How much air cargo capacity has been taken offline due to the Iran-US conflict?

Initial capacity reductions reached close to 20%, with approximately 12% of global air cargo capacity remaining out of service through a combination of airspace closures, airport shutdowns, flight cancellations, reduced flight frequencies, and mandatory rerouting to avoid conflict zones. This includes both passenger belly cargo and dedicated freighter aircraft.

Why is Xeneta revising its rate forecast from a 5-10% decline to a 5-15% increase?

Xeneta's initial forecast assumed normalized capacity and moderate demand growth. However, the Iran-US conflict has reduced supply, while demand has exceeded expectations due to strong AI hardware and semiconductor shipments (7% year-over-year growth in June). The demand-supply imbalance, combined with aircraft utilization rising to 62%, is driving higher rates instead of the expected decline.

How much have air cargo rates already increased in 2026?

Combined spot and long-term contract rates rose 17% in the first half of 2026 compared to the same period last year. Spot rates for immediate delivery jumped 22%, while long-term contract rates increased 11%. Spot rates surged 40% specifically during the May-June period. Current spot rates are 25% higher than pre-conflict levels according to the Freightos index.

What is driving demand growth if e-commerce is in decline?

Artificial intelligence and semiconductor shipments are the new growth engine, representing approximately 10% of total air cargo volume and driving concentrated demand on trans-Pacific routes. This has offset the decline in e-commerce volume, which fell 7% year-over-year in China in May due to new US and EU duty regulations eliminating preferential treatment for low-value parcels.

Which airlines are benefiting most from higher air cargo rates?

United Airlines reported a 22.6% gain in cargo revenue during Q2 2026, reaching $527 million, with first-half cargo revenue of $859 million (up 10.5% year-over-year). Delta Air Lines reported cargo revenue of $291 million, a 39% increase from the prior year. Higher yields from elevated rates were identified as the biggest factor in these gains.

Shipping & Freight

High Impact

Air Cargo Rates Could Jump 15% in 2026 Amid Iran Conflict

Jul 17, 2026

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The signal

A renewed conflict between Iran and the United States is forcing a structural reassessment of 2026 air cargo pricing, with freight rate benchmarking firm Xeneta revising its forecast from a 5-10% decline to a 5-15% increase. The resumption of hostilities has taken approximately 12% of global air freight capacity offline through Middle East airspace and airport closures, flight cancellations, and mandatory rerouting, partially reversing supply gains achieved earlier in the year. The rate pressure reflects a clash of two competing market forces. On the demand side, semiconductor and AI hardware shipments continue to surge—AI represents roughly 10% of total air cargo volume—driving year-over-year growth to 7% in June, well ahead of the original forecast.

Simultaneously, e-commerce growth, the traditional pillar of air freight expansion, has stalled following new duty regulations in the US and EU that eliminated de minimis exemptions. These cross-currents mean that while overall air cargo demand remains robust, supply constraints from geopolitical disruption are creating the pricing environment for sustained rate elevation through 2026. For supply chain professionals, this signals a fundamental shift in air freight economics. The industry can no longer rely on e-commerce volume to drive growth; instead, semiconductor and technology supply chains—concentrated heavily on trans-Pacific routes—are becoming the primary demand anchor.

Companies dependent on Asian electronics sourcing should prepare for persistent air freight cost premiums and consider longer lead times as capacity remains constrained. Strategic decisions around supplier diversification, mode substitution, and inventory positioning are now urgent.

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Simulation Suggestion

immediate

What if Middle East airspace remains restricted for 6+ months?

Simulate sustained 12% reduction in global air freight capacity with rerouting requirements adding 15-20% to flight times on affected lanes. Model impact on contract rates, equipment availability, and alternative routing economics via northern Europe and South Asia.

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Simulation Suggestion

this month

What if AI chip demand accelerates beyond current forecasts?

Model 25-50% increase in semiconductor and AI hardware shipments on trans-Pacific routes. Simulate impact on freight rates, equipment utilization, and service levels. Evaluate whether dedicated air charter becomes economically viable versus scheduled capacity.

Run this scenario

Simulation Suggestion

strategic

What if rates increase another 10% following additional Middle East escalation?

Model cumulative 25% rate increase from 2026 baseline. Evaluate breakeven analysis for ocean freight alternatives with extended lead times. Assess inventory positioning strategies and safety stock requirements across sourcing regions.

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