With petroleum markets under pressure from disruption by the Iran War, global airfreight pricing continued to rise during the last week of March, indicating that the price of jet fuel is replacing capacity constraints as the driver of upward rate momentum, according to a report from WorldACD.

Oil prices have soared in recent weeks as Iran has closed the Strait of Hormuz to most maritime traffic by both oil tankers and containerships. That has led to spikes at pump prices for gasoline, diesel, and jet fuel.

Since the outbreak of the Iran war in late February, the price of jet fuel has more than doubled, reaching an all-time high in March, WorldACD said. Inevitably, the higher jet fuel price led to upward pricing momentum.

Against that backdrop, worldwide air cargo tonnage in week 13 (23-29 March) was unchanged from the previous week, data from WorldACD show, as volumes out of four regions slipped, while the other two recorded low single-digit increases, an indication that the return of capacity – albeit still down from levels before the Middle East conflict – has absorbed current demand. On the other hand, average global full-market air cargo rates continued to rise to a new high this year at $2.98, but the momentum slowed for the second week in a row, from +10% in week 11 to +5% last week, on a week-on-week basis.

Air cargo capacity remains depressed, as airlines based in the Gulf region continued to rebuild their capacity but still face constraints from the conflict, especially on their passenger schedules. Compared with the previous two weeks (2Wo2W), capacity from the Middle East and South Asia (MESA) region was up +31% for the fortnight from 16 to 29 March, but still -33% below the level in the corresponding fortnight a year ago.

Airlines in the northern hemisphere switch to their summer schedule by the start of April, which should begin to impact capacity and pricing in a number of markets in week 14. However, the ongoing conflict in the Middle East will likely have a much larger impact on demand and pricing, the report said.