The Strait of Hormuz crisis that began with US-Israeli strikes on Iran in late February is sending shockwaves through global supply chains, weakening American retail imports and forcing airlines to slash operations as surging fuel costs and closed airspace erode margins across the transport sector.
US Import Volumes Face Prolonged Weakness
The National Retail Federation’s latest Global Port Tracker report, released May 7, projects that US container imports will fall below 2025 levels through early fall despite a temporary year-over-year bump in May and June. July volumes are forecast at 2.2 million TEU, down 7.8% from a year earlier, with August expected to decline 5.5% and September 1.3%.
NRF Vice President for Supply Chain and Customs Policy Jonathan Gold cautioned against reading too much into the short-term gains. “The numbers show a year-over-year increase for the next two months, but that’s only because of the sharp fall-off in imports after ‘Liberation Day’ tariffs were announced in April 2025,” he said. The combination of persistent tariff uncertainty and elevated shipping costs tied to the Hormuz disruption continues to weigh on retailer demand, with first-half 2026 imports expected to total 12.59 million TEU — essentially flat compared to the same period last year.
Air India Weighs Deep Cuts
Air India is considering cutting flight capacity by more than 20% over the next three months as the West Asia conflict makes dozens of international routes unprofitable. The airline’s board met on Thursday, May 7, and discussed furloughs for non-technical staff as well as delayed bonus payments, according to multiple reports citing sources familiar with the deliberations.
CEO Campbell Wilson told staff that a “massive rise in jet fuel prices,” combined with airspace closures forcing aircraft onto longer routes, left the airline with “no choice but to further trim schedules for June and July”. Air India parent Tata Group’s carrier had already reduced services in April and May. On Friday, Wilson addressed employees at a town hall, confirming that annual salary increments would be deferred by at least one quarter, though he assured staff there would be no layoffs.
Aviation Sector Grapples With Airspace Fallout
The broader aviation industry remains under strain. Airspace over Iran, Iraq, and parts of the Gulf has been closed or restricted since the conflict began on February 28, forcing airlines to reroute via southern corridors over Saudi Arabia and Oman or northern paths through the Caucasus. While the UAE lifted all flight restrictions on May 2 following a Pakistan-brokered ceasefire, the central Middle East corridor has yet to resume normal traffic.
Multiple nations took emergency measures earlier in the conflict. Qatar, Bahrain, and Kuwait closed their airspace entirely in the initial weeks, Japan’s carriers canceled more than a quarter of Middle East services, and India’s Ministry of External Affairs issued travel advisories as hundreds of flights were grounded. Although some normalization has begun, airlines including Lufthansa, British Airways, and Cathay Pacific extended suspensions of Gulf routes through late May, and the economic toll continues to mount across the sector.
