AIR FREIGHT

Air freight pricing has shifted back into an upward cycle, supported by tightening effective capacity and rising demand.

Spot rates and charter pricing have surged, with charter rates reaching COVID-era highs due to geopolitical disruptions and urgent demand.

Additionally, fuel costs have become a key driver: jet fuel prices rose 6.0% month-over-month amid supply constraints and geopolitical factors, contributing to increased and highly variable fuel surcharges across carriers.

Rates are expected to remain elevated, with no immediate return to pre-disruption levels.

In a nutshell:

• Middle East airspace disruption reshaping global air cargo flows: restrictions and closures are undermining the Gulf hub model, forcing longer routings, payload penalties, and reduced effective capacity.
• Fuel costs are now the dominant pricing driver: jet fuel prices have nearly doubled versus 2025 averages, pushing fuel surcharges to record levels and sustaining elevated airfreight rates despite flat demand.
• Severe rate escalation on Middle East linked trade lanes: Dubai and India origin lanes show the steepest WoW and YoY increases, reflecting Gulf hub disruption and constrained connectivity.
• Capacity structurally reduced on key corridors: detours beyond optimal aircraft range reduce payload and eliminate belly capacity, tightening supply even where flight schedules remain active.
• Summer schedule brings limited relief: additional belly capacity is coming outside the Middle East region, but insufficient to offset losses from Gulf carrier disruptions.
• Fuel surcharge volatility expected through Q2: FSC levels are unlikely to normalize in the near term, and renegotiation pressure is increasing on fixed rate air contracts.

SEA FREIGHT

Shipping activity in the Strait of Hormuz remains drastically reduced despite recent diplomatic efforts in the region.

Only a small number of vessels are currently transiting the passage each day, compared with normal volumes of around 140, effectively leaving the corridor close to a standstill.

The slowdown has led to a significant buildup of vessels across the Gulf, with ships idling offshore and waiting for safe passage.

A large number of vessels creating bottlenecks that extend beyond the region itself caused by rerouting and service strings adjustments.

As ships remain tied up, available capacity tightens across global trade lanes, affecting schedules and contributing to wider logistical imbalances.

The impact is no longer limited to the region, as delayed vessel rotations and equipment shortages begin to affect schedules on Asia–Europe and transatlantic routes.

Since the end of February, spot rates on the main shipping routes have increased sharply.

Transpacific routes to the west coast of the United States and transatlantic routes from Northern Europe show increases of over 40%, while the Asia-North Europe and Asia-Mediterranean routes have recorded increases of around 25 to 30%.

Paradoxically, the routes that do not pass through the conflict zone are experiencing the strongest increases.

This is due less to a real tightening of capacity than to two combined factors: a climate of generalized uncertainty among industry professionals; the global application of emergency fuel surcharges, including on routes far from the theater of operations.

Under these conditions, the new increase in the price of oil, following the announcement of the U.S. naval blockade of the Strait of Hormuz, is expected to fuel this cost-driven momentum.

Companies immediately pass on the rise in crude through surcharges across all east-west routes.

It is this factor, and not demand—which remains stable in this post-Lunar New Year period—that is driving rates.

On the Asia–Europe segment, spot rates also seem to be starting a correction in the second half of April.

However, this calm remains fragile: ships are operating at full capacity, and companies are preparing to reduce the number of rotations, which will cause prices to rise again as early as May.

This is the whole paradox of a period caught between opposing forces: on one hand, demand is fragile; on the other, the conflict feeds a cyclical price increase that could long persist...

Key facts:

• Hormuz disruption and limited container impact: while the Strait of Hormuz is effectively closed, container traffic has been less impacted than energy markets; Iranian-linked vessels account for most affected transits, and global container capacity exposure remains low.
• Congestion intensifying across the Middle East and Asia: severe pressure is evident in India, Pakistan, and Southeast Asian transshipment hubs as Middle East-bound cargo spills into alternative ports.
• Multiple chokepoints under simultaneous pressure: Hormuz, the Red Sea/Bab-el-Mandeb, and Panama Canal are all experiencing disruptions, compounding vessel delays and restricting effective global capacity.
• Red Sea routing remains selective and carrier dependent: most alliances continue Cape of Good Hope diversions.
• Emergency bunker costs driving rate behavior: bunker fuel prices near USD 1,000/ton are materially inflating freight rates, with carriers reactivating rapid emergency fuel surcharge mechanisms.
• Ocean freight rates increasingly cost led, not demand led: rate increases across Asia–Europe, Asia–US, and Middle East lanes are primarily driven by fuel, rerouting, and congestion rather than underlying volume growth.
• US container imports rebound but risks remain: March volumes recovered seasonally, yet geopolitical and tariff uncertainty continue to threaten forward stability.
• Schedule reliability continues to deteriorate: global on time performance has fallen below 60%, with delays escalating as congestion and rerouting cascade through carrier networks.  In one week, waiting for the announced increases in the coming weeks.