Overview of Market Conditions

May brought stabilisation after April's shock, with the Baltic Air Freight Index (BAI00) rising just 1.91% month-on-month. This was less a continued spike than a market settling at a higher level.

That calm at the headline covers a regional split. Asia held firm, with Hong Kong's BAI30 up 2.98% and Shanghai's BAI80 up 3.20%, and US outbound jumped, with Chicago's BAI50 climbing 12.94%. Europe, meanwhile, handed back part of April's surge as summer schedules and network adjustments freed up capacity. London Heathrow's BAI40 fell 9.65% and Frankfurt's BAI20 declined 5.89%.

While May did not fix the disruption, it marked the point where buyers and carriers stopped repricing risk every week and started operating within it. Gulf instability still matters; the market has just learned to work around it.

Four Key Drivers of Market Dynamics

1. A new operating baseline

After two months of sharp escalation, May looked like normalisation rather than recovery. Data through the end of the month shows rate easing as carriers, forwarders, and shippers settled into revised routings and capacity patterns. While the market is still expensive year-on-year, week to week, the acceleration is gone.

After two months of sharp escalation, May looked like normalisation rather than recovery. Data through the end of the month shows rate easing as carriers, forwarders, and shippers settled into revised routings and capacity patterns. While the market is still expensive year-on-year, week to week, the acceleration is gone.

The lane mix says the same thing. Asia and the US stayed strong while Europe cooled, exactly what one would expect from a system that is still constrained but no longer pricing in fresh risk every week.

2. Transpacific does the heavy lifting

Transpacific pricing is being propped up by high-value cargo, not broad demand. Hong Kong to North America rose 6.23% and to the US 5.50%, while Shanghai to North America rose 4.08% and to the USA was up 4.07%.

That fits the wider pattern of tech and semiconductor volumes holding into the United States. Even with some China–US e-commerce softness in the background, the mix leans on shipments that are hard to defer or shift modes. This was not a peak-season surge but a high-yield demand running into tight effective capacity.

3. Europe cools, unevenly

Europe was the clearest case of easing. Heathrow dropped 9.65%, with North America leading the decline as the BAI42 fell 10.30% and the USA lane BAI44 fell 11.99%. Frankfurt softened too, with BAI20 down 5.89% and its USA lane down 11.99%.

This reads as supply returning and April's disruption premium unwinding, not demand falling away. Summer passenger schedules add belly capacity, and carriers have had time to rebalance networks.

Importantly, it is not weak everywhere. Frankfurt to China rose 7.87% and Frankfurt to Southeast Asia slipped only 6.00%. As a result, Europe is being pulled both ways, with transatlantic lanes softening as capacity comes back, while Asia-linked trade holds.

4. The Gulf still sets the ceiling

May's most important feature is what didn't happen: a clean recovery of Gulf capacity. The region is still working through operational stops and starts, and the rebound has stalled in some markets after renewed drone activity and ongoing Hormuz risks.

That caps how far rates can fall. Gulf capacity remains well below pre-war levels, yet many east–west flows are still flying longer routings, and insurance and fuel sit above last year's levels. Together they keep a floor under pricing even as weekly momentum fades. Once again, stabilisation at a high level, not normalisation.

Regional and Route-Specific Insights

Asia stayed the pricing leader, but the Europe-bound versus US-bound split sharpened. Hong Kong to Europe slipped 1.43% while its US lanes climbed. Shanghai gained on both Europe, up 1.87%, and North America, up 4.08%, so China-origin pricing held firm even as parts of the market eased.

Asia stayed the pricing leader, but the Europe-bound versus US-bound split sharpened. Hong Kong to Europe slipped 1.43% while its US lanes climbed. Shanghai gained on both Europe, up 1.87%, and North America, up 4.08%, so China-origin pricing held firm even as parts of the market eased.

The US strengthened like it was playing catch-up. Chicago outbound rose 12.94%, with Europe up 12.15% and Southeast Asia up 13.31%, consistent with US outbound lagging earlier moves elsewhere, then repricing as the network tightened and demand held.

Singapore improved modestly, with BAI60 up 5.13% and intra-Southeast Asia BAI63 up 5.09%, which was more of a recovery from early-May holiday effects than a new surge.

Freighter Market and Supply-Side Trends

May reinforced that effective capacity remains the core variable. Short-term demand swings were heavily influenced by calendar effects, such as the end of Mother’s Day perishables and early May holidays in Asia, which temporarily reduced volumes and eased pressure in some weeks.

However, the bigger supply picture remains constrained. Widebody availability is still tight and the industry continues to operate with limited slack. That makes the market more sensitive to shocks and slower to unwind when conditions improve.

At the margin, higher air costs are encouraging some mode shifting where shippers can tolerate slower transit. This does not remove the demand floor created by semiconductors and time critical cargo, but it can cap upside and contribute to gradual easing when capacity returns.

However, the bigger supply picture remains constrained. Widebody availability is still tight and the industry continues to operate with limited slack. That makes the market more sensitive to shocks and slower to unwind when conditions improve.

At the margin, higher air costs are encouraging some mode shifting where shippers can tolerate slower transit. This does not remove the demand floor created by semiconductors and time critical cargo, but it can cap upside and contribute to gradual easing when capacity returns.

Short-term outlook: stabilisation, risk still skewed up

June and early Q3 should extend May's pattern: an expensive market slowly learning to work inside its constraints. If Gulf capacity returns in increments and fuel stays off its April highs, modest easing is the likeliest path rather than another spike.

The main risk is that Middle East disruption becomes more persistent or spreads operationally. In that scenario, even small reductions in Gulf connectivity can tighten Asia to Europe lanes quickly and spill over into the Americas through aircraft redeployment.

May’s message is straightforward: the market is no longer spiraling, but it is not back to normal. It has stabilised at a higher level where route reliability and capacity access are the deciding factors.

About Cargo Facts Consulting

Founded in 1978, Cargo Facts Consulting (www.cargofactsconsulting.com) is a leading air cargo consultancy and data provider. Through our specialised services in digital innovation, strategic planning, and growth management and data solutions, Cargo Facts Consulting helps its clients navigate the complexities of the air logistics industry.

 

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