News / Air freight rates surge ahead of ceasefire, while fuel fears cloud outlook

© Gordon Tipene

A two-week ceasefire in the Middle East has raised hopes of easing pressure on global supply chains – but the latest air freight data shows rates still climbing sharply to the point of the agreement, leaving the market uncertain over what comes next. 

The global Baltic Air Freight Index, calculated by TAC Index, rose a further 5.1% in the week to 6 April, leaving it up 15.8% year on year, as disruption from the conflict continued to squeeze capacity and drive up costs. 

Rates out of Asia remained particularly strong, with pricing on major lanes from China to both Europe and the US now up close to 30% year on year. Hong Kong outbound rates rose 8.6% week on week, while Shanghai increased 6.4%, with further gains across South-east Asia and India. 

The surge continues to reflect the sudden and severe capacity shock following the closure of key Gulf airspace. 

“The whole global air freight scenario changed… this was actually the defining event of the quarter,” said Milena Milenkovic, head of air freight EMEA at Flexport, noting that disruption to Middle Eastern hubs that typically handle around half of Asia-Europe air cargo effectively removed about 30% of capacity on the corridor almost overnight . 

As a result, rates spiked sharply in late March, rising 9% to 10% in a single week. 

“This is not normal in this season… this is actually the market repricing for risk,” Ms Milenkovic said during a webinar yesterday, highlighting how peak-season pricing levels had emerged during what is traditionally a quieter period. 

Airlines have been forced to reroute flights, deploy technical stops, and seek alternative routings via Central Asia, adding both cost and transit time. 

At the same time, market dynamics have shifted decisively towards short-term buying. 

“Committing to long-term rates today is extremely difficult… nobody knows how long this disruption will last,” said Ms Milenkovic, adding that around 52% of global air cargo was now moving on spot rates – close to Covid-era levels . 

Alongside the capacity squeeze, demand has also been reinforced by disruption in ocean freight, as shippers turn to air to protect supply chains. 

“When ocean networks come under strain, air becomes the pressure valve,” Xeneta noted, adding that companies shifting modes are seeking to “protect availability and keep growth plans intact despite unreliable ocean lead times”. 

However, Xeneta stressed that such decisions were rooted in wider commercial risk. 

“The most important question is often not how much air freight costs, but what it costs to be late,” it said. 

Even with a ceasefire in place, and the conditional reopening of the Strait of Hormuz, the outlook remains uncertain. 

A more fundamental constraint is emerging around jet fuel, which could limit how quickly capacity returns. Prices have surged in recent weeks, with IATA data showing jet fuel at $195.19 per barrel in late March, nearly double the level seen just a month earlier, with particularly sharp increases in Asia. 

At the same time, availability is becoming a growing concern. Governments in key refining hubs are already taking steps to protect domestic supply, with South Korean airlines urging export restrictions and China reportedly limiting shipments, while Indonesia has sought alternative supplies from Japan. 

“This is not just a Middle East story. It is a jet fuel story… a capacity story… a rate story,” said Ms Milenkovic. 

The impact is already being felt on the ground. According to Flexport, fuel rationing has been introduced at several Italian airports, including Venice, Treviso, Bologna, and Milan Linate, highlighting how supply constraints are beginning to affect operations in Europe. 

While Europe has so far been partially insulated by supplies from the North Sea, Libya, and West Africa, airline executives have warned that disruption could spread. Ryanair CEO Michael O’Leary said there was a “reasonable risk” that 10% to 25% of fuel supplies in Europe could be affected in May and June if the conflict continued. 

Industry sources warn that a prolonged shortage would have significant consequences, with freighter operations likely to be curtailed first as governments prioritise passenger services, with express capacity also coming under pressure. 

While the ceasefire has already triggered a sharp fall in oil prices and lifted financial markets, the air cargo sector may take longer to stabilise. 

Even if hostilities pause, the combination of disrupted fuel supply chains, altered routings, and constrained capacity is likely to continue shaping the market in the weeks ahead. 

For now, the key question for shippers and carriers alike is whether the ceasefire marks the beginning of a recovery, or simply a pause in a market that has already been forced to reprice for risk.