The air cargo industry hit a wall in March 2026. Global demand, measured in cargo tonne-kilometres, dropped 4.8% year-on-year. The cause was not weak fundamentals. Military action in Iran, airspace closures across the Gulf, and the effective shutdown of the Strait of Hormuz crippled major hubs and sent fuel prices into orbit.
Middle Eastern carriers bore the brunt. Demand collapsed 54.3% compared to March 2025. Capacity fell 52.4%. Emirates operated at 65% capacity by mid-March. Etihad and Qatar Airways ran at just 15%. Over 25,000 regional flights were cancelled. Asia-Middle East routes, a critical artery for global trade, lost half their capacity overnight.
Fuel Prices Surge as Strait of Hormuz Closes
US and Israeli military operations in Iran began in late February. By early March, the Strait of Hormuz-responsible for 20% of global oil supply-was under strict Iranian control. Brent crude climbed from $72 per barrel before the conflict to $118 by the end of March. Jet fuel jumped 106.6% year-on-year, hitting $4.45 per gallon at peak.
Refining margins spiked 320%. Marine bunker fuel followed suit, with very low sulphur fuel oil up more than 80% and IFO380 up over 70%. Thailand and Australia imposed cartage fuel surcharges of 30% and 44% respectively. Jet fuel briefly touched $195 per barrel in the week ending 27 March, with projections it would cross $200.
A US naval blockade of Iranian ports launched on 13 April pushed Brent above $100 again after a brief dip to $89 on 17 April. President Trump stated the blockade would remain until a deal was “100% complete” and warned that Iranian fast attack ships approaching the zone would be destroyed. Iran’s military blamed the US for failing to uphold ceasefire obligations and reimposed strict controls on the Strait.
Airspace Closures Gut Middle East and South Asia Capacity
Global air cargo capacity fell 22% on 1 March as Gulf airspace closed. Iran, Iraq, Kuwait, Israel and parts of Saudi Arabia remain off-limits. Middle East and South Asia capacity dropped 36% in aggregate. The Air Freight Baltic Index climbed 25.2% month-over-month to 2,519 by 8 April, reflecting supply shortages and scrambling demand.
India-to-Europe rates jumped 80%. Hong Kong-to-Europe cleared $5.15 per kilogramme. Jet fuel costs spiked 58% in a single week. Fresh produce shipments sat loaded on grounded planes. The Gulf region imports a significant share of perishable and premium goods by air-dairy, seafood, fresh produce. Short transit times and controlled handling make airfreight indispensable. That supply chain fractured in early March.
Willie Walsh, IATA’s Director General, noted: “Air cargo demand fell 4.8% in March compared to the previous year. This was mostly due to severe disruptions at major Gulf hubs due to war in the Middle East. The timing of the usual post-Lunar New Year slowdown also added to the decline. The underlying demand trends, at this point, appear strong and the recent World Trade Organisation and International Monetary Fund revisions to trade and GDP projections continue to see growth in 2026. Importantly, air cargo networks are providing the flexibility needed to support global supply chains as they adjust to geopolitical, tariff, and operational strains. All eyes are on fuel supply and price, which are expected to test the industry’s resilience in the coming months.”
Regional Performance Splits Sharply
Not all regions suffered equally. African airlines posted 7.0% year-on-year growth in March, the strongest of any region. Asia-Pacific carriers grew 5.4%. European carriers rose 2.2%. Latin America and the Caribbean edged up 1.8%. North American carriers fell 1.2%.
The Middle East recorded 19% growth in January and February before collapsing 37% from March to mid-April. South Asia fell 8% from March onwards. Africa contracted 11% over the same period. China, despite a strong start to the year, dropped 7% from March. Asia-Pacific remained the strongest performer year-to-date with 7% growth through mid-April, but showed signs of slowdown with a 1% decline from March.
Central and South America, along with North America, were the only regions to record continued growth from March to mid-April. Global air cargo tonnage had increased 8% in January and February 2026. By mid-April, year-to-date growth stood at just 3%, with volumes down 3% from March onwards.
Sea Lanes Also Under Fire
Ocean freight did not escape. On 22 April, an Iranian Revolutionary Guard Corps gunboat opened fire on a container ship in the Strait of Hormuz. Multiple vessel attacks occurred throughout the Persian Gulf, though most crews remained safe. The Port of Salalah in Oman suspended operations following a drone attack on fuel storage tanks.
Average bunker fuel prices surged more than 70-80% since the Strait closure. Ocean transit times stretched as vessels rerouted or waited for clearance. The combination of air and sea disruptions forced shippers to reconsider routing and mode entirely. Forwarders with access to multimodal solutions gained an edge. Comparing rates across carriers and modes became critical to maintaining service levels without blowing budgets.
Underlying Demand Fundamentals Remain Positive
Despite the March slump, macroeconomic indicators support recovery. Global industrial production grew 3.1% year-on-year in February, marking the 38th consecutive month of expansion. Global goods trade rose 8.0% year-on-year in February. The Global Manufacturing PMI stood at 51.4 in March, with new export orders at 50.1-both above the 50 threshold indicating expansion.
The post-Lunar New Year slowdown contributed to March’s decline, but conflict was the dominant factor. With airspace still closed and fuel prices elevated, the industry faces a prolonged adjustment period. Market sources expect gradual capacity recovery and easing rates, but the pace remains slow.
Cargo Solutions Network Perspective
The March exposed how concentrated risk remains in global air cargo networks. Major Gulf hubs handle vast volumes of connecting cargo between Asia, Europe and Africa. When those hubs go dark, the network fragments. Forwarders who rely on a single carrier or route face severe exposure. Those with access to diverse capacity and real-time rate comparison weathered the storm better.
Fuel surcharges, emergency routing fees and capacity shortages will persist while the Strait remains contested and Gulf airspace closed. Shippers need transparency and speed. Multimodal options-combining sea, air and road-are no longer a nice-to-have. They are essential. The ability to quote complex, multi-leg routes fast separates winners from those left holding grounded cargo. This is not a short-term blip. Geopolitical volatility is structural. The tools you use to navigate it must be too.
Frequently Asked Questions
Why did air cargo demand fall in March 2026?
Military conflict in the Middle East closed major Gulf airspace and the Strait of Hormuz, key hubs and routes. The post-Lunar New Year slowdown also contributed, but conflict was the primary driver.
Which region was hit hardest by the?
Middle Eastern carriers saw demand drop 54.3% year-on-year in March, the worst performance globally. Capacity fell 52.4%. Major airlines including Emirates, Etihad and Qatar Airways operated at drastically reduced levels.
How high did fuel prices go?
Jet fuel prices surged 106.6% year-on-year in March, peaking at $4.45 per gallon. Brent crude rose from $72 per barrel before the conflict to $118 by the end of March. Refining margins spiked 320%.
Are there any regions still growing?
Yes. African airlines posted 7.0% year-on-year growth in March. Asia-Pacific carriers grew 5.4%. Central and South America, along with North America, continued to record growth from March to mid-April despite the broader downturn.
What does this mean for freight forwarders?
Forwarders must adapt to ongoing volatility. Relying on a single carrier or route is high risk. Access to diverse capacity, real-time rate comparison and multimodal options is essential. Fuel surcharges and emergency routing fees will persist while the conflict continues.
Navigate with Better Tools
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