This past week in the freight and logistics industry has been largely defined by the persistent impact of geopolitical tensions in the Middle East on fuel prices and the subsequent ripple effects across all modes of transport. This instability is not only driving up operational costs through increased surcharges but is also leading to capacity constraints in air cargo, while simultaneously fueling a continued push towards sustainability initiatives.
The ongoing conflict in the Middle East, particularly related to the Strait of Hormuz, continues to be a major disruptor. This has directly led to significant increases in jet fuel prices, with reports indicating a 42-cent increase on U.S. Gulf Coast kerosene-type jet fuel in a single week, nearly doubling last year's prices. Consequently, air cargo carriers such as United Cargo, Air Canada Cargo, and Cathay Cargo are implementing or adjusting fuel surcharges. For instance, United Airlines' cargo arm is introducing a 'Market Disruption Fee,' with the highest surcharge of 55 cents per kilogram on shipments from Asia Pacific. Xeneta reported a 30% year-over-year surge in global air cargo spot rates in April, reaching $3.34 per kilogram, with Southeast Asia to North America routes seeing a 33% YoY increase.
The impact is not confined to air freight. Ocean carriers like MSC, CMA CGM, Ocean Network Express, and Maersk have implemented fuel surcharges and higher rates. Trucking carriers are also contending with elevated on-highway diesel prices, leading companies like Bassett Furniture to face weekly surcharges from their captive freight partners. Uber Freight noted that while intermodal remains cheaper than trucking, rates are climbing due to rising diesel costs, with diesel prices up $1.837 per gallon year-over-year.
Capacity in air cargo is further strained by factors such as limited incoming widebody freighter capacity and the reduction of bellyhold capacity on passenger aircraft. DSV highlighted these concerns, noting that demand growth is being driven by technology and semiconductor shipments, particularly on Asia-to-North America and Intra-Asia trade lanes. Expeditors International reported a 14.3% year-on-year increase in first-quarter air services revenue to $1 billion, but warned of an unpredictable market. Furthermore, DHL CEO Tobias Meyer noted jet fuel supply constraints in Asia, impacting operations at some airports.
Despite the market volatility, sustainability remains a key focus. FedEx is advancing its fleet electrification goals, having received its first 150 electric delivery vehicles from BrightDrop, with plans to incorporate 2,500 Zevo 600s across its operations. The company is also investing in charging infrastructure. Kuehne+Nagel, in partnership with Hapag-Lloyd, is progressing with sustainable ocean shipping using Sustainable Marine Fuels (SMF), aiming for approximately 3,000 tonnes of CO₂e emission reductions in a pilot volume for 2026. Additionally, Kuehne+Nagel, LATAM Cargo, and The Elite Flower completed their largest Sustainable Aviation Fuel (SAF) operation in Latin America, reducing about 300 tonnes of CO₂e related to flower shipments from Bogota to Miami.
Several companies are investing in infrastructure to enhance their services. Kuehne+Nagel has expanded its healthcare logistics network in India with a new temperature-controlled facility in Hyderabad and opened a new 3,500 sqm Container Freight Station (CFS) in Mumbai to support India's growing trade needs. Maersk is expanding its Brazil footprint with additional depots in Rio Grande and Paranaguá, aiming to support agribusiness, refrigerated commodities, and industrial cargo. They also launched a dedicated weekly reefer rail service connecting Hyderabad's pharmaceutical cluster to Nhava Sheva port, projecting a reduction of about 3,000 tonnes of GHG emissions annually by shifting from road to rail.
In strategic corporate moves, FedEx announced the board approval for the spinoff of its less-than-truckload business, FedEx Freight, to become a standalone company. DSV's acquisition of Schenker continues to boost its airfreight volumes, contributing to its strong Q1 performance.