The escalation of hostilities between Israel and Iran in mid-June 2025 has catalysed a significant disruption in global air cargo operations, with East–West trade routes through the Middle East bearing the brunt of the fallout. The immediate closure of airspace over Iran, Iraq, Jordan, and Israel has triggered extensive flight cancellations and rerouting, particularly affecting air cargo movements between South Asia, Southeast Asia, and Europe. These developments have exposed vulnerabilities in the current air logistics architecture and reinforced the imperative for long-term policy interventions to enhance operational resilience.

According to the latest WorldACD data, cargo volumes originating from the Middle East  and South Asia (MESA) region dropped by approximately 9 percent during the second week of June, compounding an 8 percent decline observed the previous week. The Levant region—including Israel, Jordan, Lebanon, and Syria—saw flown tonnages decline by 21 percent week-on-week, largely attributable to grounded aircraft following Israeli strikes on Iranian military targets. Notably, intra-MENA cargo flows contracted by 26 percent, reflecting both operational paralysis and subdued commercial demand following the Eid-Al-Adha holiday.

Freighter capacity across Iran and Syria experienced an almost complete withdrawal, with Iraq registering an 84 percent drop in lift capacity. This loss of belly and freighter capacity has been particularly detrimental to time-sensitive airfreight sectors such as perishables, pharmaceuticals, and high-value electronics. While WorldACD reports that global air cargo rates have remained relatively stable at US$2.41/kg, the MESA region has experienced a 22 percent year-on-year rate drop—indicative not of cost savings, but of constrained volumes and rerouting inefficiencies.

Additional data from S&P Global highlights a 10 percent contraction in jet fuel demand across the Gulf, driven by an estimated 1,500 daily flight cancellations. These reductions are cascading through auxiliary service sectors, including aircraft fuelling, line maintenance, and ground handling—affecting the total cost of cargo operations across impacted routes.

Rising exposure to network volatility

Exporters in India and Southeast Asia—regions collectively responsible for over 3 million tonnes of annual perishable air exports—have been particularly affected by the rerouting of flights that previously transited through Dubai, Doha, and Abu Dhabi. The imposition of longer southern detours via the Arabian Sea or Central Asia has increased average transit times by two to four hours. Airlines have accordingly revised tariff structures, with freight rates rising by 15–20 percent for shipments to Western Europe and North America.

In India, pharmaceutical exports—which exceed US$6 billion annually in air cargo value—face intensified pressure. Express logistics providers report eroded margins due to limited freighter availability, unpredictable slot access, and increased insurance premiums tied to geopolitical risk.

Addressing non-tariff disruptions

The ongoing disruptions present a new class of non-tariff trade barriers, meriting policy recognition and diplomatic response. ICAO and the World Bank have long advocated for the diversification of air corridors and inclusion of resilience frameworks within national logistics strategies. These principles now require operationalisation.

For the Indian subcontinent and ASEAN markets, the establishment of air cargo resilience agreements—including alternative routing rights and expedited bilateral approvals for emergency corridor activation—would offer a partial hedge against future airspace closures. Complementary efforts to fast-track participation in IATA’s ONE Record and e-Air Waybill frameworks could further streamline regulatory compliance for rerouted consignments.

Towards a multipolar transit model

As the regional crisis persists, freight operators are increasingly redirecting traffic through Turkish, Azerbaijani, and Central Asian airspaces. While UAE hubs such as Dubai have recorded a 15 percent recovery in weekly tonnage—according to WorldACD—this uplift is reflective of diversionary volumes rather than baseline trade growth.

Over the medium term, carrier preferences may shift to alternative hubs such as Almaty, Tashkent, or Muscat, provided they invest in the requisite customs infrastructure, airside cargo handling capacity, and diplomatic airspace agreements. This evolution underscores the importance of multilateral coordination through platforms such as the International Air Cargo Association (TIACA) and the South Asian Regional Initiative for Transport Integration (SARITI).

Stakeholders recommendations

Air transport policy professionals and industry leaders should prioritise the following:

1.     Diversification of critical cargo corridors, especially along the Turkey–Central Asia–China axis and Gulf–East Africa trade lanes.

2.     Diplomatic negotiations to secure overflight rights and emergency clearances in geopolitically sensitive regions.

3.     Mandatory digital documentation standards (e.g. e-AWB, electronic consignment notes) to reduce processing friction amid rerouting.

4.     Deployment of predictive risk management systems using AI and blockchain-enabled logistics platforms.

5.     Quantification of economic impacts through platforms like India’s Unified Logistics Interface Platform (ULIP) to inform compensation frameworks and contingency planning.