Global air freight rates drifted lower during February in what looked increasingly like the calm before the storm that arrived after some intensity began in March. 

Given large scale flight cancellations across the Middle East and significant disruption to ocean shipping, there looks to be plenty of potential volatility ahead and likely spikes in rates. But looking back, the global Baltic Air Freight Index (BAI00) drifted only modestly lower by -4.2% over four weeks to 2 March, leaving it slightly below where it was by -1.3% from 12 months earlier.

Given large scale flight cancellations across the Middle East and significant disruption to ocean shipping, there looks to be plenty of potential volatility ahead and likely spikes in rates. But looking back, the global Baltic Air Freight Index (BAI00) drifted only modestly lower by -4.2% over four weeks to 2 March, leaving it slightly below where it was by -1.3% from 12 months earlier.

Without a doubt, there were some serious ongoing geopolitical tensions throughout the month combined with renewed uncertainty about trade patterns after the US Supreme Court ruled Donald Trump’s tariff regime unlawful.

But overall the monthly price trends for February were not far out of line with previous years, with a modest rise in rates, typical of the so-called ‘mini-peak’  before Chinese New Year, followed by a quiet spell during the holiday period, before slowly picking up as factories started to spool up again.

All of this was reflected in daily BAI Spot rates out of Hong Kong during February – with first a rising trend ahead of the CNY period; then a flattening out in the second week; then a gentle series of falls through the second half of the month.

All of this was reflected in daily BAI Spot rates out of Hong Kong during February – with first a rising trend ahead of the CNY period; then a flattening out in the second week; then a gentle series of falls through the second half of the month.

BAI Spot from Hong Kong to Europe was at $34.60 per kilo on 30 January but slipped to $31.05 by 27 February. Likewise, BAI Spot from HK to the US West Coast drifted down from $35.29 per kilo to $31.09 over the same period, while HK to the West Coast fell from $33.81 to $30.50.

Meanwhile, the full index of outbound routes from Hong Kong (BAI30) – reflecting the whole spectrum of spot and forward contract business going through – slipped -8.1% over four weeks to 2 March, leaving it lower by -6.9% year-on-year (YoY).

Outbound Shanghai (BAI80) was a little firmer, dropping -5.7% month-on-month (MoM) but leaving it still comfortably ahead by +8.8% YoY.

Rates out of Europe were also holding up well, with the index of outbound routes from Frankfurt (BAI20) shedding only a modest -0.2% MoM to leave it lower at -7.2% YoY.

Meanwhile, outbound London Heathrow (BAI40) was continuing to look the strongest of the major outbound indices with a gain of +6.0% MoM, leaving it ahead by a healthy looking +19.9% YoY.

Rates out of US, however, continued to languish well below the highs of previous years, with the index of outbound routes from Chicago (BAI50) losing another -6.9% MoM to leave it down some -24.7% YoY.

All of that, however, was beginning to look like ancient history within the first few days of March following the decision of the United States to support Israel in launching massive military strikes on Iran. Iran then responded with attacks on the US and its allies in the Middle East, notably in the Gulf, resulting in large-scale closures of air space across the region.

Various local carriers, such as Emirates, Etihad and Qatar Airways, have become important players in global air cargo, causing an immediate impact on capacity, particularly for Asia-Europe cargo, about 50% of which typically goes via the Gulf, but also for wider global supply chains.

Various local carriers, such as Emirates, Etihad and Qatar Airways, have become important players in global air cargo, causing an immediate impact on capacity, particularly for Asia-Europe cargo, about 50% of which typically goes via the Gulf, but also for wider global supply chains.

The impact was immediately apparent in BAI spot rates not only out of Hong Kong but also out of India, which both started to rise in the first three days of March, with many players already expecting bigger increases to follow.

Given the pace of events, it was difficult to predict the overall extent and duration of the impact. However, some types of shippers, such as in the garments sector on the Indian subcontinent, were said to be affected immediately, leaving them searching for scarce air freight capacity through alternative routes but at much higher rates.

With Iran making attacks on Gulf oil and gas infrastructure, there were also potentially severe implications for jet fuel prices, which had already risen an average of over +10.1% globally over the month to 27 February, according to Platts data.

Prior to the renewed conflict in the Middle East – and the renewed spectre of further disruption to trade, together with higher energy prices and higher inflation – from a macro perspective markets had generally begun the year on a positive note. 

Markets were still fretting about the sheer scale of capital expenditure related to the AI theme by big US players, like Alphabet, Amazon and Meta, and how realistic are the return on investment (ROI) expectations. But the huge capex spend was also bringing benefits to many including US semiconductor manufacturers like Nvidia, Broadcom and AMD.

Since the start of 2026, this boost was also extending to the equity prices of key manufacturers in Asia, such as TSMC in Taiwan, as well as Samsung and SK Hynix in South Korea, which reflected in the continuing strength of air cargo rates out of Taiwan and Seoul.

That said, the South Korean equity market, which has jumped about +50% in the first two months of the year, was also the most immediately hard-hit by events in the Middle East, giving back -20% in just the first three trading days of March, led lower by steep falls on Samsung and SK Hynix.

Meanwhile, markets had also been responding enthusiastically to the landslide election victory of Takaichi Sanae in Japan, who is widely seen as market-friendly in the tradition of Margaret Thatcher and keen to extend the reforms of her predecessor Shinzo Abe.

On the other hand, Sanae is also notably keen to boost spending on what she sees as strategic industries such as AI and semiconductors, defence and shipbuilding, which could also add to pressures in the Japanese Government Bond (JGB) market given its huge existing debt levels.

Whatever happens in the Middle East will likely have repercussions on both short-term and long-term on the global outlook, and of course on air freight rates, which will continue to be a key barometer of market direction.

The market is currently braced for what could be an extended period of higher volatility, potentially driven by modal shifts from ocean to air freight with shippers increasingly desperate to get goods to market.

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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