News #125 - Air freight rates change little in July amid reshuffling supply chains and capacity shifts

Global air freight rates remained largely unchanged in July, with the Baltic Air Freight Index (BAI00), compiled by TAC Data, edging up by +1.5% over the four weeks ending 4 August. This leaves the index -1.8% lower year-on-year.

This stability aligns with seasonal patterns, as July typically marks the air cargo industry’s “low season.” Passenger airlines add bellyhold capacity during peak summer travel, particularly on Transatlantic routes, helping to ease rate pressures.

While the extreme uncertainties over tariffs and trade conditions that marked early 2025 have eased, industry sources report ongoing adjustments in both shipper supply chain strategies and carrier capacity allocation across trade lanes.

Shippers are proactively adapting to upcoming policy changes, notably the removal of the de minimis exemption for all inbound U.S. parcels from 29 August. This has contributed to variations in pricing across lanes and origin points. However, on the busiest corridors—China to the U.S. and China to Europe—rates moved only marginally. Newly launched public BAI Spot rates from Hong Kong in July saw minimal change.

• Hong Kong to Europe: down from HK$33.88/kg (30 June) to HK$32.62/kg (31 July)
• Hong Kong to U.S. East Coast: up from HK$36.38/kg to HK$37.34/kg
• Hong Kong to U.S. West Coast: almost flat, from HK$35.81/kg to HK$35.46/kg

The BAI30 (Hong Kong outbound average rates across spot and forward contracts) slipped -0.1% MoM, down -8.2% YoY.
The BAI80 (Shanghai outbound) rose +0.1% MoM, narrowing its annual decline to -3.2% YoY.

Some market participants attribute relative resilience in China’s rates to pre–de minimis rush shipments and ongoing U.S.–China tariff risks. Others cite reduced capacity as carriers redeploy aircraft to Southeast Asian lanes—particularly Vietnam, Thailand, and Malaysia.

Capacity tracking has become more precise thanks to TAC Space’s upgraded monitoring tool, which now provides daily, multi-leg route insights and is already in use by major shippers, especially for Transpacific services.

The BAI Spot methodology, tracking marginal rate changes, is also expanding. Trials have begun in India and South Korea, with interest emerging for other markets.

From other key global hubs, trends were similarly steady:

• Frankfurt (BAI20): down -1.2% MoM, still +4.9% YoY, as Transatlantic gains offset other declines.
• London (BAI40): up +2.8% MoM and +28.3% YoY, despite mid-month volatility.
• Chicago (BAI50): surged +18.7% MoM, reversing earlier-year losses, now +10.2% YoY.

On the macroeconomic front, global equity markets rose steadily in July as early-year political uncertainty faded. Despite renewed threats from U.S. President Donald Trump of higher tariffs, proposed rates were less severe than his earlier “Liberation Day” announcement.

The S&P 500 closed July firmly in positive territory, up ~17% YoY, driven largely by AI-led tech growth. U.S. AI leaders—Nvidia, AMD, Microsoft—rebounded strongly after early-year competitive pressures from China’s Deepseek.

Germany’s DAX index remains the world’s strongest major equity performer, up ~30% YoY, fueled by defense and infrastructure investments. This was further supported by an EU–U.S. tariff agreement setting a 15% rate on European goods—seen as a moderate rather than damaging outcome.

Tariff threats of 30%+ persist against several other economies, including Switzerland and South Africa. Nonetheless, Transatlantic air cargo rates remain firm, albeit still well below last winter’s peak season levels.

Source: https://www.balticexchange.com/en/news-and-events/news/guest-column/2025/Air-freight-rates-change-little-in-July-amid-reshuffling-supply-chains-and-capacity-shifts.html

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