Global air freight rates fell quite steeply for most of January, with the global Baltic Air Freight Index (BAI00), calculated by TAC Data, dipping some -19.3% over the four weeks to 26 January, leaving it lower by -6.1% over 12 months.

Such a steep fall in rates is not unusual for what is often a quiet period of the year following the peak season surge.

Nevertheless, the depth of the decline was slightly surprising given reports about the continuing resilience of demand and constraints on air freight capacity. In addition, several one-off factors impacted the market in January, from closure of airspace over Iran to weather events in North America; and congestion, cancellations and delays to flights across Asia.

Some market participants were also on alert because of trends in ocean shipping rates, which rose higher and earlier than usual in January ahead of the so-called ‘mini peak’ before Chinese New Year, leading some to anticipate a similar effect on air freight rates.

With Lunar New Year taking place more than two weeks later this year in mid-to-late February, it was still very possible there could yet be a late rise in rates, resulting in the sort of mini peak bounce that usually occurs. There were some signs that this bounce could have happened in the final week of January, with the BAI00 index gaining +4.1% over the week to 2 February, cutting its four-week decline to only -2.2% and the year-on-year (YoY) decline to only -3.0%.

With Lunar New Year taking place more than two weeks later this year in mid-to-late February, it was still very possible there could yet be a late rise in rates, resulting in the sort of mini peak bounce that usually occurs. There were some signs that this bounce could have happened in the final week of January, with the BAI00 index gaining +4.1% over the week to 2 February, cutting its four-week decline to only -2.2% and the year-on-year (YoY) decline to only -3.0%.

Nevertheless, BAI Spot rates out of Hong Kong fell steadily through January, both to Europe and the United States, before starting to firm up again towards month-end.

BAI Spot rates from Hong Kong to Europe went down from HK$39.24/kg on 2 January to HK$34.60/kg by 30 January.

Spot rates to the US East Coast slipped from HK$43.39 to HK$35.29 over the same period, while spot rates from Hong Kong to the US West Coast dipped from HK$41.69 to HK$33.81.

Meanwhile, the full index of outbound routes from Hong Kong (BAI30), reflecting the whole spectrum of spot and forward rates being paid, fell -8.9% over the four weeks to 2 February, leaving it lower by -5.6% YoY.

Outbound Shanghai (BAI80) had fallen very steeply over New Year but also rebounded in late January, leaving it narrowly ahead by +1.1% over the four weeks to 2 February and back in positive territory YoY at +8.9%. Rates elsewhere out of Asia were also falling most of the month, albeit with some exceptions, such as out of Vietnam where rates firmed up significantly in mid-late January (though still well down YoY).

Outbound Shanghai (BAI80) had fallen very steeply over New Year but also rebounded in late January, leaving it narrowly ahead by +1.1% over the four weeks to 2 February and back in positive territory YoY at +8.9%. Rates elsewhere out of Asia were also falling most of the month, albeit with some exceptions, such as out of Vietnam where rates firmed up significantly in mid-late January (though still well down YoY).

This was also seen from Taiwan, where rates were rising sharply again towards month-end, and remaining well up on a YoY comparison, boosted by continuing strong trade in semiconductors related to the AI investment boom.

Out of Europe, rates were falling as well, although not so fast for most of January, with a significant bounce around month-end.

After a jump in the final week, the index of outbound routes from Frankfurt (BAI20) was narrowly up by +2.0% over four weeks to 2 February, although still lower at -7.6% YoY.

In addition, after a big rebound over the final week, outbound London Heathrow (BAI40) ended the same four weeks up +13.9 % month-on-month (MoM), although still lower YoY at -6.4%.

From the Americas, the index of outbound routes from Chicago (BAI50) was also up MoM by +5.6% – but still a long way down at -18.9% YoY.

From a macro perspective, markets began the year on strong form with equities rising again in the US, Europe and Asia, despite another wobble mid-month when NATO appeared set to fall apart over Greenland.

Market sentiment was buoyed by expectations of faster growth in the US, driven not least by the apparent determination of the Trump Administration to turbocharge the economy ahead of mid-term elections.

Stimulus measures on the way in the US already included huge tax cuts following the so-called ‘Big Beautiful Bill’ of 2025. In addition, there are expectations of more fuel being added to the fire through interest rate cuts that may be pushed through by the successor to Jerome Powell at the Federal Reserve.

Further rises in the stock markets, however, also came with expectations of rising inflation, as well as ongoing geopolitical concerns, with the dollar falling further, plus gold and silver prices surging (with gold up around +85% YoY at one point in late January).

At month-end, however, the boom in precious metals went abruptly into reverse. Suddenly, both gold and silver plummeted sharply following the announcement of Kevin Warsh as Trump’s nominee to be the next chairman of the Fed. Warsh is seen as arguably more orthodox and less accommodative on lower interest rates.

Bitcoin and other cryptocurrency assets and tokens, which had not enjoyed the same sort of surge as gold over the previous year, also fell sharply.

Energy markets on the other hand surged again during January, with crude oil rising from around $60 per barrel to over $70 at one point before also falling towards month-end. The intra-month rise was showing up quite quickly in jet fuel prices, with the global average for jet up +9.6% in the month to 30 January according to Platts data. 

Rising jet fuel prices amid expectations of faster growth, and strong demand even amid trade tensions, are also continuing at a time when air cargo capacity continues to look pretty tight. Towards month-end, news also came through that UPS, which suffered the fatal crash late last year that led to the grounding the world’s entire MD-11 freighter fleet, had decided to retire all of its ageing MD-11s.

Rising jet fuel prices amid expectations of faster growth, and strong demand even amid trade tensions, are also continuing at a time when air cargo capacity continues to look pretty tight. Towards month-end, news also came through that UPS, which suffered the fatal crash late last year that led to the grounding the world’s entire MD-11 freighter fleet, had decided to retire all of its ageing MD-11s.

UPS announced plans to replace those planes with Boeing 767s, although that process would likely take some time to complete, given backlogs on new freighter orders and a continuing shortage of feedstock for conversions.

So the short-term outlook for rates ahead of Lunar New Year may not look quite so bullish as some anticipated, but still pretty firm. Meanwhile, the medium to longer-term outlook for the market continues to look pretty tight.

Find out more about the newly extended BAI Spot indices, launched in collaboration with TAC Innovation. 

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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