BAI Index October 2025: Air freight rates steady – despite geopolitical tensions and fractious trade relationships

Air freight rates were little changed in September, according to the latest data on industry price trends collated by TAC Index.

The global Baltic Air Freight Index (BAI00), calculated by TAC, was a tad lower by -0.6% over four weeks to 29 September, leaving it down by -8.1% from where it was 12 months before, when the market was being driven by a booming e-commerce sector and about to enter a pronounced peak season rise.

The relatively firm tone to the market was notable given the continuing escalation in geopolitical tensions, with no sign of an end to wars in Ukraine and the Middle East. This was combined with serious disruption to some of the most important trade relationships in the world, notably between the US and China.

The overall index of outbound routes from Hong Kong (BAI30), reflecting the full spectrum of spot and forward contract prices paid, was up +2.9% over the four weeks to 29 September, leaving it lower by -5.7% year-on-year (YoY).

However, the new BAI Spot indices out of Hong Kong, which have been in public trials since the start of July, revealed an interesting dispersion in rate trends between different lanes. Spot rates from Hong Kong to the US East Coast softened from HK$38.59 per kilo on 1 September to HK$37.85 on 30 September 30, despite a rise towards month-end.

Hong Kong to the US West Coast spot rates eased from HK$36.45 to HK$36.35 over the same period. However, from HK to Europe spot rates rose markedly, from HK$32.64 per kilo on 1 September to HK$36.21 on 30 September.

The index of outbound routes from Shanghai (BAI80) showed a similar pattern, edging up +0.3% month-on-month (MoM) to leave it at -9.7% YoY.

There were certain factors driving rates higher towards month-end, including the impending Golden Week festival in China and the major super-typhoon Ragasa disrupting supply chains.

But overall out of Asia, rates from other locations such as Vietnam and India were still languishing a long way lower YoY, with increases in capacity this year helping to hold rates down despite significantly higher volumes.

There were also declines on some new lanes added recently to the TAC data, such as from Seoul to the US. However, there were stronger numbers from other locations, such as Taiwan, where sources suggest volumes have increased sharply this year, led by rising exports of computer equipment.

From Europe, rate patterns were also firm on various new lanes added by TAC this summer, such as to India and Mexico, and still up YoY on transatlantic lanes as well as to Japan.

Nevertheless, the full index of outbound routes from Frankfurt (BAI20) declined by -6.2% MoM to leave it at -12.6% YoY.

After a strong run in recent months, outbound London (BAI40) was also lower by -7.2% MoM to drag it back into negative territory at -1.6% YoY.

From the Americas, rates were still firm both to Europe and to South America, albeit still a long way lower YoY to China and other destinations in Asia, such as Seoul.

The index of outbound routes from Chicago (BAI50) declined another -9.9% MoM, leaving it languishing at -14.7% YoY.

Another lane recently added where rates remained strong was from Mexico to Europe, still solidly ahead YoY.

That said, signs of disruption were evident across the market. For instance, in its latest quarterly earnings call, FedEx admitted ‘headwinds’ cutting revenues by $1bn on Transpacific routes, hitherto its most profitable lanes, following higher tariffs and end to the de minimis exemption for small packages into the US.

FedEx said it had responded by cutting capacity on Transpac by 25% this year, including a 10% cut in the latest quarter, and was now focusing more on Asia-Europe instead. This would concur with reports that China-US e-commerce activity dropped as much as 40% between April and July, offset by growth on lanes to Europe and elsewhere.

There were also signs of China hitting back where it can against higher US tariffs. Back in 2016, the US accounted for 41% of soybean imports to China. This had already fallen to 20% by 2024 following higher tariffs imposed during the first Trump administration, with the US increasingly displaced by supplies from Brazil. Nevertheless, those exports still accounted for some $12.8 billion in revenues for US farmers in 2024.

According to various reports, China has still placed absolutely zero new orders for US soybeans from the US for 2025 and 2026, pointing to a significant potential hit for US agriculture.

In air cargo, following the end of de minimis into the US, Chinese exporters in the key e-commerce sector seem to have been switching sales efforts successfully to other markets, notably to Europe but also to the Middle East, Africa and South America. How long this strategy will continue to work remains to be seen. The European Union and the United Kingdom have also been looking at tightening their rules on de minimis.

Chinese exporters also seem to have been taken by surprise by the sudden decision of Poland to close its border from 12 September to rail imports from the East. That followed joint military exercises between Russia and Belarus, as well as violations of Polish airspace by the Russians. The decision led to a massive tailback in rail traffic from China, possibly contributing to the recent rise in spot rates from China to Europe.

From a macro perspective, markets continued to mostly shrug off these geopolitical concerns, as well as various worries about inflation, interest rates, and growth, as well as the sustainability of government debt levels in major developed economies.

Talking points on the month included worries about debt levels, particularly in the UK where the government is struggling to stay within borrowing limits set by Chancellor Reeves; and in France, where a third government in less than a year appointed by President Macron fell after failing yet again to pass austerity measures needed to bring spending in check.

Debt-to-GDP levels are indeed worryingly high in the UK (at nearly 104%, according the latest IMF figures) and higher in France (at just over 116%). That said, debt-to-GDP is even higher in a number of other major economies such as Japan (247% and counting), Italy (nearly 133%) and the US (at over 122%).       

Indeed, excluding smaller economies, such as Switzerland and Norway, the only major developed country with lower debt-to-GDP than the UK is Germany (at just over 70%) – a figure set to expand as Germany massively boosts spending on defence and infrastructure. It is therefore not surprising that markets do not seem over-perturbed by current headwinds.

Turning back to air cargo, rates may be firm in the short term, but expectations remain mixed for the peak season ahead.

Despite the impact of higher tariffs and the end of de minimis, overall demand seems to remain strong, especially on Asia-Europe routes. Capacity ahead still looks tight, with deliveries of both new passenger planes with bellyhold space and dedicated freighters well below pre-pandemic levels and unlikely to rise anytime soon.

On the other hand, the recent firmer tone could also have been exaggerated by the impact of the super-typhoon, Golden Week and the rail closure through Poland, which has now been reopened. As always, time will tell.

Neil Wilson, TAC Editor

Neil Wilson is Editor of TAC Index, which provides independent, accurate and actionable global air freight data, allowing our customers to make comparative, cost-effective and intelligent air freight decisions.

Neil has more than 30 years’ experience in financial journalism and publishing, specialising mainly in derivatives and alternative investments. He has contributed to various publications including The Financial Times, The Economist and Risk magazine. He has also been a guest speaker at many industry events.

Neil has a B.A. with Honours in Philosophy, Politics and Economics from the University of Oxford.

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