Global airfreight rates continued their upward trajectory last week as capacity disruptions and fuel cost pressures linked to the Middle East conflict fed directly into pricing dynamics.
Latest figures from TAC Index show the global Baltic Air Freight Index (BAI00) rising +2.6 percent in the week to March 16. That leaves the index marginally below last year’s level at -0.7 percent year-on-year, but the weekly momentum points to a market being reshaped by external shocks rather than underlying demand weakness.
The key drivers are increasingly visible. Airspace closures and rerouting are constraining available lift on certain corridors, while a sharp widening in the crack spread between crude oil and jet fuel is pushing operating costs higher. Jet fuel prices are now close to double year-ago levels, with the expectation that further fuel surcharges have yet to be fully reflected in current rates.
Against that backdrop, rate development across lanes is becoming more uneven.
Out of Asia, pricing remained firm overall, with notable strength on Europe-bound corridors. Spot rates from Hong Kong to Europe rose steadily through the week, while broader outbound China pricing edged higher to both Europe and the US. The Hong Kong index (BAI30) increased +1.2 percent week-on-week, though still sits at -1.3 percent year-on-year. Shanghai (BAI80) posted a stronger +4.9 percent weekly gain, narrowing its annual decline to -1.7 percent.
Elsewhere in the region, gains were more pronounced. Vietnam saw particularly sharp increases, especially on lanes into Europe, with additional upward pressure evident from Seoul and Taiwan. Bangkok stood out as an exception, where rates declined week-on-week, albeit remaining higher year-on-year on both Europe and US routes.
The most acute shift, however, was out of India. Rates surged by around +30 percent week-on-week to both Europe and the US, reflecting a significant tightening in capacity linked to the wider disruption across Middle Eastern airspace.
European markets also registered upward pressure across most outbound lanes. Rates increased on services to the UAE—unsurprising given the loss of capacity and airspace constraints—as well as to China, Japan, India, Australia and Brazil. By contrast, Transatlantic pricing softened slightly, with declines on routes to the US, alongside weaker levels to Mexico and South Africa.
The Frankfurt index (BAI20) rose +7.8 percent week-on-week, trimming its year-on-year decline to -5.1 percent. London Heathrow (BAI40), after a run of strong gains, slipped -4.3 percent on the week, though it remains firmly ahead at +21.9 percent year-on-year.
From the US, rate patterns were more mixed. Pricing strengthened on Transatlantic lanes into Europe and on services to South America, though gains were less evident on key southbound routes from Miami. At the same time, rates to China and other parts of Asia moved lower.
Chicago (BAI50) recorded a +3.9 percent week-on-week increase, reducing its year-on-year decline to -7.8 percent. Meanwhile, rates from Mexico to Europe rose sharply over the week, returning those lanes to positive territory on an annual basis.
Taken together, the latest data points to a market entering a more volatile phase. Capacity dislocation, rather than demand, is increasingly dictating pricing, with fuel costs emerging as a second-order pressure that has yet to be fully passed through. Further rate increases look likely in the near term as carriers adjust to both.
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Author: Edward Hardy
