Shenwan Hongyuan Group: The closure of major hubs and airspace in the Gulf region is expected to reduce supply and drive up transportation prices.

Shenwan Hongyuan Group released a research report stating that the combined impact of the Russia-Ukraine war and the escalation of the situation in the Middle East has caused significant disruptions in the global air freight network. Specific manifestations include airspace closures forcing aircraft to detour, a decrease in aircraft daily utilization rates, and a reduction in effective capacity. Against the backdrop of stable air freight time requirements, it is expected that the mismatch between supply and demand will drive air freight prices to achieve a phased increase. Chinese cargo airlines, leveraging their own advantages, are expected to become the main beneficiaries in this round of air freight supply-demand imbalance situation. Pay attention to domestic air cargo airlines. Key points from Shenwan Hongyuan Group are as follows: Events: After the outbreak of the Russia-Ukraine war in 2022, Russia closed its airspace to European and American airlines, cutting off the core airspace of the Eurasian route. On February 28, 2026, Israel and the United States launched a military strike against Iran, rapidly escalating the situation in the Middle East. Subsequently, countries like Iran, Iraq, and Israel implemented military controls in their airspace, causing significant disruptions to the Persian Gulf and major routes in the Middle East. The combination of the Russia-Ukraine war and the Middle East situation has led to the loss of both the Russian and Middle Eastern core airspace channels for the Europe-Asia route, forcing a re-adjustment of the global air freight network. Impact of airspace closures on capacity: After the Russia-Ukraine war: European airlines cannot use Russian airspace and need to detour over Central Asia or the Middle East on the Eurasian route. This has led to an increase of 1-4 hours in average flight time from Europe to China and increased fuel consumption costs. After the escalation of the Middle East situation: The CEO of DHL Express stated that due to the escalation of the Middle East situation, key hubs like Dubai were closed or flights were canceled, leading to about 18%-20% of global air cargo capacity (including belly capacity and charter flights) exiting the market. It is expected that in the coming days, goods bound for Europe and America from Asia (especially China and Southeast Asia) will experience severe backlogs at local airports. Gulf airlines play a significant role in the global air cargo market, with Qatar Airways Cargo, Emirates SkyCargo, and Etihad Cargo accounting for about 13% of global air cargo capacity. Their grounding will directly lead to a tight global network capacity, which has only partially recovered. Based on Aevean's estimates, since the closure of the Gulf airspace, available tonne-kilometre capacity on the Asia-Middle East and South Asia-Europe routes has decreased by 39% compared to the pre-Chinese New Year levels. As airlines bypass Gulf transfer points and operate longer direct routes as much as possible, the direct air freight capacity between Asia and Europe has increased by about 13%-14%, but there still exists a significant capacity gap. Main commodities transported by air freight are high value-added and time-sensitive goods, with relatively rigid demand: Major products include semiconductors and electronic products, pharmaceuticals, automotive components, e-commerce goods, fresh produce, etc. According to IATA data, air freight accounts for less than 1% of global trade volume, but around 30-35% of global trade value. If global trade demand remains stable, air transport demand usually does not decrease significantly. Third-party data shows that weekly rates on several major routes have increased: rates have risen by 2% on the China-North America route, 7% on the China-North Europe route, and 3% on the North Europe-North America route. Currently, the rate increases are moderate, and the capacity losses and ongoing route adjustments are expected to bring further fluctuations in future rates. If the situation in the Middle East persists, Chinese cargo airlines have three advantages in industry competition: 1) Distance advantage - Chinese airlines can fly over Russian airspace, resulting in lower costs compared to European and American airlines that need to detour; 2) Demand advantage - China, being the world's largest exporter in cross-border e-commerce, the continuous growth in cross-border e-commerce demand provides stable and consistent support for air freight demand for Chinese cargo airlines; 3) Capacity advantage - under cost pressure, if European airlines withdraw from some Eurasian routes, Chinese airlines can fill this market gap, increasing their market share in the global air freight market. Risks: Macroeconomic conditions, lower than expected demand growth; uncertainty in international trade policies; aviation safety, etc.