Introduction
Geopolitical conflicts are increasingly affecting global supply chains and transportation networks. As an important pillar of global trade, the air freight market is particularly sensitive to geopolitical changes. The two major events, the Russia-Ukraine War and the Red Sea Crisis, provide us with typical cases for studying how geopolitics disturbs the air freight market. This article will analyze the specific impact mechanisms of these two crises on the air freight market and explore the long-term implications they bring.
- Multiple impacts of the Russian-Ukrainian war on the air transport market
- Airspace closure and route reconstruction
The mutual closure of airspace between the EU and Russia has led to large-scale adjustments in Asia-Europe routes
Flight time extension (such as the Frankfurt-Tokyo route increased by 2-3 hours)
Significant increase in fuel costs (in 2022, aviation fuel prices increased by about 60% year-on-year)
- Russian air transport capacity withdraws from the market
Russian airlines are banned from entering the European and American markets
Reduced freighter capacity (Russia accounts for about 6% of the world’s wide-body freighter capacity)
European airlines increase costs by about US$2 billion each year due to avoiding Russian airspace
- Supply chain restructuring caused by sanctions
Air transport routes for high-tech products are forced to adjust
Russia’s domestic air cargo volume has dropped by about 35% (2022 data)
Central Asia and Eastern Europe have become new air transport transit hubs
- Transmission effect of the Red Sea crisis on the air transport market
- The obstruction of sea transport has boosted the demand for air transport
Red Sea shipping risks have led to the transfer of some high-value goods to air transport
In January-February 2024, the volume of air transport in Asia and Europe increased by about 18% year-on-year
The proportion of time-sensitive goods such as electronic products and auto parts transported by air has increased
- The volatility of air transport prices has intensified
Hong Kong-Europe air transport prices have risen by 40-50% in the short term
The surge in demand for emergency air transport has led to a short-term shortage of capacity
Charter business volume increased by about 25% year-on-year
- The Middle East hub status has been strengthened
Dubai and Doha airports have seen a significant increase in cargo volume
Middle Eastern airlines have increased the deployment of all-cargo aircraft
Alternative route networks have been formed at an accelerated pace
III. The transmission mechanism of geopolitical disturbances in the air transport market
- Direct transmission path
Airspace closure → route extension → increased operating costs
Sanctions → withdrawal of capacity → reduced market supply
Safety risks → increased insurance costs → increased overall costs
- Indirect transmission path
Ocean transport is blocked → some goods are transferred to air transport → demand surges
Rising energy prices → rising aviation fuel costs → rising freight rates
Reconstruction of trade routes → transfer of hub airports → changes in network structure
- Compound effect
Cost-driven inflation and demand-driven price increases are superimposed
Short-term shocks and long-term structural adjustments reinforce each other
Regional crises spread through the global aviation network
IV. Implications for air transport market participants
- Suggestions for airlines
Establish capacity flexibility reserves and emergency response mechanisms
Diversify route network design to reduce single channel dependence
Strengthen fuel risk management and use financial hedging tools
- Implications for freight forwarders
Develop multimodal transport solutions to improve supply chain resilience
Establish regional distribution centers to diversify risks
Strengthen risk communication with customers and emergency plan formulation
- Strategic recommendations for shippers
Optimize inventory layout and balance timeliness and cost
Establish a “dual source” supply system for key components
Incorporate geopolitical risks into the supply chain cost model
V. Future Outlook and Response Strategies
Normalization of geopolitical risks: The air transport market needs to establish a continuous monitoring and rapid response mechanism
Technology empowers risk management: Use big data and AI to predict risks and optimize routes
Regionalization trend strengthens: Nearshore supply chains will promote the development of regional air transport networks
Sustainable development pressure: Detours caused by geopolitical conflicts increase carbon emissions and accelerate the development of sustainable aviation fuels
Conclusion
The Russian-Ukrainian war and the Red Sea crisis show that geopolitics has become a key variable that disturbs the air transport market. Competition in the future air transport market is not only a competition of price and service, but also a competition of risk management capabilities and geopolitical adaptability. Industry participants need to learn lessons from these two crises and build a more resilient air transport logistics system to cope with the increasingly complex and changing geopolitical environment.