moving from the Middle East and flying to Russia (depending on sanctions) or Central Asia, to reach European destinations.
Air India suspended all flights to destinations in the Middle East, as well as many flights to Europe and New York.
United Airlines has canceled all flights to and from Tel Aviv, Israel through March 6. The airline has also canceled flights through Dubai until March 4. Swiss has suspended flights to Dubai from March 4 and to Tel Aviv until March 8. The airline said in a statement.
In addition to delaying flights to the region, European cargo planes were affected because they had to take the long northern route through Central Asia to reach South and East Asia instead of the southern corridor through Turkey, Iraq and Iran.
Freightos, a global cargo marketplace and freight data provider, said air cargo prices in and out of the Middle East have remained stable so far.
“While the situation is still evolving, we can now advise in advance of significant delays for both shipments already in transit and for future shipments to the Middle East. There is also the possibility that there may be delays on the Asia-Europe trade route as a result,” Scan Global Logistics said in a notice to clients.
The immediate increase in air cargo prices could be offset by the fact that China’s exports are still slow as factories come online after the Lunar New Year holiday, meaning there is more of a shortage in aircraft supply than a week or two, said Dmitry Kulsch, chief executive of Air Cargo APAC Ltd, a Hong Kong-based shipping consultancy. He said cargo prices could also be pushed up because fewer passenger planes will be available to carry cargo as airlines prioritize placing planes on their networks to resume operations after the war ends.
Effect on sea transport
Meanwhile, on the ocean front, container shipping lines Maersk, Hapag-Lloyd, MSC and CMA CGM are halting shipping through the Strait of Hormuz and the region, with CMA CGM introducing an emergency surcharge of $4,000 for each forty-foot container service. Hapag Lloyd has announced a war risk surcharge of $1,500 per 20-foot equivalent unit for Arabian/Persian Gulf cargo shipments, effective March 2. Reefer and special containers will be charged $3,500 per TEU.
Maersk also warned customers of possible service disruptions in the UAE, Oman and Qatar.
Iran’s Revolutionary Guard attacked two oil tankers on Sunday. Four Marines in MT heavenly light According to officials from Oman and the delegation’s ship registry, they were injured and taken ashore for treatment after their vessel was attacked in the Strait of Hormuz.
DP World has suspended operations at the Jebel Ali port in Dubai after a fire broke out there on Saturday night due to air interference.
Iran-backed Houthi rebels in Yemen have threatened to launch attacks again. In response, carriers that had resumed some Red Sea sailings diverted ships around the Cape of Good Hope, delaying the industry’s plans to return to the shortcut between Asia and Europe.
The Shipping and Trade Association and the Australian Package Shippers Association, which represents logistics providers and cargo owners in Australia, said on Sunday night that “the situation is already having a direct and measurable impact on Australian supply chains, with disruptions to air cargo connectivity, container shipping schedules, and the rapid implementation of major international surcharges related to significant disputes.”
Global supply chains have been hit by geopolitical events in recent years, including the conflict in Ukraine, the Israel-Hamas conflict and the expansion of global tariffs by the United States.
Click here for more FreightWaves/American Shipper stories by Eric Kolsch.
Write to Erik Kulisch at ekulisch@freightwaves.com.
Related stories:
Pro-Iranian Houthi rebels have warned of new attacks in the Red Sea
The post Air freight rates expected to rise as Iran war escalates appeared first on FreightWaves.
