Air freight rates remain elevated as higher jet fuel prices bite

Global air freight rates continued to edge up and remain at highly elevated levels throughout April according to the latest data from TAC Index.

The global Baltic Air Freight Index (BAI00) calculated by TAC gained another +15.7% over the four weeks to April 27, leaving it ahead by some +32.7% year-on-year. Despite then falling back a little in the week to May 4, by then the YoY gain had grown to +37.2% and remained well above levels reached even at the very highest points of recent peak seasons.

Rates had already spiked steeply in March after the US and Israel launched massive air attacks on Iran – and Iran responded with missiles and drones across the region, as well as effectively closing the Strait of Hormuz to ocean shipping traffic.

The events of March had a massive impact on air traffic and cargo through air space closures and flight cancellations – and also on jet fuel prices given problems moving oil products from the Gulf.

By April, the market had adjusted to some extent – with shippers finding various alternative routes to move products, plus some capacity through the Middle East coming back on stream. There was also an uneasy ceasefire between the US and Iran, initially for two weeks from April 7 and subsequently extended.

The ceasefire was originally announced on the basis that the Strait of Hormuz would be reopened. But by month-end, this had still not happened – the US responding initially with a blockade of its own against vessels trading with Iran, and then with plans to assist ships with safe passage – leading to a stand-off continuing with negotiations towards a broader solution seemingly stalled.

After the ceasefire was announced it seems the air cargo market entered ‘wait and see’ mode – with rates remaining elevated and effects continuing to ripple out more broadly across the globe, but the pace of rate increases dropping or rates even falling back a little on some of the most impacted lanes.

BAI Spot rates out of Hong Kong to Europe – which had risen steeply during March – only edged up a little more through April, rising from HK$42.70 per kilo on March 30 to HK$45.50 by April 30.

By contrast, spot rates on Transpacific routes from HK to the US continued to escalate during April – perhaps reflecting a more delayed reaction as the impact of events in the Gulf gradually spread further around the globe. BAI Spot from HK to the US East Coast surged from HK$45.95 per kilo on March 30 to HK$57.53 by April 30. HK to the West Coast jumped from HK$42.88 to HK$53.96.

On the other hand, BAI Spot rates out of India, which had been impacted much more severely during the early stages of the conflict – more than doubling in March – actually fell back a little during April from US$4.10 per kilo on March 30 to US$3.93 by April 30.

Nevertheless, rates on the busiest routes in the market from China continued to grind higher in April both to Europe and the US. The index of outbound routes from Hong Kong (BAI30) – still the biggest airport in the world by cargo volume (handling more than 5 million tonnes of freight in 2025) – gained another +24.6% over the four weeks to April 27,
leaving it up by +38.0% over 12 months. Despite a slight fall in rates in the following week, the YoY comparison had barely changed at +37.2%.

Outbound Shanghai (BAI80) – still the second biggest airport for cargo globally with volume of over 4 million tonnes in 2025 – gained another +10.0% month-on-month to April 27 to leave it at +33.3% YoY, with the YoY change increasing further to +42.4% by May 4.

By month-end, however, the overall rate of increases was dropping and rates to Europe even falling back a bit according to TAC data on many other busy outbound routes from Asia – including from Vietnam, Bangkok, Seoul and Taiwan.

Out of Europe, rate patterns were also a little more mixed in April. The index of outbound routes from Frankfurt (BAI20) actually slipped a little by -1.3% over the four weeks to April 27 to leave it ahead though by only +17.4% YoY. By May 4, the YoY change had also slipped back a bit to +15.9%.

Outbound London Heathrow (BAI40) by contrast gained another +15.7% MoM to April 27, adding to a series of gains over recent months – starting well before the recent MidEast conflict – to leave it up by a whopping +91.8% YoY.

Out of the Americas, there seemed to be some catch-up going on – with the index of outbound routes from Chicago (BAI50) gaining +29.8% over the four weeks to April 27, though leaving it still only marginally ahead at +3.9% YoY. By May, the YoY change had increased a little further to +15.3%.

From a macroeconomic perspective, despite continuing worries about higher energy prices leading to higher inflation and interest rates, lower growth or even recession, equity markets largely regained their composure in April.

The broad-based US S&P500 index surged back past previous highs in April – with the AI theme reasserting itself powerfully. The Nikkei 225 in Japan followed the same pattern, and even markets in the more sluggish economies of Europe also rebounded – including the UK, boosted by the high proportion of oil and gas and other resource components in the FTSE100 index.

Dire Straits?

Nevertheless, the continuing hiatus in the Strait of Hormuz was continuing to cast a cloud – and cause headaches for shippers, forwarders and carriers.

Air freight capacity was gradually returning through April – even through the Middle East, at least in terms of cargo freighters if less so in terms of passenger (and bellyhold) capacity, with many passengers still reluctant to fly through the region.

There were also continuing major problems with jet fuel – with the supply of crude oil as well as liquefied natural gas (LNG) and oil products still very disrupted by the lack of ocean shipping from the Gulf. This in turn was leading to shortages of supply to some locations as well as highly elevated prices for jet fuel globally.

By late April, crude oil prices were back above $120 a barrel – up +71.9% YoY to May 1 ,according to Platts data. But jet fuel prices were up much more over the same period – more than doubling to +101.3% YoY, with the ‘crack spread’ still at much higher levels than normal.

As we noted last month, a swift resolution to the conflict in the Middle East could perhaps point the market back on a path towards more normal conditions. But given the current state of disruption to jet fuel supplies, it seems unlikely rates will fall back sharply any time soon.