Tariffs and Capacity Strains Reshape Global Air Cargo

As Q2 2025 begins, the global air cargo market is navigating a complex landscape shaped by tariffs, capacity constraints, and regional divergences. The Baltic Air Freight Index (BAI00) dipped slightly by 1.07% from February to March, reflecting a market in flux. Tariff-driven urgency and a tight freighter supply system are key factors influencing current dynamics.

The Shanghai market stood out in March, with BAI80 (Shanghai Outbound) rising by 2.94% due to strong gains on routes to North America and Europe. This was driven by frontloading activity ahead of US tariff changes. In contrast, European export hubs like Frankfurt and London-Heathrow experienced rate declines, particularly on US-bound corridors.

Freighter supply constraints are becoming acute, with production delays and limited conversion pipelines. Boeing’s 777-8F and Airbus’s A350F delays have left operators reliant on older aircraft, such as the 747-400Fs and MD-11Fs, to bridge the gap until new models arrive.

Tariff uncertainties have led to a pull-forward in demand, with carriers and shippers frontloading cargo ahead of the 2 April tariff hikes. This has spiked spot demand for freighters, especially from China, Vietnam, and Taiwan to the US. However, forwarders are reallocating volumes to more stable corridors as policy details shift.

China-US Corridor Tariffs

Regionally, the China–US corridor showed cautious stabilization, with BAI82 (Shanghai to North America) rising 3.00% month-on-month. Southeast Asia gained momentum, with Singapore-origin lanes posting strong gains. Meanwhile, transatlantic routes showed mixed signals, with declines in Europe–US lanes.

Despite some short-term excess capacity, particularly on transpacific routes, the overall freighter supply remains tight. Narrowbody freighters face supply constraints due to high conversion costs and engine shortages. The delay in new widebody freighters has forced carriers to extend the life of aging aircraft.

Looking ahead, Q2 may bring more volatility if new tariffs or retaliatory measures come into force. Cargo Facts Consulting forecasts a 2.1% annual growth in the global freighter fleet to 3,874 units by 2044, but nearly 60% of these deliveries will replace aging aircraft. Without accelerated production or conversion volume, fleet expansion may not match shifting trade requirements.

In this climate, carriers and forwarders are leaning into short-term flexibility, ACMI lift, and opportunistic chartering while long-term planning remains on hold. The message from March: capacity is still constrained, but demand isn’t running away either.

Hong Kong’s air cargo market has shown resilience, with rates maintaining strength despite market uncertainties. Rates on key routes have sustained year-on-year increases, with shipments from Hong Kong to North America up by more than 15% compared to 2023. Seasonal factors, such as the Lunar New Year, have influenced rate movements, but demand is rebounding post-holiday.

Overall, the global air cargo market is adapting to a challenging environment, with stakeholders remaining watchful of ongoing trade policy developments and their potential long-term impact on airfreight flows.