BAI Index July 2025: Freighters return, but confidence remains uncertain

June brought a cautious recalibration in the global air cargo market. The Baltic Air Freight Index (BAI00) was flat month over month (MoM), up just +0.07%, showing differences across regions and noticeable swings during the month. The bounce that followed May’s tariff pause proved to be very short, especially on transpacific routes, where demand slipped again after a brief lift at the end of May.

Freighter capacity on the transpacific trade appears to have stabilised between 60,000 and 65,000 tonnes per week. That figure is well below the March peak of 75,000 tonnes, but higher than the low point of 51,000 tonnes reached in May. Even with more lift available, rates out of major Asian hubs are still under pressure. Hong Kong to North America (BAI32) rates dropped 1.64% MoM, and overall Hong Kong outbound rates (BAI30) slipped slightly.

Meanwhile, Shanghai told a different story in June. The Pudong index (BAI80) rose 3.60%, with rates to both Europe (BAI81) and North America (BAI82) climbing more than 3%.

While Asia-Europe routes showed resilience, Europe-North America remained under pressure, especially from Frankfurt. Outbound rates from Frankfurt to the United States (BAI24) declined nearly 6% MoM, while BAI20 overall dropped 3.75%. London Heathrow was the outlier, with a 25% MoM surge in outbound pricing (BAI40), partly due to capacity shifts and strong mid-month demand. US exports, particularly out of Chicago (BAI50), fell sharply, reflecting rate pressure on Southeast Asian lanes.

Key drivers of market dynamics

1.        Tariff pause offers little lasting lift
The US–China tariff pause in mid-May brought temporary relief, but the structural impacts of the de minimis suspension remain. Cross-border e-commerce shipments from China to the US fell dramatically in May, with many Chinese platforms diverting volumes to Europe and Southeast Asia. Despite spot rate volatility, overall rates have not returned to pre-April levels. BAI34 (Hong Kong to USA) and BAI84 (Shanghai to USA) remained flat in June.

2.        Freighter redeployment continues
Freighter operators remain careful. While capacity on Asia–US and Asia–Europe lanes recovered from May’s low figures, the restored capacity reflects repositioning and not new additions across these lanes. Transpacific widebody freighter capacity has settled below the peak seen in March, and freighter traffic has expanded on Asia–Europe and Latin America–North America lanes. Transatlantic capacity, however, reduced in line with summer passenger growth.

3.        Mixed pricing environment
Global pricing was mostly flat in June, with the overall BAI index (BAI00) barely moving but the case is not the same across regions. London Heathrow to the US (BAI44) jumped more than 34%, while Frankfurt to China (BAI25) dropped nearly 6%. Singapore outbound (BAI60) fell more than 7%, even as Southeast Asia continues to benefit from China+1 strategy. The market remains heavily reliant on the spot side, with contract rates continuing to soften in the background.

4.        Freighter fleet faces tight capacity in the medium term
Freighter supply remains constrained. While active capacity is back online in many lanes, Cargo Facts Consulting’s warning of a prolonged widebody shortage underscores the structural fleet challenge. Feedstock for conversions remains tight, with 747-400Fs and MD-11Fs still operating in large numbers. Delays in certifying 777 conversion programs and OEM production bottlenecks, especially for 777-8Fs and A350Fs, are limiting long-term growth. With more than half of upcoming deliveries set to replace older aircraft, net expansion will remain slow.

Regional and route-specific insights

Asia–US volatility persists
After a brief recovery in late May, both rates and volumes softened again in early June. Hong Kong to North America (BAI32) slipped 1.64%, while overall outbound rates from Hong Kong (BAI30) also fell. In contrast, Shanghai showed stronger momentum. Rates to Europe (BAI81) and North America (BAI82) rose by more than 3%, driven by general cargo flows and restocking ahead of July’s tariff deadlines.

Asia–Europe shows diversification
Rates from Shanghai to Europe (BAI81) climbed 3.85% month over month, while Hong Kong to Europe (BAI31) dipped slightly by 0.67%. European sourcing continues to diversify, with more volume shifting toward Vietnam, India, and other Southeast Asian markets. Demand from South Korea and Taiwan softened in June, influenced by regional holidays and slower export activity. Overall, the lane remains relatively stable, although upcoming EU parcel fee changes could impact flows in the coming quarter.

Europe–North America outlook remains muted
Frankfurt outbound rates (BAI20) fell 3.75% in June, with all key lanes to North America (BAI22 and BAI24) registering declines. In contrast, London Heathrow saw strong MoM gains. Rates to the U.S. (BAI44) surged by over 34%, while Heathrow–Southeast Asia (BAI43) rose 23%. These movements likely reflect short-term demand spikes and tactical routing changes rather than a sustained market rebound.

Intra-Asia and Latin America fill in gaps
As long-haul lanes remain uncertain, intra-Asia and Latin America are absorbing some of this capacity. Chinese carriers have introduced air-to-air routings via Hanoi and Singapore. While BAI data for Vietnam and India remains limited, anecdotal evidence suggests strong rates on select intra-Asia sectors. Latin America–North America capacity increased, while transatlantic freighter flights fell.

Freighter market and supply-side trends

Tight availability continues despite rate softness
Mid-life widebody freighters remain in demand, but lease rate growth is slowing. Conversions are delayed due to feedstock constraints and long component lead times. The pool of viable aircraft for conversion, particularly 767s, A330s, and 777s, remains limited. Operators continue to extend the life of legacy aircraft, especially 747-400Fs and MD-11Fs, to maintain flexibility during demand shifts.

OEM bottlenecks limit new deliveries
Production challenges continue to weigh on freighter supply. Boeing’s backlog for 777Fs will end in 2027, with the 777-8F and A350F not entering service until 2028. With few conversion slots available and no new freighters entering in 2027, capacity growth is expected to lag demand. Combined with age-related retirements, this dynamic could drive limited capacity through the early 2030s.

Strategic realignment by key operators
Atlas and other ACMI carriers are leveraging flexible models to reposition aircraft into markets like Mexico, Brazil, and Eastern Europe. This trend will likely continue as tariffs, trade rules, and customs procedures reshape trade lanes. Meanwhile, OEMs and forwarders are revisiting long-term agreements, opting for shorter-term commitments and ad hoc capacity buys.

Q3 outlook: fragile momentum, rising risks

June ended without a clear trend. Rates have stabilised, but uncertainty is growing as new tariff talks approach. Transpacific routes are still volatile, and Europe is absorbing extra capacity from Asia but that could change quickly. Regional routes, especially in Latin America and intra-Asia, will be key to balancing the market in the second half of the year. Cargo Facts Consulting expects moderate pressure on global rates in July, with possible local surges if shippers frontload ahead of new tariffs. Long-term, the market will need to navigate supply constraints, ageing fleets, and unpredictable demand.

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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