Overview of market conditions

December saw another month of firm pricing, with the Baltic Air Freight Index (BAI00) up 7.74% on strong year-end clearances and tight Asia-origin capacity. Shanghai led gains as BAI80 rose 10.05%, with double-digit increases to North America (BAI82 +10.40% and BAI84 +10.50%), while Hong Kong followed, with BAI30 up 6.19%.

Europe saw steadier improvement. Frankfurt’s BAI20 rose 7.65%, boosted by strong North America lanes (BAI22 +15.51% and BAI24 +14.06%), while Heathrow (BAI40) edged up 1.68%. Chicago (BAI50) posted one of the month’s largest rebounds at 18.05%. Singapore (BAI60) stabilised, up 1.65% after November’s decline.

December ended on a firm tone, although early-January patterns point to the expected post-peak correction, with sharp rate declines out of China and Hong Kong as volumes ease.

 

Four key drivers of market dynamics

Peak-season demand sustained strong Asia-origin flows.
The same dynamics that shaped November carried into December: strong e-commerce volumes, factory acceleration ahead of Chinese New Year, and tight space on high-tech and semiconductor exports. This supported continued double-digit gains on Shanghai–North America (BAI82, BAI84) and solid momentum from Hong Kong into both Europe and the United States.

Trade realignment and high-tech shipments reinforced long-haul strength.

Diversified sourcing across East and Southeast Asia kept demand firm into European hubs, reflected in Hong Kong–Europe (BAI31 +9.60%) and Shanghai–Europe (BAI81 +9.43%). Semiconductor-linked uplift from Taiwan and South Korea continued to tighten space ahead of Lunar New Year.

Diversified sourcing across East and Southeast Asia kept demand firm into European hubs, reflected in Hong Kong–Europe (BAI31 +9.60%) and Shanghai–Europe (BAI81 +9.43%). Semiconductor-linked uplift from Taiwan and South Korea continued to tighten space ahead of Lunar New Year.

Selective freighter redeployment strengthened Transatlantic performance.
Frankfurt saw renewed activity, particularly into the US, with Frankfurt–North America (BAI22) and Frankfurt–USA (BAI24) both rising strongly. Chicago’s December rebound also reflected operators shifting lift into lanes offering stable winter yields and high load factor reliability.

Post-peak normalisation began to emerge mid-month.
This aligns with typical seasonal behavior as restocking winds down, and shippers pause ahead of the Lunar New Year cycle.

 

Regional and route-specific insights

Asia–Europe:
Hong Kong–Europe (BAI31) rose nearly 10% and Shanghai–Europe (BAI81) increased 9.43%, supported by diversified production sources and steady parcel and tech-related demand. Rates into Europe held firm through early December.

Asia–North America:

Shanghai–North America (BAI82) and Shanghai–USA (BAI84) posted another month of double-digit gains, with Hong Kong–North America (BAI32) up 8.13%. These flows remained the core driver of global demand, although early January already shows a sharp post-peak correction.

Shanghai–North America (BAI82) and Shanghai–USA (BAI84) posted another month of double-digit gains, with Hong Kong–North America (BAI32) up 8.13%. These flows remained the core driver of global demand, although early January already shows a sharp post-peak correction.

Europe–North America:
Frankfurt led the region, with Frankfurt–USA (BAI24) and Frankfurt–North America (BAI22) among the strongest global increases. Chicago (BAI50) surged 18.05%, reflecting late-season consolidation into Europe and Asia.

Intra-Asia and Southeast Asia:
Singapore (BAI60) stabilised with a modest increase, while Hong Kong–SEA (BAI33) rose 5.43% on holiday-related e-commerce flows. Regional momentum held early in December before easing as peak-season volumes tapered.

Freighter market and supply-side trends

Freighter availability remained tight through December, even as conversion pipelines showed modest progress. Widebody utilisation continued at or near peak levels, and the global freighter fleet is still operating below earlier-year capacity. Belly capacity provided partial relief, but slot shortages, labour constraints, and winter weather disruptions continued to influence operator scheduling and aircraft deployment.

High-tech demand, particularly semiconductors, AI hardware, and server components, kept Northeast Asia corridors congested. Taiwan and South Korea remained heavy users of long-haul widebodies, and indirect routings into the US continued to lift rates in late December as freighter operators prioritised high-yield uplift.

From a structural standpoint, the freighter market remains constrained. Large widebody additions are still limited by feedstock and slower 777-300ERSF and A330 conversion throughput. Narrowbody programmes are progressing but remain insufficient to ease regional tightness, particularly on lanes with sustained e-commerce and express activity.

From a structural standpoint, the freighter market remains constrained. Large widebody additions are still limited by feedstock and slower 777-300ERSF and A330 conversion throughput. Narrowbody programmes are progressing but remain insufficient to ease regional tightness, particularly on lanes with sustained e-commerce and express activity.

Southeast Asia continues to gain share in diversified manufacturing flows, but year-end volumes eased slightly, reducing some pressure on regional freighter networks. Even so, fragmentation across Asian sourcing hubs is increasing reliance on tactical redeployments rather than structural fleet expansion.

 

What the indicators say about demand

Cargo Facts Consulting interprets December’s indicators as showing a solid year-end but a clear shift toward softer conditions entering 2026. Demand remained supported by strong Asia-origin flows and high-value shipments, and capacity growth was gradual enough to keep load factors stable.

However, rate momentum eased across several major corridors, and early-January patterns point to a typical post-peak reset. From CFC’s perspective, this reflects a market that is still healthy but no longer accelerating.

E-commerce continues to grow, albeit at a more measured pace. This suggests e-commerce will remain an important driver in 2026, but with steadier contributions rather than sharp seasonal surges.

 

Early-2026 outlook

Cargo Facts Consulting expects December’s strength to give way to a standard January reset, amplified by a softer e-commerce outlook and rising policy uncertainty. Growth in 2026 is likely to slow to the low single digits, with sharper divergence between high-tech uplift and weaker consumer-goods demand.

Cargo Facts Consulting expects December’s strength to give way to a standard January reset, amplified by a softer e-commerce outlook and rising policy uncertainty. Growth in 2026 is likely to slow to the low single digits, with sharper divergence between high-tech uplift and weaker consumer-goods demand.

Capacity constraints will persist, but rates should face downward pressure as shippers regain leverage and demand eases into Q1. A brief rebound is expected ahead of Lunar New Year as exporters accelerate volumes across China, Korea, and Taiwan. Beyond February, the landscape becomes more uncertain, shaped by new e-commerce compliance rules, ongoing US–China tariff adjustments, slower manufacturing momentum, and continued freighter tightness.

Overall, December ended on a firmer note, but early 2026 signals a more cautious and fragmented operating environment.

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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