42 American Journal of Transportation American Journal of Transportation ajot.com The Middle East conflict raises havoc with Gulf air cargo By Stuart Todd, AJOT When the Middle East conflict broke out earlier this year, the capacity of major cargo-carrying Gulf air- lines, Emirates, Qatar Airways and Eithad nosedived. With their transhipment hubs in Dubai, Doha and Abu Dhabi fully or partially-closed for a time or at best regularly disrupted by the hostilities, rivals filled the gap, taking advantage of the lucra- tive opportunities to offer direct services on the key, high-demand air cargo routes between Europe and Asia and the Far East. And seizing such market openings was clearly reflected in a raft of strong second quarter and first half-year results. ‘Business Gained Momentum’ German aviation group Lufthansa’s logis- tics division, whose main component is Lufthansa Cargo, reported an adjusted operating profit for the three months (April-June 2026) of €116 million, up 58% year over year (YoY). Revenue rose 27% to just over €1 billion. The Group said that “in the context of the sig- nificantly changed market environment due to the conflict in the Middle East and the corresponding reduction in competitors’ capacities in the region, Lufthansa Cargo’s freight business gained momen- tum in overall terms.” With the addition of the strong rise in fuel costs, the result was a significant increase in yields compared to previous quarters. Demand driven by continued strong business in the Asia/Pacific region in particular. Turning to the Air France-KLM Group, in an interim report it noted that “global air cargo capacity had started to normalize towards the end of Q2, as disruption in the Middle East eased, Gulf hub capac- ity was restored and operational pressure reduced. However, demand continued to outpace capacity growth on several key lanes, keeping the market rel- atively tight.” Such factors enabled Air France-KLM Marti- nair Cargo to post Q2 traffic and revenue growth of 11.3% and 27.6% respectively. India Something of ‘A Trade Hotspot’ Cathay Pacific Cargo also produced a strong performance in the first of half of the year which it attributed to adapting to new trade patterns arising from the conflict in the Middle East. The Hong Kong-based carrier’s total tonnage carried increased by 9% year on year (YoY) while June’s YoY figures also showed growth of 9%. With the Middle East market currently con- strained, India in particular has become something of “a trade hotspot,” head of Cargo, Chinese Main- land, Wendy Ge, explained. Despite the geopolitical developments in the Middle East and the significant pressure on global air cargo capacity, Turkish Airlines Cargo also delivered stand-out results in the second quar- ter, “responding effectively to demand through its strong infrastructure and strategic geographical position”, the airline group noted. Turkish Cargo’s volumes increased by 11.3%, while revenues were up by 58% to nearly $1.3 billion. Having taken on the role of an ‘alternative’ hub to those in the Middle East, Istanbul Airport was Europe’s busiest for cargo in the first half of the year, handling just over one million tonnes and dethroning Frankfurt from first place. Air Freight Outlook So, what of Q3 and the remainder of 2026? Approached by AJOT, Lufthansa Cargo said that in keeping with Group policy it “couldn’t share any developments” on how the current quarter was playing out and would reserve comments until the publication of its Q3 results in November. Cathay Pacific Cargo was more forthcoming, anticipating “continued healthy flows across its net- work, still led by the urgent demand for server racks and chips to fuel AI,” Wendy Ge noted. “At the same time, we will keep an eye on the potential impact on e-commerce flows following the introduction of new customs duties on low-value imports into Europe that could affect volumes from the Chinese Mainland.” Xeneta’s chief airfreight officer, Niall van de Wouw, recently pointed out, the major Gulf hubs are around 90% of pre-crisis levels. Doha is effectively back to full capacity, with Dubai and Abu Dhabi close behind. “The recovery is even more impres- sive given it has continued despite continued flash- points in the conflict. So, unless there is a major deterioration in the security situation, I believe the worst is behind us in terms of the impact on the air freight market. Rates spiked sharply but they are coming down gradually as we anticipated, so it’s a step-by-step path back to business as usual.” In an air cargo update at the end of August, Airgroup, part of US 3PL Radiant Logistics, said Air cargo trends and what they could mean By E.C. Lauriat, AJOT After uneasy periods, punctuated by sharp declines and rapid rises, air cargo demand appears to be finally stabilizing. This is a relief to multiple sides of the air freight industry, where the instability and potential long-term damage have been watched with bated breath. Questions, however, continue to remain: How long will this ‘stability’ last? Will the chaotic state of the market return? And what can, if anything, the air cargo community do about it? Tonnage Stabilization According to WorldACD Weekly Air Cargo Trends #34 – August 17 to 23, 2026, there has been, for instance, stabilization of the air cargo tonnages going from China and Hong Kong to Europe. This comes after sev- eral straight weeks of declines, influ- enced by the new European Union import duty rules. Brandon Fried, of the AirForward- ers Association, corroborated this, saying, “Yes, the WorldACD num- bers match what our members are seeing. Demand and pricing have leveled off after the usual start-of-year dip, and worldwide rates have sat around levels still well above where they were a year ago.” While, this is good news for the industry, it isn’t the whole story. Brandon Fried also added, “Whether it holds is the harder question. This stability is sitting on top of tight capacity rather than booming demand, so I’d be cautious about calling it durable. With aircraft deliveries running years behind and geopolitics still in play, I’d expect more choppiness before any real calm.” It is important to keep this in mind, so that everyone can plan ahead. If the industry becomes too comfortable with the current status of things, it will surely be blindsided by the factors that caused the issues in the first place, which have yet to be solved. Causes of Instability The fluctuations in air cargo demand and rates have had many different sources. Removal of de minimis, the war in Iran, and the USA tariff regime, amongst other things, has caused widespread dif- ficulties to the industry. Recovery has been a slow and difficult process, marked by attempts to find alternatives to routes and practices which no longer function in this volatile time. Still, the industry is nothing if not adaptable, as the statistics show. Despite the challenges, there have been solutions found to the troubles that have been plaguing the air cargo industry. The changing of de minimis in both the USA and EU has had strong impacts on the shipping industry, particularly smaller shipments usually purchased online. Air carriers and freight forward- ers have had to adjust to that. According to Bran- don Fried, “Forwarders and carriers are rebuilding around formal entry. Every one of those sub-$800 parcels that used to clear with almost no paperwork now needs a real customs entry, a 10-digit classifica- tion and duty paid, and the volume that fell off after the US suspension was enormous, better than half in the low-value segment. So, members are staffing up their brokerage and compliance operations and leaning hard on automation to process entries at that scale, because doing it by hand doesn’t pencil out when the brokerage cost per parcel can top the value of what’s in the box.” In regard to the carrier side, he said, “On the car- rier side, some of that B2C belly demand has soft- ened, and you’re seeing a shift toward bulk B2B moves with fulfillment centers set up here and in Europe, closer to the customer. A fair amount of the AIR CARGO QUARTERLY AIR CARGO QUARTERLY (HAVOC – continued on page 44) (TRENDS – continued on page 44) Brandon Fried, AirForwarders Assoc.
View this content as a flipbook by clicking here.