April concluded with a mixed air cargo performance, as the Baltic Air Freight Index (BAI00) rose 2.53% month-on-month (MoM), sustained largely by outbound strength from China and North America. Yet beneath the surface, the global picture remains fractured. Significant volatility on China-US lanes, accelerated by US tariff hikes and the 2 May cancellation of the de minimis exemption, has reshaped demand and freighter flows.

Frankfurt and London outbound indices (BAI20 and BAI40) declined sharply by -8.34% and -10.94%, respectively, reflecting declining westbound demand. Routes from Frankfurt to the US (BAI24) plunged 17.15%, while London–Southeast Asia rates (BAI43) collapsed nearly 21%. In contrast, Shanghai Pudong (BAI80) surged 7.37%, with rates to the US and Europe gaining 7.06% and 7.09%, respectively.

Frankfurt and London outbound indices (BAI20 and BAI40) declined sharply by -8.34% and -10.94%, respectively, reflecting declining westbound demand. Routes from Frankfurt to the US (BAI24) plunged 17.15%, while London–Southeast Asia rates (BAI43) collapsed nearly 21%. In contrast, Shanghai Pudong (BAI80) surged 7.37%, with rates to the US and Europe gaining 7.06% and 7.09%, respectively.

The capacity environment continues to diverge. While North Asia is preparing for a potential surplus of freighter availability post-tariff, North America is absorbing redirected aircraft amid surging regional demand. Freighter operators are navigating a turbulent second quarter with caution, deploying capacity tactically, often via short-term ACMI or charter operations.

Key Drivers of Market Dynamics

  1. Freighter reallocation and route realignment
    Freighter operators have started repositioning aircraft away from China-US routes, anticipating a sharp drop in e-commerce flows. Dimerco and Cirrus Global Advisors report freighter cancellations and demand declines of up to 50% year-on-year (YoY). As a result, aircraft are being redeployed to growing lanes in Latin America and intra-Asia, especially out of Singapore, Vietnam, and Mexico.
  2. E-commerce cutback post-tariff
    The end of the de minimis exemption and 145% tariffs on Chinese imports are reshaping fulfillment strategies. Major platforms like Temu and Shein are pausing US-bound shipments, shifting to regional hubs or B2B2C models via US warehouses. With e-commerce comprising more than 50% of China-US air cargo, freighter demand is set to shrink.
  3. Short-term capacity planning
    The uncertainty around tariffs is driving carriers and forwarders to avoid long-term exposure. Spot markets and short-duration ACMI contracts dominate planning. Older freighters, including 747-400Fs and MD-11Fs, are being kept in service despite high maintenance costs, reflecting both fleet inflexibility and immediate market need.
  4. New market flows and Latin America surge
    As China-US traffic declines, Mexico and broader Latin America are emerging as brighter spots. Demand to and from Mexico is rising rapidly, with capacity added to Nuevo Laredo and other key cargo hubs. FedEx and other integrators report volume shifts as shippers reroute through tariff-friendly alternatives.

Regional and Route-Specific Insights

Transpacific markets see steep turns

Shanghai routes to North America (BAI82, BAI84) climbed 8.07% and 7.06% MoM, respectively, reflecting pre-de minimis rush volumes in early April. However, by mid-month, demand collapsed. Hong Kong outbound (BAI30) rose just 2.22%, with softer performance to Southeast Asia (BAI33: -5.04%) and only modest gains to the US (BAI34: +1.53%). A major inflection is expected in May, with excess capacity potentially depressing rates by up to 40%.

Shanghai routes to North America (BAI82, BAI84) climbed 8.07% and 7.06% MoM, respectively, reflecting pre-de minimis rush volumes in early April. However, by mid-month, demand collapsed. Hong Kong outbound (BAI30) rose just 2.22%, with softer performance to Southeast Asia (BAI33: -5.04%) and only modest gains to the US (BAI34: +1.53%). A major inflection is expected in May, with excess capacity potentially depressing rates by up to 40%.

Europe–US corridor remains weak
Frankfurt (BAI20) and London Heathrow (BAI40) showed broad weakness, with respective declines of -8.34% and -10.94%. Corridor-specific rates from Frankfurt to the US (BAI24) and London to Southeast Asia (BAI43) dropped 17.15% and 20.99%, respectively, driven by softer US demand and overcapacity. Only modest growth was seen in outbound US–Europe flows, with BAI51 (Chicago–Europe) up 5.21% for example.

Southeast Asia holds firm

Singapore’s outbound index (BAI60) increased 9.39%, supported by stronger intra-Asia flows (BAI63: +9.35%). While not immune to tariff disruptions, Southeast Asia benefits from temporary US tariff exemptions. Meanwhile, Vietnam, Taiwan, and Thailand have seen double-digit volume growth as sourcing diversifies away from China.

China–Europe stability offers temporary relief

Despite collapsing US-bound e-commerce cargo, China–Europe lanes held steady. Shanghai–Europe (BAI81) rose 7.09%, and Hong Kong–Europe (BAI31) increased 4.14%. These trends reflect shifting flows and stronger demand from sectors unaffected by US tariff action. Still, the sustainability of these gains is questionable as European tariffs are under review.

Despite collapsing US-bound e-commerce cargo, China–Europe lanes held steady. Shanghai–Europe (BAI81) rose 7.09%, and Hong Kong–Europe (BAI31) increased 4.14%. These trends reflect shifting flows and stronger demand from sectors unaffected by US tariff action. Still, the sustainability of these gains is questionable as European tariffs are under review.

Freighter market and supply challenges

Freighter supply remains structurally tight. The 777F line is near capacity, while delays to the 777-8F and A350F programmes prolong large widebody shortages. Feedstock for conversions, especially 737-800s, A330s, and A321s, remains scarce, and certification hurdles persist.

Conversion costs continue to rise. Cargo Facts Consulting noted lead times for components like LEDs stretching up to 35 weeks, inflating costs, and slowing deliveries. Meanwhile, labour costs are up due to the rebound in passenger MRO activity, particularly in China, where conversion still offers cost advantages, but margins are narrowing.

Legacy freighters are staying active longer. More than 120 ageing 747-400Fs and MD-11Fs remain in service, kept flying as vital capacity bridges despite high maintenance burdens. With yields softening, mid-life 767Fs and converted A330Fs remain in demand, and lease rates for these assets are holding firm.

2025 Q2 Outlook: Capacity Unleashed, Demand in Doubt

April’s volatility marks the start of what could be a turbulent Q2. While the BAI00 posted a moderate gain of 2.53%, the underlying signals suggest softening ahead. E-commerce collapse, policy impact, and unstable geopolitical conditions will continue to distort demand patterns.

Cargo Facts Consulting forecasts that the global freighter fleet will grow at 2.1% annually to 3,874 units by 2044, but with 58% of deliveries replacing ageing assets. The current mismatch between aircraft supply, policy risk, and e-commerce retrenchment is eroding the margins of many operators.

Cargo Facts Consulting forecasts that the global freighter fleet will grow at 2.1% annually to 3,874 units by 2044, but with 58% of deliveries replacing ageing assets. The current mismatch between aircraft supply, policy risk, and e-commerce retrenchment is eroding the margins of many operators.

The industry should expect rate instability and opportunistic fleet repositioning in Q2. Charter volumes are already being redirected to Mexico and Southeast Asia. Meanwhile, aircraft parking or temporary grounding is expected on China-US lanes after the cancellation of the de minimis exemption.

For now, agility is key: short-term deals, narrowbody flexibility, and secondary hub development define the operating playbook. Despite structural headwinds, the industry’s resilience will be tested, not just by market dynamics but by its capacity to adapt.

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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