Overview of Market Conditions

January marked a period of "growth normalisation" following a resilient 2025 as the global air cargo industry dealt with the dual forces of seasonal cooling and intense geopolitical volatility. 

The Baltic Air Freight Index (BAI00) fell 15.76% month-over-month, reflecting the typical post-holiday slump. However, this headline decline shows significant regional divergence. While Shanghai (BAI80) dropped 23.73% as e-commerce flows keep adjusting to new trade realities, Frankfurt (BAI20) surged 8.48%, driven by a massive 24.09% spike in rates to the United States (BAI24).

The Baltic Air Freight Index (BAI00) fell 15.76% month-over-month, reflecting the typical post-holiday slump. However, this headline decline shows significant regional divergence. While Shanghai (BAI80) dropped 23.73% as e-commerce flows keep adjusting to new trade realities, Frankfurt (BAI20) surged 8.48%, driven by a massive 24.09% spike in rates to the United States (BAI24). This could suggest a frantic "front-loading" of cargo ahead of the implementation of proposed US tariffs on 1 February linked to the Greenland dispute.

Four Key Drivers of Market Dynamics

The "Greenland Tariff" and de minimis impact: The landscape of 2026 is being defined by a new round of trade friction. President Trump’s proposed 10% tariff on eight nations (including Germany, the United Kingdom, and France) starting 1 February triggered a January rush, particularly on the Frankfurt–USA lane. Simultaneously, the removal of the US de minimis exemption has fundamentally impacted Asian flows. While China-to-US volumes via Hong Kong and Shanghai softened (BAI34 down 15.26%), Southeast Asian hubs like Vietnam and Thailand saw tonnages to the US surge by 50%, as shippers bypassed traditional Chinese gateways to mitigate tariff exposure.

Sea to air shift via the Red Sea: Predictability remains uncertain for supply chains. CMA CGM’s recent U-turn, reversing the return of its FAL and MEX services to the Suez Canal, has battered shipper confidence in ocean schedule reliability. As container lines revert to the longer Cape of Good Hope route, the resulting 10–14 day delay continues to provide a "safety net" for air cargo demand.

The persistent aircraft supply crunch:

Capacity is no longer just about demand; it is about physical availability. The global aircraft order backlog, which includes passenger and freighter aircraft, has expanded to more than 17,000 units, roughly 60% of the active fleet.

Capacity is no longer just about demand; it is about physical availability. The global aircraft order backlog, which includes passenger and freighter aircraft, has expanded to more than 17,000 units, roughly 60% of the active fleet. With a delivery timeline stretching into the 2030s, passenger airlines are holding onto older widebodies longer. This has tightened the supply of feedstock for freighter conversions, pushing the average age of a cargo widebody to 19.8 years. The result is a high-cost environment where airlines spent an extra $4.2 billion on fuel in 2025 just to keep less efficient, older planes in the air.

Strategic freighter redeployment: Freighter operators are voting with their wings, shifting capacity away from the declining Transpacific market. Capacity from Asia to North America fell 9% in January, while Asia-to-Europe freighter capacity surged by more than 30%, according to the latest data by Cargo Facts Consulting. This shift reflects the 2025 trend where Asia-Europe became the industry's star performer, recording 32 consecutive months of growth. Carriers are chasing the more stable yields of the Asia-Europe e-commerce and high-tech corridors over the volatile, tariff-heavy US lanes.

Regional and Route-Specific Insights

  • Asia–Europe: tonnage from Asia Pacific to Europe rose 19% year-on-year (YoY) in mid-January. Hong Kong to Europe (BAI31) saw rates ease by 19.06% last month as capacity flooded the lane, but demand remains robust for high-fashion and electronics.
  • Asia–North America: while the Hong Kong Outbound Index (BAI30) fell 16.67%, Southeast Asian origins are booming. Singapore's outbound index (BAI60) was the exception for this global trend, gaining 19.35% as it cements its status as a primary "neutral" hub for US-bound cargo.
  • Europe–North America: the Transatlantic market saw the most dramatic price action. Frankfurt to USA (BAI24) hit a 24.09% increase, while London Heathrow (BAI40) rates climbed 18.4% in a single week in mid-January. Shippers are clearly racing to beat the 1 February tariff deadline.
  • North America Outbound: there remained continued softness across North American lanes in January. Chicago O’Hare (BAI50) fell 14.76% in January and remains 30.1% lower YoY, reflecting the broader 1.3% decline in North American carrier demand. North America was the only region to post a full-year contraction in 2025.

Freighter Market and Supply-Side Trends

The secondary market for freighters is under extreme pressure. The half-life value of a 777-300ER has soared to about $48 million (up from $28 million in 2022), making the math for cargo conversions increasingly difficult for mid-tier operators. This shortage is helping sustain rate levels but is also driving up maintenance costs, which IATA estimates rose by $3.1 billion last year.

Global capacity rose 4% in early January, primarily driven by a 6% increase in bellyhold space as passenger networks continued to expand. However, this bellyhold growth is unevenly distributed, favouring Asia-Europe and intra-Asia routes while leaving Transpacific freighter operators to face contracting margins and high fuel burn on ageing fleets.

Global capacity rose 4% in early January, primarily driven by a 6% increase in bellyhold space as passenger networks continued to expand. However, this bellyhold growth is unevenly distributed, favouring Asia-Europe and intra-Asia routes while leaving Transpacific freighter operators to face contracting margins and high fuel burn on ageing fleets.

2026 Outlook: Moderation Amid Volatility

Cargo Facts Consulting projects air cargo demand to grow by 2.8% in 2026, a slight drop from the 3.4% seen in 2025. The immediate focus is on 17 February (Lunar New Year), which will likely cause a late-February dip in Asian tonnages. However, the true wild card remains the increase in global tariffs. For now, carriers are prioritising network flexibility over aggressive expansion, keeping a wary eye on the 11-year aircraft delivery backlog that continues to floor the market's capacity.

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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