Full Breakdown
Disruption of Global Supply Chains Amid Middle East Conflict
3/7/2026, 2:54:59 AM
Impact on South Asian Garment Exports
The ongoing conflict in the Middle East has significantly disrupted air cargo operations, particularly affecting garment shipments from South Asia. Major airlines, including Emirates and Qatar Airways, have canceled flights due to airspace closures, leaving shipments for fast-fashion brands like Zara, owned by Inditex, stranded at airports in Bangladesh and India. Shovon Islam, managing director of Sparrow Group, reported that his consignments, intended for the UK, are currently stuck at Dhaka airport, complicating logistics as alternative routes are neither simple nor cost-effective. The reliance of South Asian manufacturers on Gulf airlines for cargo transport is evident, with over half of Bangladesh's air cargo and 41% of India's relying on these carriers.
As air capacity diminishes, freight costs have surged. Alexander Nathani, managing partner at Kira Leder, noted that shipping costs from Mumbai to Austria have doubled due to the cancellations. The Bangladesh Knitwear Manufacturers and Exporters Association's president, Mohammad Hatem, indicated that while most shipments are made by sea, the disruption in air transport is already impacting logistics.
Broader Economic Implications
The conflict's escalation has raised concerns about its long-term effects on the global economy. Qatar's energy minister, Saad al-Kaabi, warned that prolonged conflict could lead to higher energy prices and negatively impact global GDP growth. The Ras Laffan LNG export facility in Qatar, a critical supplier of liquefied natural gas, has halted operations following an Iranian drone attack, causing gas prices in Europe to spike by 50%. This disruption threatens to undermine Qatar's reputation as a stable energy supplier and could lead to widespread economic repercussions, including increased inflation and stagnant growth.
Conflicting Reports on Air Cargo Demand
Despite the disruptions, global air cargo demand had shown resilience prior to the conflict, with a reported 6% year-on-year increase in February. However, the situation has changed dramatically since military strikes on Iran began on February 28, leading to a significant reduction in air cargo capacity. Analysts have noted that the conflict has removed approximately 12% of global air cargo capacity, particularly affecting routes from South and Southeast Asia, where reliance on Middle Eastern carriers is high.
Criticism and Concerns
Critics have raised concerns about the potential for prolonged disruptions to exacerbate supply chain issues globally. Niall van de Wouw, Chief Airfreight Officer at Xeneta, emphasized that while the airfreight sector has historically adapted to macro-events, the current geopolitical climate poses significant challenges. The potential for increased logistics costs may force shippers to accept higher expenses temporarily to maintain service levels.
Verbatim Quotes
- “Some of my apparel consignments are currently stuck at Dhaka airport,” — Shovon Islam, Managing Director, Sparrow Group
- “If this war continues for a few weeks, GDP growth around the world will be impacted.” — Saad al-Kaabi, Qatar’s Energy Minister
- “The whole freight capacity is being blocked now on the airlines that are flying, so prices are increasing,” — Alexander Nathani, Managing Partner, Kira Leder
The ongoing conflict in the Middle East continues to pose significant challenges to global supply chains, particularly in the garment and energy sectors, with implications that could extend far beyond the region.
