Air freight rates were little changed overall during the month of July, with the global Baltic Air Freight Index (BAI00) calculated by TAC Data edging up +1.5% over the four weeks to August 4. That left it lower but only marginally by -1.8% over 12 months. The relatively muted movement in rates was not unusual for a period when air cargo often enters its ‘low season’. Typically, extra capacity gets added in the bellyhold of passenger planes at this time of year – with more planes flying as people take summer holidays, particularly on Transatlantic routes. The extra capacity tends to help keep overall rates down. The extreme uncertainties of earlier this year – on the outlook for tariffs and trade – had also clearly abated to a significant extent. Nevertheless, sources were still reporting an ongoing reshuffling of supply chains by shippers and capacity by carriers between different lanes. Shippers, sources said, were trying to anticipate upcoming changes to trade terms, such as the removal of the de minimis exemption for packages entering the US from all countries – due to take effect from August 29. There was therefore also considerable variation in price patterns through July between different lanes and outbound locations. That said, on traditionally the busiest lanes in the market from China to the US and to Europe, there was relatively little movement in rates overall. The new BAI spot rates from Hong Kong – which went from private to public trials from the start of July – were barely changed over the month. BAI Spot rates from Hong Kong to Europe eased lower from HK$33.88 per kilo on June 30 to HK$32.62 on July 31. To the US East Coast, they edged up from HK$36.38 to HK$37.34. And to the US West Coast rates hardly moved, starting July at HK$35.81 and ending at HK$35.46. The overall index of outbound routes from Hong Kong (BAI30) – reflecting average rates achieved across the full spectrum of spot and forward contract cargo – was also little changed over the four weeks to August 4, dipping a tad by -0.1% month-on-month to leave it lower by -8.2% year-on-year. Outbound Shanghai (BAI80) was a tad up by +0.1% MoM, to leave it lower too but by only -3.2% YoY. Some sources suggested the relative strength in these rates reflected some shippers moving cargo more quickly before the end of de minimis – and the continuing risk of much higher tariffs between the US and China. Others, however, suggested China rates were also being buoyed up to some extent by a reduction in capacity – and movement of planes to other lanes such as from Vietnam, Thailand and Malaysia. The tracking of changes in capacity has been made much more accurate through a new version of the TAC Space capacity-tracking tool – now available and helping to identify more easily changes as they occur day by day on multi-leg routes. It is already being used by various major shippers, particularly for TransPacific lanes. Meanwhile, the popularity of the new BAI Spot methodology to track changes in the marginal price is already spreading to other locations – with private trials now underway from both India and South Korea, and demand developing for other lanes too. Out of Europe and North America, rate patterns were also relatively strong through the month. The index of outbound routes from Frankfurt (BAI20) slipped a bit but only marginally by -1.2% MoM, with gains on Transatlantic lanes offsetting falls to other locations, leaving it still ahead by +4.9% YoY. After some big gains in the previous month or so, outbound London (BAI40) was volatile intra-month but ended the four weeks to August 4 with a rise of +2.8% MoM leaving it well ahead by +28.3% YoY. From the US, the index of outbound routes from Chicago (BAI50) was also up by an eye-catching +18.7% MoM – recovering losses from earlier in the year to propel it too back into positive territory by +10.2% YoY. From a global macro perspective, equity markets continued to rise gently over the month in a relatively serene fashion – with the elevated political uncertainty of the first half of 2025 continuing to abate. That happened despite renewed threats from US President Donald Trump to impose swingeing tariffs on various trade partners – if not so high as in his ‘Liberation Day’ announcement earlier this year. The broad-based S&P500 index had ended July back firmly in positive territory for the year-to-date – and at roughly +17% over 12 months. And after a brief wobble at the start of August, it seems the market was now largely discounting the likely impact of that. The recovery in US equity markets has been driven by a resurgence in tech themes led by AI. Leading US stocks in the AI field such as Nvidia, AMD and Microsoft had been hit earlier in the year by the revelation of potentially challenging cut-price competition from Deepseek in China. But they have all recovered strongly since the start of May and continued to rise to new heights through June and July. Nevertheless, the strongest performing major global equity market this year remains the DAX index, which was still up around +30% YoY at the end of July as the market anticipates faster growth in Germany boosted by major new spending on defence and infrastructure. All of this has been further helped by the agreement on tariffs announced between the EU and US, with a rate of 15% being applied to European goods being seen as not so great – but not so damaging as it might have been. And far from a worst-case scenario. Tariff rates of 30% or more into the US are still being threatened against many other economies from Switzerland to South Africa. But Transatlantic air cargo markets rates have thus far remained relatively strong – though still a long way below the levels of peak season last winter.

June may have been a tumultuous period in terms of geopolitical developments. But global air freight rates were little changed over the month. In June, the conflict in the Middle East escalated severely – first with Israel mounting massive air strikes on Iran, then Iran responding and finally with the US getting involved as well.  During that period of turmoil, there were many delays and cancellations to air traffic in the Middle East. Crude oil prices surged – and jet fuel prices jumped nearly 20% month-on-month to June 20, according to Platts’ data, before falling back sharply after a ceasefire was declared on June 24. Yet the global Baltic Air Freight Index (BAI00) barely moved, drifting a tad lower by -1.1% over the four weeks to June 30 – leaving it down by -5.3% year-on-year. The overall pattern is not surprising perhaps given that some of the busiest lanes in air cargo – such as Transpacific and Transatlantic – do not traverse Middle East airspace, even though there is a lot of air cargo that also moves from Asia to the Americas via Middle East carriers. And the broader outlook for tariffs and trade between the US and China, and between the US and Europe, is of course not driven solely by events in the Middle East. Looking ahead, markets were also focusing on a series of important dates coming up. Notably: During June, rates on the busiest lanes out of Asia were little changed overall. The index of outbound routes from Hong Kong (BAI30) – reflecting the whole spectrum of spot and forward transactions from the biggest airport in the world by cargo volume – was lower but by only -2.7% in the four weeks to June 30, leaving it lower by -10.9% YoY. That said, the new BAI Spot indices – reflecting purely spot market rates reported for Hong Kong to the US East Coast and US West Coast as well as to Europe (which have moved from private to public trials from July 1) – did show significant volatility intra-month. BAI Spot rates were falling steadily in the first half of June, then flattening out mid-month –and then rebounding towards month-end. Meanwhile, overall rates from Shanghai (BAI80) showed a similar pattern to HK, falling by -5.0% MoM to leave that index at -7.6% YoY. Some sources have been suggesting the outlook might be a little more bearish given the withdrawal of some widebody freighters from Transpacific lanes following the US-China trade standoff earlier this year.  Others however suggest the market has continued in a pattern of complex interaction between supply and demand we have witnessed all year. Capacity, they suggest – particularly on Transpacific lanes, which are dominated by freighters rather than passenger bellyhold volumes – was continuing to adjust rapidly to the rise and fall of demand. Hence, in periods when demand has been strong, such as in the runup to President Trump’s announcement of higher tariffs on China, capacity has also been high – and then then cut back after the tariffs were announced. More latterly, after the 90-day US-China deal, it seems capacity has been restored to some extent, though not to previous levels – as e-commerce business, at least on China- US lanes, has still been impacted by an end to the de minimis exemption for small parcels. Providing more transparency on those capacity trends is TAC Space, with the beta edition of version 2 now available – providing significantly more detail on multi-leg routes. Meanwhile, rates from Europe remained pretty firm through June, led by Transatlantic lanes – which were still up by close to +20% YoY in late June – but lower YoY on other key lanes such as to China as well as to Japan. The index of outbound routes from Frankfurt (BAI20) edged up +2.6% MoM to remain ahead by +1.3% YoY. From London Heathrow (BAI40) rates continued rebounding strongly from low levels in early May, gaining a further +33.1% MoM to end the month at +31.5% YoY. Out of the US, rate patterns were more mixed – staying lower YoY to China and flattish to Europe but well ahead on lanes to South America, led by strong rates from Miami, which does the lion’s share of that volume. The index of outbound routes from Chicago fell by -0.9% MoM to leave it at +0.4% YoY. Other than the important trade issues, from a global macro perspective markets were also focusing on the sustainability of US debt levels post Trump’s ‘big beautiful bill’ on tax and spending – which pointed towards the federal deficit reaching an alarmingly high 6.2% of GDP in 2025, and adding a projected $2.4 trillion to US debt over 10 years. The bill led ratings agency Moody’s to downgrade the US credit rating by one notch from Aaa to Aa1. The dollar has also continued to fall against other major currencies – dropping from around $1.04 to the euro in early January to around $1.18 by the end of June, and from around $1.20 to the pound sterling to $1.37. Nevertheless, although long-term US bond yields did go up, equity markets have not been unduly affected – at least in the short term – despite considerable debate about the outlook. Those with a more sanguine view were pointing to the fact that US productivity and growth have consistently beaten forecasts throughout the years since Covid. And that higher interest rates also reflect in part expectations of stronger growth going forward. Plus the fact that higher rates arguably reflect a ‘normalisation’ of interest rates – at higher levels than in the ‘abnormal’ era of quantitative easing (QE), which has now finally come to an end. In the era of the new Trump administration, policy decisions and outcomes remain hard to predict. Which means that shippers, freight forwarders and airlines will all be on their toes and watching closely to see not only how events in the Middle East pan out, but also what happens when those dates for decisions on tariffs

It was another volatile month in May for air freight markets. The global Baltic Air Freight Index (BAI00) did not move much overall in the four weeks to June 2, gaining +1.2% to leave it lower by -5.4% from where it was 12 months earlier. But an array of countervailing trends led to a lot of intra-month volatility and dispersion in rate patterns on different lanes. And a continuing state of flux on terms of trade was still making it difficult for shippers, forwarders and airlines to plan ahead. Nevertheless, given the significant disruption to global trade this year – driven by the Trump administration’s moves to address global trade imbalances with threats of higher tariffs – rate levels continued to be relatively firm. Especially when compared with a year ago when the market was being driven by a boom in e-commerce – now de-railed to some extent by an end to the so-called de minimis exemption for smaller parcels entering the US. With jet fuel price levels also lower by some -18.3% over 12 months to May 30, according to Platts’ data, that should also mean the market has if anything become even more profitable for carriers. Rates on the busiest lanes out of China eased lower overall during May but not by much – with spot market levels first falling then rising sharply as the month went on. The index of outbound routes from Hong Kong (BAI30) – the biggest airport in the world for air cargo – edged up +0.9% in the four weeks to June 2 to leave it lower by -6.3% YoY. But pure spot rates from Hong Kong as tracked by the new BAI Spot indices – which are soon moving from private trials to public trials – were rising strongly towards the end of the month before flattening out at month-end both on TransPacific lanes to the US East Coast and West Coast as well as to Europe. Meanwhile, the index of rates out of Shanghai (BAI80) was also firmer in May – showing a healthy increase of +7.0% MoM, though also a decline at -5.3% YoY. Some sources said disruption to ocean shipping due to cancellations during the recent stand-off on tariffs between the US and China could lead shippers to turn to air cargo instead – causing a ‘Covid effect’ similar to the pandemic period when supply chains became severely snarled. Others, however, suggest customs issues are still causing some hesitancy on shipping to the US – holding back demand to some extent. With many block space agreements (BSAs) having been cancelled earlier this year due to uncertainties on tariff levels, it seems likely the market – at least short term – will be dominated and driven more by spot market activity. Complicating the picture was also a drop in capacity on TransPacific lanes – with carriers having shifted some aircraft to other routes in response to the US-China trade stand-off. Following the deal to cut tariff levels back to 30% for Chinese goods into the US and to 10% for US goods into China – at least for 90 days – sources reported some reversal of that trend, with capacity starting to be restored Meanwhile, other markets out of Asia which tend to be dominated by spot market activity did not seem to benefit from any short term drop in levels of US-China trade during the recent stand-off. According to TAC Freight data, rate levels out of both Vietnam and India for instance are now considerably lower YoY. Out of Europe rate patterns were mixed. The index of outbound routes from Frankfurt (BAI20) – the biggest airport by cargo volume in Europe – was lower by -4.0% MoM to leave it lower by -4.7% YoY. Meanwhile, the index of outbound routes from London Heathrow (BAI40) bounced back from very low levels in late April, gaining +26.3% MoM – putting it back in positive territory by +5.2% YoY. Out of the Americas, the index of outbound routes from Chicago (BAI50) went the other way, giving back most of the big gains from earlier this year during May, dropping -24.0% MoM – dragging it back into negative territory by -7.2% YoY. Rate levels on lanes from the US to South America – dominated by volume from Miami – continued to stand out from most other markets by being well ahead YoY, according to TAC Freight numbers. That said, after big increases on those rates over the past year, some sources are starting to say there are now indications of over-capacity emerging on lanes to LatAm. Meanwhile, TAC also announced the launch of data on a range of new lanes including 10 regional and 6 country to country routes, adding numbers for the first time on key markets such as Mexico, Brazil, Australia and South Africa. More broadly, despite some serious concerns about the “big, beautiful” tax bill proposed by Trump, the global macro picture was looking a little better in May than in April – when there had been a steep drop in equities and then a dramatic rebound after Trump backtracked on most of his big tariff announcements. The subsequent 90-day deal on tariffs between the US and China was then perceived as a material positive for markets – and a meaningful de-escalation that had reduced if far from eliminated the risks going forward. Markets now expect US growth will be slower, but earnings for most companies to be affected only modestly – paving the way for US equities to continue their rebound through May. Similarly, economic growth in China is also expected to be slower than before – not least after a 21% decline reported in exports to the US in April. China seems to have coped reasonably well to offset the impact of that by increasing exports elsewhere. It also enjoys plenty of scope to soak up excess production by boosting domestic demand – if it can find effective stimulus tools to achieve that. In the short term, European equities have been doing best –

During a period of high volatility and turmoil in markets, global air freight rates were generally trending a little lower in April – though with huge dispersion in the trends across different lanes. The global Baltic Air Freight Index (BAI00) calculated by TAC Data slipped -4.1% over the four weeks to April 28, leaving it still narrowly ahead by +0.8% year-on-year. The overall level of rates was still relatively strong as compared with 12 months earlier – when rates were high for the time of year, entering the summer season, and rising further driven by a boom in e-commerce.  Rate levels at or slightly above 12 months ago also continue to compare favourably with the continuing weakness in jet fuel prices. Jet fuel was some -14.6% lower on average year-on-year to April 25, according to the latest data from Platt’s. That should mean most carriers are still enjoying higher profit margins, at least for now. On the other hand, market sources were reporting spot rates falling much more than the index averages over the past month – and ending the month flat-to-down in the last couple of weeks of April on the busiest lanes out of China to the US and to Europe. The index of outbound routes from Hong Kong (BAI30) – still the biggest airport in the world by cargo volume – dropped -3.1% over the four weeks to April 28, dragging it into negative territory by -3.6% YoY. The index of outbound routes for Shanghai (BAI80) also fell – by -3.5% MoM to leave it at -4.8% YoY. After starting the year strongly during Q1, rates out of Europe had a much weaker month in April – though overall rates on Transatlantic lanes to the US still remained well up YoY.  The index of outbound routes from Frankfurt (BAI20) dropped -21.8% MoM – though leaving it still in positive territory by +7.9% YoY. Outbound London Heathrow (BAI40) dropped a similar amount – by -20.9% MoM – but was left languishing at -13.2% YoY, back below even its weakest levels of 2024. Rates out of the US by contrast ended the month strongly, bucking the downward global trend – at levels comfortably higher YoY not only to Europe and to South America but also to China, despite a sharp fall towards month-end.  The index of outbound routes from Chicago (BAI50) surged +35.7% MoM, pushing it up by +61.9% YoY – higher than at any point since 2023. At a macro level, market participants have been grappling with the potentially massive exogenous shock of a huge hike in taxes – caused by swingeing new tariffs on goods imported to the US proposed by the Trump administration. And likely effects on inflation and on business and consumer confidence. Equity markets initially sold off sharply in early April after Trump announced his tariff plans. Initially, the recently re-elected president did not blink – not until US Treasury bonds sold off sharply too, threatening to send the US economy into a potentially serious tailspin. After announcing a 90-day delay on most of the bigger tariff measures – except those on China of up to 145% – markets calmed down and recovered to some extent. Conditions then eased further after Trump backtracked more with exemptions for key imports such as mobile phones, computers and semiconductors – and more recently on auto parts. Nevertheless, the new US administration has clearly set its sights on a total reordering of the global trade system – to tackle what it sees as asymmetric trade barriers, particularly with China as well as with the EU – even if that comes at the cost of recession in the US. Many market participants continue to hope the higher tariffs – such as those on Chinese goods, which would likely cause a total collapse in US-China trade – are primarily a negotiating gambit. And hence remain hopeful deals will be struck at some point both with China and with the EU to negotiate the tariffs down and for trade to continue on more normal terms. Even if that does prove to be the case, however, continuing uncertainty remains the biggest problem for markets to gauge. For the air cargo sector in particular, all of this uncertainty continues to throw up huge challenges – and potential opportunities – as discussed at length during the recent IATA World Cargo Symposium, held during April in Dubai.  Not least of the challenges was the imminent end of the so-called de minimis exemption – which hitherto exempted packages worth less than $800 from duty into the US. After an initial attempt to abolish the exemption earlier this year led to chaos at US customs, there was a delay on implementation – set to expire on May 2. There were some expectations air freight rates might rise ahead of that deadline – if e-commerce shippers, for instance, rushed to move more product before the deadline expired. But there was little evidence of that in the latest TAC air freight rate data, with sources reporting spot rates remained weak. Sources also reported that some big shippers had already built up significant inventories of one to three months ahead – allowing a little time to cushion the blow of higher tariffs from China in particular while they developed alternative supply chain solutions. In the short term, there were also reports of significant cancellations in ocean shipping – and many so-called ‘blank sailings’ or ships with no cargo. Some were also viewing that as a potential opportunity ahead for air cargo to step in and get some of those cancelled shipments to market quickly – if and when trade conditions ease. Whatever happens next, it seems unlikely to be dull.

Markets were volatile and fractious in March – not surprisingly perhaps given the outlook for higher tariffs in the US, risks of retaliation from elsewhere and the potential disruption to global trade and growth. Indeed, the US stock market completed its worst quarter for three years, with the S&P500 index sliding -4.6%. Nevertheless, global air freight rates were stronger again over the last month according to the latest data recorded by TAC Index. The global Baltic Air Freight Index (BAI00) calculated by TAC gained +7.1% over the four weeks to March 31 to leave it up a solid +5.1% YoY.  This was an impressively strong performance compared with last year – when air freight rates were surging due to the boom in e-commerce. Over the last year, jet fuel prices also fell an average of -7.8% according to data from Platts to 28 March. Higher rates combined with lower fuel costs should thus be boosting margins for carriers. The overall trend was led again by rising rates out of China both to the US and to Europe. The index of outbound routes from Hong Kong (BAI30) – the biggest airport in the world by cargo volume – gained +6.3% over four weeks to March 31, leaving it still narrowly ahead by +1.4% above last year’s high level. Outbound Shanghai (BAI80) did even better with a gain of +11.9% month-on-month to leave it ahead by +3.4% YoY. Rates out of Europe also enjoyed a mostly solid month. The index of outbound routes from Frankfurt (BAI20) gained +8.2% MoM to leave it ahead by an impressive +28.3% YoY. Outbound London (BAI40) did less well, but after a big drop mid-month recovered well to end March only down a tad at -0.1% MoM, and also still ahead by +2.6% YoY. Out of the Americas, rates were more mixed with the index of outbound routes from Chicago (BAI50) ending lower by -5.9% MoM, though also still narrowly ahead by +1.1% YoY. Sources were largely agreed about the main reason rates were rising overall, particularly in the last two or three weeks of the month – the primary driver being the likelihood of impending tariffs to be imposed in the US after April 2. The new Trump administration had already moved to introduce tariffs on certain key commodities such as steel and aluminium. And also on certain key trading partners with which the US runs large deficits – notably Mexico and Canada as well as China. From April 2, market participants were also anticipating the introduction of US tariffs across the board affecting all goods globally, as well as the potential for so-called ‘reciprocal tariffs’ in response to other non-tariff barriers like VAT – notwithstanding the fact many US states also impose such sales taxes.  All of this led to shippers rushing to move more products more quickly ahead of April 2.  Some anticipate that, if the new tariffs go ahead as anticipated, trade volumes could get hit and rates will then fall. Some sources said spot rates already started to soften on April 1, though whether that pattern continues remains to be seen. Looking ahead, perhaps the key issue market participants are grappling with is sheer uncertainty.  The erratic pattern of on-again, off-again announcements about tariffs coming out of the White House clearly seem to be a negotiating tactic aimed at keeping trade partners off-balance.  But this has also at times looked chaotic – with the new administration having to reverse tack more than once due to complexities in the supply chain it had not foreseen, such as within the auto sector. All of this has also make it more difficult for market participants – including airlines, forwarders and shippers – to plan ahead with confidence. And that’s before taking into account the potential responses of other trading partners – and all the uncertainties about that. In the meantime, a more pessimistic mood about the global economy has taken hold – with expectations of US growth falling, and euphoria around opportunities related to investing in artificial intelligence (AI) punctured by developments involving first DeepSeek and then Alibaba out of China. Against that, the European market has been lifted by developments following the election of Friedrich Merz as the new Chancellor of Germany – and plans to loosen fiscal rules in order to massively boost defence spending. Unlike the US, European equity markets were mostly up in the first quarter – led by the German DAX index, which gained well over +10% in Q1. All of that said, some market developments appear to be secular trends with such momentum they will continue regardless – if perhaps in different ways – whether or not tariffs and other trade barriers impact costs.  Foremost among these remains e-commerce, which is still rising globally – as sector specialist Brinkley Chan outlined to the recent TAC Innovation dinner held in Hong Kong in late March.  China may currently still enjoy a massive advantage on costs in e-commerce. But as Chan pointed out, any erosion of that – due to tariffs and other policy changes – may well lead to the movement of production to other regions such as Europe and South East Asia. And if so, that could of course also affect the level of freight activity – perhaps as soon as May or June of this year. The TAC dinner in Hong Kong also featured a timely contribution from Jin Yu Cheong, Baltic Exchange head in Asia, who outlined among other things the key importance of data and risk management tools – such as those provided by TAC – especially in turbulent times.

Air freight rates dropped a little in February, as they often do in the period during and just after Chinese New Year, but remained comfortably ahead of last year. The global Baltic Air Freight Index (BAI00) calculated by TAC Data fell -5.4% in the four weeks to 3 March, but remained ahead by some +10.1% from 12 months before. The data is interesting given huge uncertainties about future levels of global trade – with stiff new tariffs planned on goods imported to the US, plus an end proposed to the so-called  ‘de minimis’ exemption for parcels worth less than $800.  The uncertainty about the end of de minimis – which was announced and then rapidly postponed as US customs ports became overwhelmed – led to some cancellations of e-commerce flights, sources reported. This also followed a rush of ocean container shipping activity, with imports rising 41% in January at the major US west coast port at Long Beach – as shippers rushed to move goods ahead of new requirements coming in. Container shipping rates have since fallen sharply, with further uncertainty created by a plan announced through the US Trade Representative to impose port fees of $1 million-plus per ship per visit for any ships manufactured in China arriving at US ports. Some view this as potentially good news for air freight rates – if shippers then decide to move more via air cargo instead. During February, however, air cargo sources reported spot rates were continuing to trend lower on the big lanes out of China – though that was not unusual for the time of year. Sources said the market had been weighed down a bit during February by downward pressures due to the issues with the proposed changes on de minimis, though this seemed to be abating as we entered March. The index of outbound routes from Hong Kong (BAI30) fell -6.9% in the four weeks to 3 March – but was still well above levels of the year previously with rates higher by some +13.4% YoY. Outbound Shanghai (BAI80) was lower too MoM by -5.6%, but also comfortably higher still YoY by +12.3%. Out of Europe, rates over the month were also quite firm, with the index of outbound routes from Frankfurt (BAI20) almost unchanged at -0.6% MoM and also still in positive territory YoY by +15.3%. Outbound London Heathrow (BAI40) was lower MoM by -17.3%, but also still ahead YoY by +5.4%. From the Americas, the index of outbound routes from Chicago (BAI50) edged up +0.3% MoM – leaving it still slightly lower by -4.0% YoY. Markets spent the month digesting a barrage of announcements on trade issues from the newly re-elected US President Donald Trump, trying to work out what might be mere threats or bluster or ‘machine gun diplomacy’ for negotiating purchase – and what may be serious, as well as what the effects may be.  The speculation about how Trump viewed the use of tariffs focused on four main possibilities:  First, that Trump saw he could make threats as potential ‘bargaining chips’ to achieve essentially non-financial ends, such as curbing illegal migration. Second, that Trump viewed tariffs as a potentially important revenue raising tool – that might help him cut taxes elsewhere. Third, that tariffs could be used for strategic defense purposes – to protect vital domestic industries such as steel production. And fourth, that tariffs could be used as a mercantile tool – to help rebalance big trade imbalances, in particular the massive deficits on trade the US has been running for many years with both China and the EU. Some commentators fretted that big tariffs would lead inevitably to retaliation and trade wars, hitting global trade and growth – with the impact disproportionately outside the US on more open trading economies such as in Europe and the UK, where trade is a much higher proportion of total economic activity.  Others were focused more narrowly on how an end to the de minimis exemption alone might have a massive effect on the way trade is conducted – with supply chains altered to accommodate onerous new reporting requirements and new fees to be paid. Within the cargo industry itself, however, leading players continue to query how much of a change will be forthcoming – given the huge logistical challenges in trying to implement a new system of checking every single package – plus the potential impact on inflation in the US. On the wider threat of a potential trade war, many market players remain optimistic that – after both China and the US have suffered to some extent from the effects of increasingly tense rivalry in recent years – perhaps a deal might be done after all, not least given Trump’s vaunted credentials as a dealmaker. In the short term, perhaps the most surprising development in markets so far on 2025 has been the largely unexpected strength in European equities – which started the year with stronger gains than the US. Perhaps this simply reflects the fact that US equity values were already relatively high, trading at historically high price earnings (P/E) ratios prior to the new presidential term starting.

Air freight rates declined in the first half of January – as they usually do after the end of peak season – and then rebounded a little, particularly on the busiest lanes out of Asia, in the runup to Chinese New Year (CNY). The global Baltic Air Freight Index (BAI00) calculated by TAC Data fell -14.6% over four weeks to 27 January, though was still ahead by +8.7% from 12 months earlier, with sources citing a continued firm tone to the market. Following another quiet week through CNY to 2 February, the index was still ahead by +6.7% YoY. After a modest rise during the weeks both before and through CNY, the index of outbound routes from Hong Kong (BAI30) had shed -7.2% over the four weeks to 2 February, leaving it ahead by +7.2% YoY. Outbound Shanghai (BAI80) saw a slightly bigger drop of -12.9% MoM to the same date, leaving it narrowly up +1.0% YoY.  From major outbound hubs in other regions, the market was also firmer than a year before. Out of Europe, the index of outbound routes from Frankfurt (BAI20) shed some -17.6% MoM to 2 February, but was still comfortably ahead by +18.0% YoY. Outbound London Heathrow (BAI40) was up +3.1% MoM and even further ahead YoY by +23.7%. From the Americas, the index of outbound routes from Chicago (BAI50) slipped -14.0% MoM but was also still a little higher YoY at +5.1%. The firmer tone of the market reflects a significant rise in cargo volumes over the past year, which the market accommodated without rates escalating too severely – partly by adding extra capacity. Hong Kong, which remains the world’s biggest airport by cargo volume, handled some 4.9 million tonnes in 2024 – an increase of +14% YoY, boosted by more bellyhold capacity made available through rising passenger traffic. Shanghai’s Pudong airport also registered an increase in cargo volumes of some +9% YoY, taking its total up to 3.4m tonnes. One of the biggest gainers by volume in 2024 was Changi airport in Singapore, which saw a rise of +14.6% YoY, taking its total to just under 2m tonnes, boosted partly by extra Sea-Air activity to evade disruption in the Red Sea, sources said.  Sources were also reporting big increases in volume from other locations out of Asia, including from India, Vietnam and Thailand – as shippers continued to diversify supply chains.  Dimerco, a big international freight forwarder, highlighted in a recent report a surge in air cargo volume out of Taiwan too, which is a major supplier of semiconductors including AI chips as well as AI server stacks. From Europe too cargo volumes were rising last year. Frankfurt saw a +6.2% increase, taking its total up to 2.1m tonnes. And London Heathrow rose +10.4% taking its total to nearly 1.6m tonnes, its best year since 2019. Other big airports in Europe also registered increases, with Schiphol in Amsterdam rising +8% YoY to take its cargo volume to 1.5m tonnes. One of the biggest gainers was Liege in Belgium, which saw a rise of +15.6% YoY pushing its volume up to 1.2m tonnes. The healthy volume numbers underpin what has been an optimistic tone in the sector, though with expectations that such high recent growth rates must surely fall at some point. Not least due to worries about the impact of higher tariffs and potential trade wars following the re-election as US President of Donald Trump. One of the first moves of the Trump administration, in addition to announcing tariffs on goods from Canada, Mexico and China, was to suspend access to the Section 321 customs de minimis entry process for small shipments of under $800 from those countries.  Such shipments are often e-commerce packages, which have been the biggest driver of air cargo market growth in the past year or so – led by Chinese shippers like Temu and Shein – giving rise to fears that rates could suddenly drop.  However, a crackdown on de minimis was not completely unexpected – and indeed had already attracted bipartisan support in the US Congress, so seemed likely to go through whoever was President. E-commerce players have had some time to plan for it, with sources optimistic the market can absorb some higher costs – if at the expense of higher inflation in the US. While waiting to see which new tariffs would actually be pushed through, markets have continued to focus on various investment themes, not all of which might chime with the notion of a new era of American dominance.  The urgent need for more electricity and infrastructure to support it – driven to a significant extent by the rise of AI – is seen as playing particularly well for Schneider Electric, for instance, a French-based company which saw its share price surge in the past year (until a sell-off in late January). Likewise, the use of GLP-1 drugs developed by the Danish corporation Novo Nordisk would appear to have enormous potential – not least in the US, where nearly 12% of adults have diabetes and 40% are classified as obese. The same drugs are thought to promise various further benefits from improved kidney function to cardiac health to protection against dementia.  So plenty of potential for sales in the US – so long as they do not get embroiled in a trade war between the US and the EU.  The biggest theme in the market for some time has of course been AI, viewed as a massive new driver for the whole economy from software to autos.  Until recently, this has been seen as an exclusive preserve of the US, led by AI chip maker Nvidia and its big clients among the US tech titans. That was until the sudden emergence last month of DeepSeek, backed by the hitherto little-known Chinese hedge fund High-Flyer, led by Liang Wenfeng.  The market’s sudden realisation that DeepSeek may offer highly effective and much lower-cost competition sparked a dizzying fall in the Nvidia share price in

Peak season for air freight reached the end of its traditional period in December, with rates continuing to rise in the runup to Christmas and then tailing off as volumes dropped during the holiday period to New Year. The overall Baltic Air Freight Index (BAI00) gained a further +7.2% in the four weeks to 23 December, leaving it still a little lower by -3.1% from the level 12 months before, when there was a pronounced peak season spike.  Over New Year rates then fell back a little with the BAI00 index dropping -3.7% in the week to 6 January. Nevertheless, rates were still comfortably ahead of 12 months earlier – when there was a steep fall after the peak season spike – to remain up some +25.9% YoY. For most of 2024, the index rose steadily, creating what felt like a peak season which started much earlier than usual – with rates rising slowly and steadily – and then lasting much longer than the previous year.  With jet fuel prices down more than 20% over the year, according to Platt’s data, it thus turned into a much more profitable year for carriers than looked likely in early 2023 – when it seemed the industry had added rather too much capacity during the pandemic. In 2023, the market was in the doldrums much of the year, which arguably made many shippers complacent about capacity for peak season. That had to a sudden and dramatic surge during the final quarter as they scrambled to secure space. In 2024, some of the lessons of that chaotic period seem to have been taken on board – with shippers and forwarders planning ahead accordingly.  It was obvious for most of the year that overall demand was rising – led by a continuing boom in e-commerce, particularly out of China. Air cargo volumes, as tracked retrospectively by IATA, were showing 10% or so YoY rates of growth all year.  Capacity did increase significantly as well, augmented by some switching of freighters from less busy to more busy routes, such as away from Europe onto TransPacific lanes.  The overall index was led higher most of the year by activity on the busiest lanes out of China, with the index of outbound routes from Hong Kong (BAI30) up a further +5.3% MoM through 23 December – though still -7.1% below the steep peak season high of the year before. However, even after a fall over New Year of -11.1% in the week to 6 January, it was still up +14.0% YoY – reflecting what still feels like a firmer tone to the market than a year ago. Likewise, outbound Shanghai (BAI80) continued to rise until Christmas, up another +2.0% MoM to 23 December, though below the previous year’s peak by -6.2%. And although it then fell after Christmas by -6.8% in the week to 6 January, it was also still well ahead by some +37.6% YoY. Out of Europe, rates were in the doldrums most of the year, but finally began to surge in the final quarter – caused in part by rising demand and also by a fall in capacity, partly due to the loss of access to airspace over Russia. The index of outbound routes from Frankfurt (BAI20) surged +28.3% MoM to 23 December, putting it back in positive territory by +10.7% YoY. After a further surge of +19.8% in the week to 6 January, it was up +40.8% YoY as compared with the depressed levels of a year ago. Outbound London also gained strongly by +13.4% MoM to 23 December, pushing it up by some +31.6% YoY. After a fall of -5.8% in the week to 6 January, the YoY gain slipped back a bit to +19.4%. From the Americas, the index of outbound routes from Chicago (BAI50) also rose strongly by +8.8% MoM to 23 December, though still lower at -10.0% YoY. After a further surge of +16.3% in the first week of 2025, that YoY figure had flipped to a gain of +30.9% from the level of a year before. From a macro perspective, the outlook continued to be dominated by expectations for the return as US President of Donald Trump. In the short term, this was positive for US equities, particularly the Russell 2000 index – reflecting more the outlook for domestic US companies than the S&P500, which is seen more as an index of US global trading firms.  Other immediate winners were bitcoin and cryptocurrency markets – expected to benefit from a lighter-touch and more certain regulatory regime under Trump.  The S&P500, however, still enjoyed another stellar year, gaining +24% during 2024 – leading some to wonder how much higher US equities can realistically go when the S&P already accounts for an incredible 75% or so of total global equity market cap. For some influential investors such as Howard Marks of Oaktree Capital, a big alternative investment firm, that valuation reflects the fundamental relative strengths of the US economy. As Marks wrote to investors recently: “[The US] benefits from a wonderful combination of free markets and the incentives they provide, dependable rule of law, stable government, highly functioning capital markets, strong higher education, reasonable levels of regulation, spirited entrepreneurship, and thus vitality and dynamism.” The US may eventually be overtaken by China as the world’s largest economy, Marks admitted, but that should not be surprising if China has almost four times the population. Compared with Europe, some would point out that the US also benefits from much more plentiful and cheaper commodities – notably energy – which are also key factors in its competitiveness and faster growth.  At the same time, many of those touted as potential losers from higher tariffs under Trump – such as US companies that rely heavily on imports from China – did not see their equity prices hit, at least not yet.  There are various possible explanations for this, including the fact that many US retailers, for instance, reported strong recent earnings. Plus the possibility

And despite worries about higher tariffs into the US and trade wars, with capacity still tight the outlook for air cargo may not look too bad  Air freight rates were up again last month as the market entered its traditional peak season period, with the global Baltic Air Freight Index (BAI00) calculated by TAC Data rising +4.6% in the four weeks to 2 December. The index was, however, still a little below the level of 12 months before – by -1.1% – when the market was heading into a pronounced peak season spike. Prospects for peak season and beyond were major talking points at the recent TIACA Air Cargo Forum, which brought together over 3,000 industry executives in Miami just after last month’s US elections.  Despite concerns about new, more severe tariffs imposed by a re-elected President Donald Trump – and how that might affect trade flows – the mood was sanguine if not upbeat about the outlook for air cargo, at least in public.  In an industry leaders’ panel session, Ashok Kumar of DB Schenker, for instance, said peak season would be big – if not quite as big as expected – and that he was “cautiously optimistic” about 2025. In another session, Delta Airlines Cargo president Peter Penseel said he thought the impact of the US election would probably be “not huge” – as he expected consumers to keep buying even if prices were hiked to some extent.  As various speakers noted, 2024 has turned into an unexpectedly good year.  The industry has already been anticipating some sort of crackdown on e-commerce conducted under the so-called de minimis exemption – which exempts items shipped into the US worth under $800 – as proposed by both Democrats and Republicans in Congress. But working out ways to navigate it.  While the other four speakers on his panel all gave 8 out of 10 ratings for the outlook, Penseel gave a full 10 out of 10 – emphasising how “very adaptive” the industry typically is in response to changing needs. And with capacity still looking very tight – due mainly to a low supply of new freighters – there seems good reason to stay positive. As for this year’s peak, it has indeed so far proved not as explosive as expected earlier this year – when a lot of capacity was being secured months ahead via block space agreements (BSAs). Spot rates have been rising strongly, sources report, but the rise in average rates achieved – as shown in the TAC data – has been held back by a relatively high proportion of ‘controlled capacity’ booked by forwarders planning ahead. Nevertheless, average rates on the biggest lanes – such as those out of Hong Kong, still by some distance the biggest airport for cargo volume – have continued to grind relentlessly higher. The index of outbound routes from Hong Kong (BAI30) gained a further +6.6% in the four weeks to 2 December, leaving it narrowly lower by -1.4% from the level 12 months before – when it was entering a steep peak season spike.  Rates to Europe, in particular, have been surging – driven partly by a loss of bellyhold capacity following the closure of air space over Russia, plus some switching of capacity to other lanes, sources say. By contrast, outbound Shanghai (BAI80) edged up only +1.7% MoM to leave it lower YoY by -0.7% – reflecting perhaps a very different mix of cargo that moves from there as compared with southern China. Rates on lanes out of India, Vietnam and Thailand also remain a long way above levels of a year ago – reflecting no doubt further movement of manufacturing out of China to other locations in Asia. How much further this can go – at least in the short term – is doubtful, however, given capacity constraints, sources suggest. Rates out of Europe were also trending up over the month, especially on Transatlantic lanes. The index of outbound routes from Frankfurt (BAI20) was up +11.6% MoM, finally lifting it back into positive territory YoY by +6.3%. Outbound London Heathrow (BAI40) was slightly lower by -1.6% MoM but also now well ahead YoY by +13.8%. From the Americas, outbound Chicago was up +4.7% MoM though still a long way lower YoY – by -18.0%. However, rates on certain lanes from the US, such as on Transatlantic routes to Europe, were rising strongly last month – as well as from Miami to South America, which is still well up YoY.  Looking ahead to the positive macro outlook many expressed at the TIACA meeting in Miami: What may not have been expressed directly but implicitly was a general feeling about Trump’s intentions on tariffs and trade – namely, that Trump is nothing if not a dealmaker, and hence that his campaign threats of 10-20% tariffs across the board, and 60% on China, would probably prove no more than an opening gambit. Some describe this as an ‘escalate to de-escalate’ strategy – often adopted as a negotiating stance by Trump. Only time will tell.  Initial market reactions to the election result were positive, with promised tax cuts for corporations, deregulation measures and a more liberal energy policy on fossil fuels all helping drive a strong rally in equity markets, as well as in alternative assets like bitcoin and other cryptocurrencies. That said, there are also worries going forward that Trump’s policies could stoke inflation, lead to higher interest rates, and further enlarge the huge US federal deficit – as well as hitting global trade and growth. So far, signs are that Trump will not go softly-softly on trade and will play hardball – indeed, threatening since the election to slap 25% tariffs from day one even on ‘friendly’ countries like Canada and Mexico, plus 10% more on China.  In the short term, there has been some excitement in India that their market in particular may benefit – as it was not identified initially as a target for new tariffs. On the

Air freight rates were up again last month, with the global Baltic Air Freight  Index (BAI00) calculated by TAC Data rising +8.1% over the four weeks to 4 November, leaving it ahead by +10.9% over 12 months. October thus delivered another in a series of solid gains this year, especially on big export lanes out of Asia to Europe and North America. Though not as spectacular as some had been expecting – for a period when the market enters its traditional peak season in the runup to Thanksgiving and Christmas holidays. Indeed, some big forwarders now say there may be less of a peak season spike than they were expecting back in the summer, when a lot of forward capacity was being booked via block space agreements (BSAs).  Kuehne+Nagel, for instance, said in its latest results statement that it now anticipates the peak to be ‘more muted’ than it expected earlier this year.  According to CEO Stefan Paul, this is due to customer ‘front-loading’ of volumes in order to avoid potential disruption – plus an easing of conditions in the sea-freight market and postponement of the threatened US dock strike.  That said, air freight rates were still rising last month on the big lanes out of China – led by higher spot rates, market sources said – and that was despite some reported shifting of capacity from other regions to busier routes from Asia, particularly onto TransPacific lanes. The index of outbound routes from Hong Kong (BAI30) was up +8.2% over the four weeks to 4 November, leaving it ahead by +10.2% YoY. Outbound Shanghai (BAI80) was up more – by +12.6% MoM to leave it up by an even more impressive +22.4% YoY.  Rates on other lanes out of Asia, such as from India, Vietnam and Thailand, also remain a long way ahead of 2023 levels. Out of Europe, where the market has been somewhat in the doldrums, there were also finally some gains in October – though rates do remain slightly lower YoY on lanes to the US, as well as still significantly down both to China and to Japan. Boosted by a big spike over the final week of the month, the index of outbound routes from Frankfurt (BAI20) gained +10.9% MoM, cutting its decline to only -3.2% YoY. Also boosted by a sharp rise in the final week of October, outbound London Heathrow (BAI40) jumped +15.3% MoM – lifting its gain to a much healthier looking +17.4% YoY above what had been pretty depressed levels 12 months ago. Meanwhile, from the Americas, the index of outbound routes from Chicago bucked the rising global trend with a decline of -18.4% MoM – leaving it still in negative territory YoY at -15.1%. Overall rates from the US are not down so much but do remain lower YoY both to Europe and to China – though significantly up on lanes to South America. From a global macro perspective, the air freight data arguably still reflects a market where European economies appear to be caught in a ‘doom loop’ scenario – of low to zero growth; high government debt-to-GDP levels (that they can’t reduce without growth); but a loss of competitiveness in key sectors such as German autos (due in large part to higher energy prices). In the US, by contrast, the economy has continued to defy fears of a recession – maintaining a trend towards a ‘soft landing’ with lower interest rates helping to ease the pain.   While the market has been looking ahead beyond the US election to what that might mean for trade policy, tariffs, currencies, inflation and interest rates, in the meantime China has also become a focus of attention.  This followed the announcement in late September of major action by the government and People’s Bank of China to try and address a ‘balance sheet recession’ and arrest the trend towards deflation. This so-called ‘fiscal bazooka’ – alongside lower interest rates, easing of lending requirements and other measures – sparked an immediate surge in Chinese equities in late September.  Since then, however, the market has oscillated around the same levels – as investors have tried to work out whether the trillions of RMB committed are really enough of a bazooka to move the dial on growth sufficiently. As we entered November the jury was very much still out on that. Meanwhile, there was some fascinating discussion regarding the capacity side of the market at the recent 30th annual Cargo Facts Symposium, held last month in San Diego.  Among key issues highlighted were various supply chain challenges and blockages. These ranged from current well-publicised problems with production at manufacturers like Boeing to a lack of sufficient ‘feedstock’ of older planes for freighter conversions, which looks significant given that dedicated freighters currently carry around 50% of air cargo volume (and a lot more on some important lanes). Among various illuminating contributions was a presentation from Boeing market analysis director Aaron Tayler, highlighting how growth of freighter capacity was looking highly likely to lag a continuing rise in demand, driven not least by the continuing boom in e-commerce.  Air cargo demand had risen about 7% YTD through August, according to figures Tayler cited – much in line with the rise in Baltic air freight index rates as measured by TAC. Looking ahead, demand is projected to grow an average of 2.7% a year, he added – significantly faster than capacity looks able to grow alongside it. So this year’s peak season may not be quite so strong as expected. But with air freight rates up while average jet fuel prices were down some -20.7% over the 12 months to 1 November, according to Platt’s data, 2024 should still prove a considerably profitable year for airline carriers. And with capacity looking tighter again in future, the air cargo market looks potentially even stronger going forward. Absent any major geopolitical developments – and big changes to global trade patterns.