Air freight rates soar as Middle East conflict blocks trade routes

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Air freight rates have risen by as much as 70 per cent on some routes since the start of the US-Israeli war on Iran, data shows, as the conflict limits flights, blocks some ocean shipments and pushes up jet fuel costs.

Rates on routes between South Asia and Europe have been the most affected by Middle Eastern airspace closures and security issues, industry experts said, after the conflict has stranded more than 100 container ships in the area around the critical Strait of Hormuz oil export corridor.

Products like inexpensive generic medicines from India destined for the European Union, Africa and some Arab countries like Saudi Arabia and the United Arab Emirates typically move on container ships through the strait, said pharmaceutical supply chain expert Prashant Yadav.

“The main shift I’ve heard about involves companies moving generic medicines from ocean freight to air cargo,” said Yadav, a senior fellow at the Council on Foreign Relations.

“Customers are shifting freight from ocean to air, however, it is extremely expensive - typically 5x to 10x higher - and those costs are climbing as capacity tightens,” said Steve Blough, chief supply chain strategist at logistics software firm Infios.

“More often, shippers are moving a limited quantity by air to bridge a gap.”

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