When the US and Israel launched strikes on Iran on February 28, 2026, the world watched oil prices surge past $100. What most didn't notice — at least not immediately — was the simultaneous detonation of a second crisis: the near-total collapse of global air cargo capacity across the world's most critical aviation corridor.
Three weeks later, more than 20,000 commercial flights have been cancelled. Global air cargo capacity has fallen 18% from pre-war levels. Freight rates from India to Europe are up 80%. From Hong Kong to Europe, rates have cleared $5.15 per kilogram. The Middle East — home to two of the world's four largest cargo airlines and a central transshipment hub connecting Asia, Europe, and the Americas — has been functionally closed as a logistics corridor. What's now unfolding is not just an aviation story. It is a supply chain emergency with consequences for every industry that depends on fast, reliable movement of high-value goods.
THE HUB THAT THE WORLD FORGOT IT NEEDED
Dubai, Doha, and Abu Dhabi are not just tourist destinations. Together, they form the nerve centre of global air freight. Emirates SkyCargo is the world's largest international cargo airline by freight tonne-kilometres. Qatar Airways Cargo operates 29 Boeing 777 freighters and offers shippers 13 tonnes of capacity per day, serving as one of the top three cargo carriers by capacity globally. Together with Etihad, these three Gulf carriers account for approximately 13–14% of total global air cargo capacity.
When Iranian missile and drone strikes began on February 28, the UAE closed its airspace. Dubai International Airport sustained damage to a passenger concourse. Qatar closed its airspace entirely. Emirates SkyCargo suspended operations and placed temporary restrictions on all new shipments. Qatar Airways Cargo halted all flights out of Doha. Etihad suspended all services through Abu Dhabi. In a single weekend, roughly one in eight tonnes of global air freight capacity disappeared.
FedEx suspended all flights to and from Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, the UAE, and Saudi Arabia. KLM stopped services to Dubai, Riyadh, and Dammam. Lufthansa Group suspended flights to Dubai and Abu Dhabi. Swiss International Air Lines avoided the airspace of Israel, Lebanon, Jordan, Iraq, Iran, Kuwait, and Bahrain. Air India — a significant carrier on South Asia to Europe routes — suspended all Middle East flights as well as many to Europe and New York. United Airlines cancelled all services to Tel Aviv and Dubai.
As of March 17, three weeks into the conflict, full airspace closures remain in effect across Iran, Iraq, and Kuwait. Even hubs nominally "open" — such as Israel, Qatar, and Bahrain — are operating under Prior Permission Required (PPR), meaning every single flight needs special government clearance to move. Emirates is operating at approximately 60% of its pre-war capacity. Etihad has pulled back to just 15% of pre-conflict levels.
WHAT'S ACTUALLY STUCK
Air freight accounts for roughly 35% of global trade by value — but only around 1% by volume. That gap tells you exactly what moves by air: not bulk commodities, but the high-value, time-sensitive, irreplaceable goods that modern industry depends on.
Semiconductors are the clearest example. Before the conflict, demand from the semiconductor sector had been a primary driver of air freight rate increases, with Xeneta noting that semiconductor demand was continuing to push freight rates higher even before the war began. The Taiwan–to–Europe corridor, a critical lane for chip shipments, had already been tightening. Now, with Middle East hubs closed and rerouting adding 2–4 hours of flight time per sector, payload capacity on those routes has dropped as airlines reduce cargo loads to carry extra fuel.
Pharmaceuticals are equally exposed. The India–to–US East Coast corridor is among the world's most critical lanes for drug shipments — a route that typically transits through Middle East hubs. With those hubs closed or restricted, Flexport has warned that backlogs of Europe-bound and US-bound cargo are stacking up in Asia, with "delays and pushed-up prices" expected to compound as the weeks continue. Warehouses across South Asia are increasingly backlogged, posing direct risks to perishables, temperature-sensitive drugs, and time-critical medical shipments.
Mobile phones and consumer electronics — manufactured overwhelmingly in China and Southeast Asia, routed through Gulf hubs to reach Europe and the Americas — face the same bottleneck. Gulf carriers account for approximately one quarter of all China–Europe air cargo capacity, per data from Aevean. With those carriers grounded or operating at a fraction of normal capacity, Kuehne + Nagel reported that freight forwarders had already begun chartering direct Far East to Western Europe flights to make up for the missing capacity — a stopgap that is both expensive and limited in scale.
The clothing sector is also under acute pressure. Manufacturers in Bangladesh and India are reporting shipments being left behind at airports as airlines adjust routes and reduce schedules. Massive flight cancellations out of South Asia have delayed deliveries for major clothing retailers globally, with the inventory implications of those delays only beginning to register in supply chain planning systems.
THE REROUTING PROBLEM
The natural solution — fly around the Middle East — is easier said than done. Freighter operators in Asia pivoting away from the Gulf are being forced to route over Russia or Central Asia to reach European destinations, depending on applicable sanctions. These routes add hours to each flight sector.
Longer routes require more fuel. More fuel means heavier aircraft. Heavier aircraft means reduced cargo payload — the weight available for freight decreases directly as fuel load increases. Airlines are reducing what they carry on each flight simply to accommodate the longer journey. The result is a double compression: fewer flights operating, and those that do operate carrying less.
Jet fuel prices compound the problem further. The Strait of Hormuz carries approximately 20% of the world's oil supply — and jet fuel is a derivative of crude. With Brent crude above $112 per barrel, jet fuel prices have surged more than 60% since the conflict began, reaching $150–$200 per barrel in some regional spot markets. War-risk insurance premiums have spiked 50–500% for Gulf routes, with multiple Lloyd's syndicates cancelling or suspending standard coverage entirely. Airlines operating into the region at all are doing so on emergency carve-outs with dramatically elevated premium costs.
The combined effect on freight rates has been rapid and severe. South East Asia to Europe rates climbed more than 6% within the first days of the conflict. South Asia to Europe rates are up approximately 80% on pre-conflict levels. China to US rates jumped 15% to $6.90 per kilogram within the first week. Europe to Middle East rates are up 22%. Hong Kong to Europe has cleared $5.15 per kilogram. Xeneta has explicitly recommended that shippers on affected trade lanes delay signing longer-term contracts — a signal that the rate spike is expected to persist.
THE OCEAN FALLBACK AND ITS LIMITS
Some shippers are attempting to shift cargo from air to ocean freight. But the sea lanes are suffering their own version of the same crisis. DP World suspended operations at Jebel Ali in Dubai — the largest container port in the Middle East and a critical transshipment hub — following aerial attacks, before partially resuming. CMA CGM suspended all Suez Canal transits. MSC instructed vessels to proceed to safe shelter areas and suspended all bookings for worldwide cargo to the Middle East. Hapag-Lloyd and Maersk both rerouted services around Africa's Cape of Good Hope.
Sea-Intelligence estimates that up to 200,000 TEUs of critical deep-sea container capacity remain potentially trapped by the closure of the Strait of Hormuz. Container yards in India are already filling with gulf-bound containers with nowhere to go. A war risk surcharge of $1,500 per standard container — and $3,500 for special cargo — has been introduced for all Gulf-adjacent port bookings. The ocean fallback, in other words, is not a clean solution. It is slower, more expensive, and partially disrupted in its own right.
For goods that cannot wait — drugs, chips, just-in-time automotive components — ocean freight is not a substitute at all. It is not a question of cost. A semiconductor fab that needs a specific component does not have the option of waiting 30 days for a vessel via the Cape of Good Hope.
THE INDUSTRIES MOST AT RISK
The sectors facing the sharpest near-term pain follow a predictable pattern: the higher the value-to-weight ratio, the more dependent on air freight, and the more exposed to Middle East transit hubs.
Consumer electronics manufacturers in Asia — particularly those shipping from China, Taiwan, and South Korea to European distribution centres — are facing rate shocks and schedule uncertainty at a moment when inventory management was already being disrupted by tariff volatility earlier in 2026. Automotive suppliers shipping just-in-time components face the same corridor problems, with the Gulf region sitting at the crossroads of key Asia-Europe trade routes.
The pharmaceutical exposure is particularly acute for India, the world's largest generic drug manufacturer. The India-to-US and India-to-Europe corridors are among the most time-sensitive in global freight, and both relied heavily on Gulf transshipment hubs. With those hubs restricted or closed, both lead times and costs for drug shipments have increased sharply at a moment when supply chain resilience in healthcare is already under political scrutiny.
The e-commerce sector faces its own version of the crisis. Direct-to-consumer shipments from Chinese factories to European and American doorsteps overwhelmingly relied on Gulf hub connections. With those connections broken, transit times have extended by 10–20 days on affected routes — a delay that is immediately visible to consumers and immediately costly for the platforms that have built their business models on fast delivery.
THE OUTLOOK: HOW LONG DOES THIS LAST?
The air cargo industry has navigated crises before — the COVID grounding of passenger aircraft, the Red Sea rerouting crisis of 2024, the post-pandemic capacity crunch. Xeneta's chief airfreight officer has noted the industry is "highly skilled" at finding solutions. But he added a critical qualifier: those solutions come at the price of higher logistical costs, borne ultimately by the shippers and their customers.
The trajectory of the air cargo crisis is entirely dependent on one variable: how quickly the Gulf airspace reopens to normal commercial operations. If de-escalation comes in April and the major Gulf hubs — Dubai, Doha, Abu Dhabi — return to full commercial operations within weeks, the backlog can be cleared and rates can normalise by Q3 2026. If the conflict extends through summer, the backlogs that are now beginning to stack up in South Asia will compound. Rates that are currently up 70–80% on key corridors could double or triple, per Xeneta's own modelling.
For now, the $8 trillion air freight market — the invisible infrastructure that moves the world's most valuable goods — is operating at a fraction of its normal capacity, rerouting around a war zone, paying crisis premiums for fuel and insurance, and hoping that the geopolitical situation that created this crisis resolves itself before the supply chain consequences become impossible to contain.