Airfreight capacity in the Middle East has plummeted since the outbreak of hostilities between Israel and Iran. This decline has led to a global drop in capacity, affecting supply chains worldwide. According to recent reports, all widebody capacity, both belly and freighter, in the region has seen significant reductions. Specifically, capacity in Iran and Syria has dropped by 100%, while Iraq has experienced an 84% reduction.
This reduction in airfreight capacity has had a ripple effect on global air cargo markets. The Middle East has long been a critical hub for air freight, serving as a bridge between Europe, Asia, and Africa. The current situation has disrupted key trade lanes and led to increased costs and delivery times for shippers.
The impact of reduced airfreight capacity extends beyond the immediate region. According to data from Accenture, international air cargo capacity has faced fluctuations, with container trade outgrowing scheduled capacity in some areas. The Asia Pacific-Middle East-Europe trade lanes have shown persistent growth, largely driven by e-commerce. However, the recent decline in Middle East airfreight capacity has created challenges for this growth.
The decline in airfreight capacity is also affecting individual carriers. For example, Qatar Airways, a major Middle Eastern carrier, has seen a small but above-market rise in cargo traffic of 1% to 14.4 billion cargo tonne-kilometres (CTK). This increase came as the carrier continued to expand its belly network following the lifting of Covid-related restrictions and capitalized on a surge in e-commerce demand towards the end of the year.
Despite these challenges, some regions and carriers are faring better. In August 2023, the Middle East-Asia market recorded a growth of 3.5% year-on-year, and the Middle East-Europe market saw a 0.4% increase. Middle Eastern airlines also posted a 1.3% increase in cargo volumes in August 2023 compared to the previous year.
However, the overall air cargo market remains down 1.7% compared to pre-pandemic levels in 2019. The reducing tonnages and increasing capacity have resulted in the global cargo load factor slipping to 42%, causing a steep decline in average rates.
In summary, the Middle East airfreight capacity has been significantly impacted by regional tensions, leading to a global drop in capacity. While some markets and carriers are showing resilience, the overall air cargo industry continues to face challenges. The situation highlights the vulnerability of global supply chains to geopolitical events and underscores the need for adaptability and contingency planning in the logistics industry.