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 late January.
Another area attracting positive attention from investors is aerospace, with some foreseeing an end to a ‘perfect storm’ particularly for Boeing as well as to a lesser extent for Airbus – with long-running supply chain issues finally starting to get resolved.
Another major theme for Trump has been ‘drill, baby, drill’ – to boost energy production in the US, and so cut prices and drive growth. This mantra conveniently ignores the fact that oil production in the US already jumped 1.9m barrels a day during the Biden Administration – and, given the high marginal cost of production in the US, seems unlikely to grow faster if prices do indeed fall.
Of most interest to the aviation sector, oil prices began the year on an uptick. Jet fuel prices jumped +6.2% over the month to 31 January, according to Platt’s data, though falling again by early February.
Rates drop in January – as markets absorb AI shocks, crackdown on de minimis and tariff stand-offs
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 late January.
Another area attracting positive attention from investors is aerospace, with some foreseeing an end to a ‘perfect storm’ particularly for Boeing as well as to a lesser extent for Airbus – with long-running supply chain issues finally starting to get resolved.
Another major theme for Trump has been ‘drill, baby, drill’ – to boost energy production in the US, and so cut prices and drive growth. This mantra conveniently ignores the fact that oil production in the US already jumped 1.9m barrels a day during the Biden Administration – and, given the high marginal cost of production in the US, seems unlikely to grow faster if prices do indeed fall.
Of most interest to the aviation sector, oil prices began the year on an uptick. Jet fuel prices jumped +6.2% over the month to 31 January, according to Platt’s data, though falling again by early February.