BAI Index April 2026: Middle East conflict sends air freight rates soaring in March

With conflict raging across the Middle East, it was unsurprisingly an explosive month in March for air freight markets.

The overall Baltic Air Freight Index (BAI00) gained some +19.4% over the four weeks to 30 March, leaving it ahead by +10.0% from 12 months previously. To 7 April, the four-week gain had risen to +25.2% to leave it up +15.8% year-on-year (YoY) and back close to peak season levels.

However, with rates surging much more on many key lanes, particularly between Asia and Europe, and with jet fuel prices more than doubling, signs are now pointing towards potentially steeper rises ahead.

The sudden surge in rates was sparked by the United States and Israel launching massive air attacks against Iran on 28 February. Iran responded with drones and missiles to hit targets throughout the region, de facto closing the Strait of Hormuz to ocean transport and causing major air space closures and flight cancellations through the Gulf.

BAI Spot rates out of Hong Kong spiked dramatically, rising on lanes to Europe from HK$31.05 per kilo on 27 February to HK$42.70 by 30 March. Spot rates from HK to the US rose sharply too, from HK$31.09 per kilo to HK$45.95 to the US East Coast in the same period, and from HK$30.50 to HK$42.88 to the US West Coast. BAI Spot rates from India rose even more dramatically, more than doubling on lanes to Europe, from US$1.85 per kilo on 27 February to US$4.10 by 30 March.

Most of the major outbound indices did not rise so dramatically but were still showing a strong upward trend, with the index of outbound routes from Hong Kong (BAI30) gaining +22.7% over the four weeks to 30 March to leave it up +7.4% YoY; and +22.6% over four weeks to 7 April, pushing its gain to +13.4% YoY.

Similarly, outbound Shanghai (BAI80) gained +20.3% month-on-month (MoM) to 30 March to leave it ahead by +16.9% YoY. By 7 April, the MoM gain had escalated to +41.8%, helping push the YoY change to +21.3%.

However, those outbound indices reflect the full spectrum of spot and forward contract business going through, including fulfilments on contracts agreed months previously. Hence, they can give an accurate snapshot of average rates achieved but not necessarily of marginal prices, which may be a lot higher at times of market stress as the BAI Spot indices were indicating.

TAC Freight indices out of some other locations in Asia, such as from India, Vietnam and Thailand, were also showing steeper rises for the month, reflecting perhaps that these markets are typically dominated more by spot market activity.

Rates from other locations out of Asia, such as Korea and Taiwan, which were already at elevated levels, reflecting the boom in semiconductors and AI-related activity, were also higher in March but to a lesser extent as affected less directly by disruption in the Middle East.

Rates from Europe also rose in March, although to a more modest extent. The index of outbound routes from Frankfurt (BAI20) rose +8.5% over the four weeks to 30 March, although these remained a little lower at -7.0% YoY. By 7 April, the MoM gain had escalated to +22.7%, helping push the YoY change back into positive territory at +6.1%.

Outbound London Heathrow (BAI40) gained +9.2% MoM to 30 March, although this was building further on strong gains in recent months to leave it comfortably ahead at +31.0% YoY. Despite little change in the week to 7 April, the YoY change by then had ratcheted up to +48.8%.

From the Americas, the index of outbound routes from Chicago (BAI50) bounced more steeply by +35.9% MoM to 30 March, although this was largely recovering ground from falls in previous months, leaving its gain at a more modest +8.6% YoY. After little change in the week to 7 April, the YoY change slipped back into negative territory at -0.4%.

From a global macro perspective, markets were grappling with what was being seen as an ‘asymmetric war’, where the US and Israel may wield overwhelming air power, but where the path to a decisive victory was unclear.

Meanwhile, mere survival alone for the Iranian regime might be seen as victory for Iran. This may well be achieved by waging an economic war through limiting access to the Strait of Hormuz and attacking oil and gas infrastructure in the Gulf states.

After the initial shock, equity markets spent the month oscillating up and down in relation to the news flow, and US President Donald Trump’s wild swings between threats to either totally obliterate Iran’s infrastructure or do a deal to end the conflict.

Traders were looking for ways to make a so-called ‘TACO trade’ on the basis that there might be a TACO (Trump Always Chickens Out) moment, similar to last year when he backed down from his initial ‘Liberation Day’ threats on tariffs.

The difficulty this time, as one trader quipped, is that “it takes two to TACO” and there was little immediate sign that a theocratic regime in Tehran would play ball.

By the time of writing, this had played out into the two-week ceasefire announced on 7 April, allowing for a potential reopening of the Strait of Hormuz while negotiations on a more permanent deal continued.

Nevertheless, the conflict had already caused major effects in energy markets, with crude oil shooting up to $120 per barrel at various points over the month, before falling abruptly back below $100 after the ceasefire was announced, albeit still way above the $70 or so it was before the conflict.

While crude oil prices escalated, there were even more dramatic effects on liquefied natural gas (LNG), with Qatar, one of the world’s largest suppliers, effectively blocked from exporting.

Most importantly for air freight, the effects were also very dramatic on jet fuel prices. Although crude oil was up +59.9% over the month to 27 March, according to Platts data, jet fuel was up +103.9% over the same period due to a more than three-fold rise in the width of the so-called ‘crack spread’ between crude and jet prices.

In normal times, locations in the Gulf enjoy a natural advantage in oil products like jet fuel, given the cheap and plentiful supply of the raw ingredient. This is one reason Gulf-based airlines, such as Emirates, Etihad and Qatar, have become such big players in cargo, alongside their ideal geographical location about halfway between Europe and Asia.

At one stage in early March, the air space closures in the Gulf were knocking out some 15-20% of total global air cargo capacity, sources estimated, alongside that rising impact on jet fuel prices. By the end of the month, some of the lost capacity was coming back on stream, with one leading freight forwarder in Hong Kong estimating overall capacity was down only about 5% globally.

Nevertheless, there were still very significant headaches over routings given the ongoing lack of passenger (and thus bellyhold) traffic through the Middle East. “Normally we would do all our ULDs (unit load devices) for Europe via the Middle East and break them down for different final destinations there,” one trader told TAC. “Now there is less flexibility, transit is longer and costs are much higher.”

Another source suggested that shippers were finding new ways to move things to Europe through alternative routes, such as sea-air solutions via Singapore or Colombo or even across the Pacific to the US and then by air. Other solutions were being found overland by rail or truck to Central Asia – and then by air.

However, with every solution, one thing seemed clear. It was costing a lot more, with prices rising further whichever way you went, leading to quotes for jet fuel rates sometimes 4x or 5x what they were a month earlier. That was if you could get it,  with reports from some locations of jet fuel running out or not available at all.

A swift and decisive resolution to the conflict may  start to put the market back on the road to normal. However, even with that, sources expect significant disruption – and thus higher rates – for quite some time ahead.

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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