BAI Index January 2025: Air freight market braces for AI shocks, de minimis crackdowns and tariff standoffs

Despite a more positive and firmer period for the air cargo market, concerns remain that recent growth rates are likely to fall. With changes coming from the new US administration and evolving technology and energy markets in the not too distant future, it appears as though many in the air freight sector are beginning to prepare to absorb the short-term costs.
Air freight rates declined in the first half of January – as they usually do after the end of peak season – before rebounding a little, particularly on the busiest lanes out of Asia, in the runup to Chinese New Year (CNY).
The global Baltic Air Freight Index (BAI00) calculated by TAC Data fell -14.6% over four weeks to 27 January, although it was still ahead by +8.7% from 12 months earlier, with sources citing a continued firm tone to the market. Following another quiet week through CNY to 2 February, the index was still ahead by +6.7% year on year (YoY).
After a modest rise during the weeks both before and through CNY, the index of outbound routes from Hong Kong (BAI30) had shed -7.2% over the four weeks to 2 February, leaving it ahead by +7.2% YoY.
Outbound Shanghai (BAI80) saw a slightly bigger drop of -12.9% month on month (MoM) to the same date, leaving it narrowly up +1.0% YoY.
From major outbound hubs in other regions, the market was also firmer than a year before. Out of Europe, the index of outbound routes from Frankfurt (BAI20) shed some -17.6% MoM to 2 February, but still comfortably ahead by +18.0% YoY, while outbound London Heathrow (BAI40) was up +3.1% MoM and even further ahead YoY by +23.7%.
From the Americas, the index of outbound routes from Chicago (BAI50) slipped -14.0% MoM but was also still a little higher YoY at +5.1%.
The firmer tone of the market reflects a significant rise in cargo volumes over the past year, which the market accommodated without rates escalating too severely – partly by adding extra capacity. Hong Kong, which remains the world’s biggest airport by cargo volume, handled some 4.9 million tonnes in 2024 – an increase of +14% YoY, boosted by more bellyhold capacity made available through rising passenger traffic.
The firmer tone of the market reflects a significant rise in cargo volumes over the past year, which the market accommodated without rates escalating too severely – partly by adding extra capacity. Hong Kong, which remains the world’s biggest airport by cargo volume, handled some 4.9 million tonnes in 2024 – an increase of +14% YoY, boosted by more bellyhold capacity made available through rising passenger traffic.
Shanghai’s Pudong airport also registered an increase in cargo volumes of +9% YoY, taking its total up to 3.4 million tonnes.
One of the biggest gainers by volume in 2024 was Changi airport in Singapore, which saw a rise of +14.6% YoY, taking its total to just under 2 million tonnes, boosted partly by extra Sea-Air activity to evade disruption in the Red Sea, sources said.
Sources were also reporting big increases in volume from other locations out of Asia, including from India, Vietnam, and Thailand, as shippers continued to diversify supply chains.
Dimerco, a big international freight forwarder, highlighted a surge in air cargo volume out of Taiwan, which is a major supplier of semiconductors including AI chips and AI server stacks.
Cargo volumes from Europe were also rising last year. Frankfurt saw a +6.2% increase, taking its total up to 2.1 million tonnes, while London Heathrow rose +10.4% taking its total to nearly 1.6 million tonnes to record its best year since 2019.
Other big airports in Europe also registered increases, with Schiphol in Amsterdam rising +8% YoY to take its cargo volume to 1.5 million tonnes. One of the biggest gainers was Liege in Belgium, which saw a rise of +15.6% YoY pushing its volume up to 1.2 million tonnes.
The healthy volume numbers underpin what has been an optimistic tone in the sector, although with expectations that such high recent growth rates must surely fall at some point. Worries about the impact of higher tariffs and potential trade wars following the re-election of US President Donald Trump also remain at the forefront of the air cargo sector.
One of the first moves of the Trump administration, in addition to announcing tariffs on goods from Canada, Mexico, and China, was to suspend access to the Section 321 customs de minimis entry process for small shipments of under $800 from those countries. Such shipments are often e-commerce packages, which have been the biggest driver of air cargo market growth in the past year or so – led by Chinese shippers like Temu and Shein – giving rise to fears that rates could suddenly drop.
One of the first moves of the Trump administration, in addition to announcing tariffs on goods from Canada, Mexico, and China, was to suspend access to the Section 321 customs de minimis entry process for small shipments of under $800 from those countries. Such shipments are often e-commerce packages, which have been the biggest driver of air cargo market growth in the past year or so – led by Chinese shippers like Temu and Shein – giving rise to fears that rates could suddenly drop.
However, a crackdown on de minimis was not completely unexpected as it had already attracted bipartisan support in the US Congress, so seemed likely to go through whoever was President. E-commerce players have had some time to plan for it, with sources optimistic the market can absorb some higher costs, if at the expense of higher inflation in the United States.
While waiting to see which new tariffs would actually be pushed through, markets have continued to focus on various investment themes, not all of which might chime with the notion of a new era of US dominance.
The urgent need for more electricity and infrastructure to support it – driven to a significant extent by the rise of AI – is seen as playing particularly well for Schneider Electric, for instance – a French-based company that saw its share price surge in the past year (until a sell-off in late January).
Likewise, the use of GLP-1 drugs developed by the Danish corporation Novo Nordisk would appear to have enormous potential for the US market. The same drugs are thought to promise various additional benefits from improved kidney function to cardiac health to protection against dementia.
As a result, there appears to be plenty of potential for sales in the US so long as they do not get embroiled in a trade war between the US and the EU.
The biggest theme in the market for some time has been AI, which is viewed as a massive new driver for the whole economy.
Until recently, this has been seen as an exclusive preserve of the US, led by AI chip maker Nvidia and its big clients among the US tech titans. That was until the sudden emergence last month of DeepSeek, backed by the hitherto little-known Chinese hedge fund High-Flyer, led by Liang Wenfeng.
The market’s sudden realisation that DeepSeek may offer highly effective and much lower-cost competition sparked a dizzying fall in the Nvidia share price in late January.
Another area attracting positive attention from investors is aerospace, with some foreseeing an end to a ‘perfect storm’, particularly for Boeing and, to a lesser extent, Airbus, with long-running supply chain issues finally starting to get resolved.
Another major theme for Trump has been ‘drill, baby, drill’ as the US looks to boost its own energy production to cut prices and drive growth. This mantra conveniently ignores the fact that oil production in the US already jumped 1.9 million barrels a day during the Biden Administration – and, given the high marginal cost of production in the US, seems unlikely to grow faster if prices do indeed fall.
Of most interest to the aviation sector, oil prices began the year on an uptick. Jet fuel prices jumped +6.2% over the month to 31 January, according to Platt’s data, although it had fallen again by early February.
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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