Air freight rates dropped a little in February, as they often do in the period during and just after Chinese New Year, but remained comfortably ahead of last year’s levels.

The global Baltic Air Freight Index (BAI00), calculated by TAC Data, fell -5.4% in the four weeks to 3 March, but remained ahead by some +10.1% from 12 months before.

The data is interesting given huge uncertainties about future levels of global trade, most notably from the United States, including stiff new tariffs planned on imported goods imported and an end proposed to the so-called ‘de minimis’ exemption for parcels worth less than $800. 

The uncertainty about the end of de minimis, which was announced and then rapidly postponed as US customs ports became overwhelmed, led to some cancellations of e-commerce flights, sources reported. This followed a rush of ocean container shipping activity, with imports rising 41% in January at the major US West Coast port at Long Beach as shippers rushed to move goods ahead of new requirements coming in.

Container shipping rates have since fallen sharply, with further uncertainty created by a plan announced through the US Trade Representative to impose port fees of $1 million-plus per ship per visit for any vessel manufactured in China arriving at US ports. Some view this as potentially good news for air freight rates, as long as shippers then decide to move more volumes via air cargo instead.

During February, however, air cargo sources reported spot rates were continuing to trend lower on the big lanes out of China, although that was not unusual for the time of year. Sources said the market had been weighed down a bit during February by downward pressures due to the issues with the proposed changes on de minimis, although this seemed to be abating as we entered March.

During February, however, air cargo sources reported spot rates were continuing to trend lower on the big lanes out of China, although that was not unusual for the time of year. Sources said the market had been weighed down a bit during February by downward pressures due to the issues with the proposed changes on de minimis, although this seemed to be abating as we entered March.

The index of outbound routes from Hong Kong (BAI30) fell -6.9% in the four weeks to 3 March - but was still well above levels of the year previously with rates higher by some +13.4% year on year (YoY). Outbound Shanghai (BAI80) was lower month on month (MoM) by -5.6%, but also comfortably higher YoY by +12.3%.

Out of Europe, rates over the month were also quite firm, with the index of outbound routes from Frankfurt (BAI20) almost unchanged at -0.6% MoM, remaining in positive territory YoY by +15.3%. Outbound London Heathrow (BAI40) was lower MoM by -17.3%, but ahead YoY by +5.4%.

From the Americas, the index of outbound routes from Chicago (BAI50) edged up +0.3% MoM, leaving it slightly lower by -4.0% YoY.

Markets spent the month digesting a barrage of announcements on trade issues from the newly re-elected US President Donald Trump, trying to work out what might be mere threats for negotiating purposes and what may be serious, as well as what the effects may be. 

Some commentators fretted that big tariffs would lead inevitably to retaliation and trade wars, hitting global trade and growth, with the impact disproportionately outside the US on more open trading economies such as in Europe and the United Kingdom, where trade is a much higher proportion of total economic activity. 

Others were focused more narrowly on how an end to the de minimis exemption alone might have a massive effect on the way trade is conducted, with supply chains altered to accommodate onerous new reporting requirements and new fees to be paid.

Within the cargo industry itself, however, leading players continue to query how much of a change will be forthcoming, given the huge logistical challenges in trying to implement a new system of checking every single package, plus the potential impact on inflation in the US. On the wider threat of a potential trade war, many market players remain optimistic that, after both China and the US have suffered to some extent from the effects of increasingly tense rivalry in recent years, perhaps a deal might be done after all, not least given Trump’s vaunted credentials as a dealmaker.

Within the cargo industry itself, however, leading players continue to query how much of a change will be forthcoming, given the huge logistical challenges in trying to implement a new system of checking every single package, plus the potential impact on inflation in the US. On the wider threat of a potential trade war, many market players remain optimistic that, after both China and the US have suffered to some extent from the effects of increasingly tense rivalry in recent years, perhaps a deal might be done after all, not least given Trump’s vaunted credentials as a dealmaker.

In the short term, perhaps the most surprising development in markets so far in 2025 has been the largely unexpected strength in European equities, which started the year with stronger gains than the US. Perhaps this simply reflects the fact that US equity values were already relatively high, trading at historically high price-earnings ratios prior to the new presidential term starting.

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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