Air cargo has cleared its old ceiling, and fuel is holding the floor

There is a number in this week's air freight data that deserves more attention than the headline index: the Baltic Air Freight Index, compiled by TAC Index, rose 4.7 per cent in the week to 19 October and stood 26.4 per cent above a year earlier. That places it above the highest point reached in each of the last two peak seasons. Those peaks normally arrive just before Thanksgiving and Christmas. This one is early, and it is being built on a different foundation.

Start with the fuel. IATA's jet fuel monitor has prices up 113.7 per cent year on year, and TAC's own language is unusually blunt — the surge will "put a hard floor under rates at which airlines will carry cargo". That matters for anyone modelling a January correction. When the cost of the flight itself has doubled, a carrier has little reason to chase marginal tonnage with discounts. Rates may soften at the margin; they are unlikely to collapse.

Demand is doing the rest, but selectively. Freightos put China to North America up 19 per cent in a week to $6.88 per kilo, with its global benchmark 30 per cent above last year. WorldACD recorded a global spot rate of $3.55 per kilo in the week of 5 October, up 34 per cent year on year. Between 12 and 18 October chargeable weight and available capacity each rose 2 per cent, a rebound after two weeks of contraction. Asia Pacific volumes ran 10 per cent higher week on week to the United States and 13 per cent to Europe, with Hong Kong to the US up 27 per cent and mainland China to the US up 18 per cent.

Year on year, though, the two directions have separated. Asia Pacific to the US volumes are up 14 per cent and rates up 41 per cent. Asia Pacific to Europe volumes are still 16 per cent below last year despite a post-Golden Week recovery, and rates added just 1 per cent on the week. WorldACD attributes part of that gap to European Union measures aimed at low-value ecommerce imports. The result is a market where "global rates are up" is technically true and practically misleading: a Frankfurt or Heathrow shipper and a Chicago shipper are living in different markets this quarter.

Capacity is the third leg. Gulf capacity sits 20 per cent below late-February levels, a consequence of rerouted and suspended services through the Middle East, and global capacity slipped 1 per cent in the latest week. Xeneta's September figures — volumes plus 6 per cent, capacity plus 2 per cent — describe a gap that has not closed. Tonnage has fallen for three consecutive weeks as rates climbed, but remains 9 per cent above last year, which is the signature of a peak that is flattening rather than breaking.

Practically, this argues for locking Asia-US capacity into early November rather than waiting for a dip that fuel costs will not permit. Europe is the softer side of the market and worth negotiating, but not worth gambling a delivery date on. For time-critical freight that would otherwise fly, price sea-air routings against direct lift while trans-Pacific belly space stays tight. Yufeng International Logistics combines air and sea-air options on its USA routes; sales@ruixincargo.com for lane-level quotes.

Sources: Based on reporting by The Conveyor citing Air Cargo News and TAC Index, Breakbulk News citing WorldACD and IATA's Jet Fuel Price Monitor, and Freightos weekly air index updates.