Transportation confronts a slowdown in global trade
In 2025, the volume of global trade in goods grew by 5 per cent, a rate significantly higher than the 2 per cent average recorded over the previous four years. This acceleration is mainly due to trade being brought forward ahead of the entry into force of so-called ‘reciprocal’ tariffs in the United States, as well as strong demand linked to artificial intelligence. It is expected to slow in 2026 due to an unfavourable base effect. Furthermore, the conflict in the Middle East, which is causing high volatility in commodity prices and significant disruptions to supply chains, is also weighing on trade. Although it eased in June, the global supply chain pressure index returned in April and May to levels not seen since the supply chain crisis of 2021–2022. Despite the signing in June 2026 of a memorandum of understanding between the United States and Iran, ongoing tensions are jeopardising a recovery in maritime traffic through the Strait of Hormuz. The Houthis’ blockade of the Bab el-Mandeb Strait since 20 July has further exacerbated the situation. Whilst growth in global trade volumes slowed during the first few months of the conflict, with a year-on-year increase of 4.4 per cent for the period March–May (compared with 7.1 per cent in January–February), the risk associated with persistently high commodity prices and disruptions to supply chains could continue to weigh on trade and, consequently, on transport activity.
Transport and logistic businesses in Middle East are the most vulnerable to the conflict. Maritime transport has suffered significant disruptions, with port calls at Jebel Ali falling by more than 60% during the first half of 2026. Air transport has also been affected by repeated airspace closures and route diversions. While Middle Eastern airlines adapted rapidly by rerouting flights and reallocating capacity, air traffic in the region has been slower to recover. Aircraft movements at Dubai International Airport (DXB), the main Gulf’s airport, remained around 23% below normal levels as of midJuly. Disruptions were reported globally, with a lengthening in delivery times by European, Asian and North American manufacturers.
Slower global trade affects all modes of transportation. Shipping, which handles around 90% of global trade, is particularly exposed. Also used for international trade, air cargo will continue to increase at a softer pace. Mainly serving regional and domestic transport, road and rail will develop differently according to local trends. Persistent truck driver shortages in several European countries, as well as in China, Mexico and Türkiye will continue to disrupt activity. Despite its environmental and cost advantages, rail transport is expected to remain hampered by limited flexibility and ageing infrastructure in many developed economies.
Time for falling fuel prices is over
The first direct impact of the conflict in the Middle East on transport businesses has been a tightening in fuel supply. Around onefifth of global oil production originates from the Gulf region. The second impact, closely linked to the first, has been felt through fuel prices. Jet fuel experienced the greatest volatility. In the European market, for which the Middle East normally represents more than 40% of imports, the latter declined by around 40% year-on-year over April-May 2026. This fueled a 114% increase in prices over the same period. In Asia, while the direct reliance on Gulf countries was limited, the region’s main jet fuel exporter – namely South Korea, Singapore or India - depended on them for crude oil. In response, some of them curbed exports to their neighbors to ensure sufficient supply for their domestic market. Jet fuel prices went up even more sharply on the Asian market, with an increase of up to 160% in April.
Although jet fuel prices softened from April’s highs, they remain volatile, mirroring crude oil price movements. As of July 22, jet fuel prices were 70-80% above pre-war benchmarks on Asia, Northwest Europe and US Gulf markets. While uncertainty remains particularly high, the time required to restore Gulf oil production to previous levels and the need to rebuild oil inventories is likely to keep oil prices elevated through 2027. This situation weighs on transport businesses’ cost structures, as fuel represents one of the largest expense items alongside labor. It is typically estimated to account for around 30% of operating costs for airlines and roughly 20% for shipping companies. Fuel costs also exert significant pressure on the road transport sector, which is largely composed of micro-enterprises reliant on diesel-powered vehicles, and whose margins are particularly sensitive to energy price fluctuations.
Whilst rising fuel prices may encourage the green transition in the transport sector, several obstacles are slowing progress. In road freight, the high cost of battery electric vehicles, which are the most widespread type of zero-emission vehicles (ZEVs), and inadequate charging infrastructure continue to limit adoption. According to the International Council on Clean Transportation, in 2025, virtually none (0.3%) of the newly registered heavy goods vehicles in the United States were ZEVs. The situation was only slightly better in the European Union, where they accounted for 1.9% of new registrations. In China, this share is significantly higher, at 29%. In aviation, sustainable aviation fuels (SAF) remain scarce, representing less than 1% of fuel consumption. In maritime transport, insufficient port infrastructure and limited availability of alternative fuels resulted in the transition largely relying on liquefied natural gas (LNG), despite concerns about its overall environmental impact due to methane emissions.
At the same time, stricter environmental regulations are driving up costs. In the European Union, the gradual implementation of a CO?-based truck tolling and a tighter application of the EU Emissions Trading System (ETS) since 2026 for both aviation and maritime transport are adding costs. They could rise further if the scope of the ETS were to be extended to cover additional emissions, as proposed by the European Commission in July 2026. At the global level, the World Maritime Organization’s Net-Zero Framework could be voted in October 2026, introducing a global carbon pricing mechanism for ships.
Geopolitical developments shape sea freight rates
Container freight rates rose in Spring 2025 amid tariff-driven volatility in shipping demand, before falling in H2 2025 and early 2026. This decline was reversed by supply chain disruptions linked to the Middle East conflict. It caused rates to double between mid-May and to early July, reaching levels not seen since September 2024, as shippers accelerated orders to avoid higher costs and supply shortages. Demand was also supported by trade policy uncertainty in the United States, as the temporary 10% universal tariff rate expired expire on 24. Looking ahead, the quasi certainty around the emergence of El Niño in the final quarter of 2026 could exert additional upward pressure on container freight rates. Weather conditions are expected to disrupt operations at the Panama Canal (5% of global seaborne trade) from mid-2026 to at least the first half of 2027. The Panama Canal Authority (ACP) announced a reduction in the maximum authorised draft for vessels transiting the Neopanamax locks starting early July. Over the longer-term, however, container market fundamentals with overcapacity should weigh on rates throughout 2027. An improved geopolitical environment in the Middle East would also add downward pressure on rates. Declining rates would weigh on container shipping companies’ margins. Mirroring rates, the EBITDA margin of the top 10 listed container shipping companies had moderated from 28% in H1 2025 to 25.3% in the following semester.
On the tanker market, freight rates surged following the quasiblockade of the Strait of Hormuz. The Dirty Tanker Index, which tracks rates for vessels transporting crude oil and fuel oil, rose to nearly twice its preconflict level by the end of April. Over the same period, rates for refined oil products - such as diesel and kerosene - increased even more sharply, reaching around 2.5 times their precrisis levels. Although rates fell from these highs, they remain vulnerable to volatility in crude oil prices. That being said, tanker rates are expected to come under downward pressure in 2027, as fleet capacity is projected to grow faster than demand. This imbalance is likely to be particularly pronounced in the refined products segment. In parallel, dry bulk freight rates have followed an upward trend from early 2025 through early June 2026. This increase has been driven in particular by longer average sailing distances, reflecting a shift in Asian imports toward suppliers in South America and Guinea. Although an increase in ship deliveries in 2027 is expected to put downward pressure on rates, the impact of the El Niño phenomenon could partially offset this trend. By boosting demand for coal and disrupting agricultural production and trade, El Niño is expected to help keep bulk freight rates at a high level.
The 2026 freight market environment has had a significant impact on shipbuilding activity. In the tanker segment, surging freight rates drove a sharp increase in newbuilding demand, with the VLCC orderbook reaching a record high in early June 2026 (by number of vessels), equivalent to around 30% of the existing fleet. In the containership segment, ordering activity remained strong in the first half of 2026, with new orders rising by around one-third year-on-year. Chinese shipyards maintained their dominant position, securing 71% of global newbuilding orders between January and April 2026, well ahead of South Korean yards (18%). This dominance has persisted despite policy uncertainty in the United States regarding potential port service charges on Chinese-built vessels calling at US ports. The measures were suspended shortly after their introduction in November 2025, limiting their impact on contracting decisions.
Improving but persistent supply chain challenges in air transport
Although growth rates moderated from previous years, both passenger and cargo air activity reached record highs in 2025. Air transport expansion has slowed further in 2026, as demand was constrained by higher fuel prices and longer flight routes resulting from ongoing tensions in the Middle East. These factors have increased airlines’ operating costs and resulted into higher airfares, weighing on demand. Cargo volumes have also been affected by regulatory changes, notably the removal of customs exemptions for low-value parcels in the United States (July 2025) and the European Union (July 2026). These measures weighed on cross-border e-commerce flows, around 80% of which are transported by air. Growth is likely to reaccelerate moderately from 2027 onwards. Favourable demographics and rising household incomes in emerging markets should support sustained demand for air travel. In Europe, however, environmental concerns and tighter regulation are likely to act as a headwind. The European Commission has proposed extending the scope of the EU Emissions Trading System (ETS) from 2029 to cover flights between the European Economic Area (EEA) and destinations located within a 5,000-kilometre radius of Frankfurt.
Airlines are expected to continue facing supply-side constraints related to aircraft availability and maintenance capacity. The situation has improved since the pandemic, supported by easing labour shortages, stronger engine production, and progress in resolving Boeing’s quality and certification issues. As a result, Airbus and Boeing increased aircraft deliveries by 15% and 12% in the first half of 2026, respectively. Nevertheless, deliveries remain below pre-pandemic peak levels. Consequently, the total order backlog reached 18,100 aircraft in May 2026, equivalent to almost 60% of the active fleet and representing more than 11 years of production for Airbus and Boeing. Delivery delays have increased maintenance costs for airlines. The ageing of airline fleets – the average age reached a record 15 years in 2025, compared to 13 in 2019 – has also contributed to higher fuel consumption.
Last updated: July 2026
Transports
