News / A tight-capacity and surcharge-heavy air cargo market looms

Airfreight capacity on key Europe tradelanes remains tight, as carriers adjust operations amid continuing Middle East disruption.

However, forwarders say conditions are beginning to improve slightly, compared with last week. 

Cathay Cargo announced today that, “in view of the volatile situation in the Middle East”, its cargo freighter flights to Dubai and Riyadh were cancelled, up to and including 31 March. 

“We continue to monitor the situation closely. The safety of our customers and people guides every decision we make,” it said, noting that the cancellations would allow it to provide cargo customers with “greater certainty for their planning”. 

At the same time, the airline said, it was adding capacity on European routes to capture rising demand.

Cathay said it would operate additional passenger flights to London and provide extra cargo capacity to Zurich this month to cater for an “upsurge in market demand for Europe”. 

Oman Air is seeing similar patterns, according to head of cargo Mike Duggan. 

“We’ve been really busy… We’re seeing a lot of demand from Europe on our flights,” he told The Loadstar, adding that the airline had been operating “lots of extra flights”, mainly to Europe. 

However, he cautioned that capacity remained “difficult to secure”, as much of the demand from Europe moved directly from Asia. 

Indeed, Xeneta said its February recap showed inbound air cargo to Europe had “proved more resilient” than flows into the Gulf region, and noted that some Asia-Europe freight could be rerouted or shifted to direct services into Europe, avoiding affected airspace. 

However, forwarders reported capacity conditions had begun to improve slightly. DHL Global Forwarding said, in its latest update, that global airfreight capacity was “steadily improving”, although it warned that operational challenges remained. 

“Regional and international carriers are adding flights, restoring uplift into key Gulf hubs, though schedules remain fluid,” the forwarder said. 

Ben Lambert, VP regional head of airfreight for DHL GF Middle East and Africa, agreed there had been “a gradual improvement” in viable capacity this week. 

“I think, fortunately, what we can say is that it’s not getting tighter. So our operations are still feasible,” he said. 

However, the market remains constrained as several airlines are still absent from the region. 

“The truth is there’s still around about 80% of the regional capacity that does not exist,” Mr Lambert said. “There’s still a lot of European airlines, freighters, and ACMI operators not flying into this region, which does present some challenges with capacity.” 

For now, available airspace includes that over Saudi Arabia, Jordan, Lebanon, and Oman, while Bahrain, Iran, Iraq, Israel, Kuwait, Qatar, Syria, and Yemen airspace remains closed. 

And with parts of the network so disrupted, analysts warned freight rates could remain volatile. 

Xeneta said prolonged disruption could see prices on affected markets “double, or even triple”, while Transport Intelligence (Ti) noted that fuel costs remained the key uncertainty. 

“Elevated geopolitical risk can spill into energy markets, potentially pushing oil and jet fuel prices higher,” it said, adding that airlines were likely to pass any increases on to shippers through fuel surcharges. 

“Overall, the market setup points to tighter capacity, rate volatility, and a surcharge-heavy environment, particularly on Asia-Europe and Asia-Middle East lanes,” Ti said. 

It warned that “the most acute constraints” were expected on routes from the Far East to Europe, where any detours or hub disruption could “quickly ripple through network connectivity”.  

“For shippers, that typically translates into longer lead times and tighter booking windows, particularly for time-definite or temperature-controlled products.”