After a strong start to 2025, global spot prices for air freight rates have cooled and are now hovering close to, or slightly below, last year’s levels on many lanes.
TAC’s global Baltic Air Freight Index edged up just +1.5% through early August, but today sits at approximately 1.8% lower year over year, signaling a market that’s neither collapsing nor roaring - just drifting near 2024 price points.
TAC Index WorldACD’s June data showed +2% month-on-month but ~1% below June 2024, again underscoring the “sideways” theme.
Demand is resilient but not runaway.
Industry demand expanded solidly through H1 (e.g., +5.8% YoY in April, per IATA) and e-commerce remains a locomotive. Yet most analysts see 2025 full-year growth in the low single digits (roughly +4 to 6%), enough to support load factors but not necessarily to lift rates broadly without capacity constraints.
Capacity keeps pace.
Passenger traffic keeps pouring belly space back into the market. As long as that continues into the Northern winter schedule, supply should remain adequate - limiting rate upside outside of discrete surges.
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IATA’s early-year read on yields showed a March rebound (+3.8% YoY) helped by stronger load factors and softer fuel, but not the kind of tightness that forces a sustained price spike.
Middle East air freight rates
Through the remainder of 2025, Middle Eastern air freight rates are most likely to either soften slightly or remain flat, especially given current demand and capacity dynamics.
Expect short-duration rate spikes around any geopolitical or routing disruptions but these are unlikely to sustain unless structural shifts occur. If global trade or consumer sentiment picks up, bumping up demand, rates could stabilize modestly.
Policy shocks = short spikes, then digestion.
Two policy moves defined pricing swings in 2025: new US tariff rounds and the removal of the de minimis exemption on low-value parcels from China.
Ahead of tariff dates, US-bound lanes saw sharp rate run-ups (eg, ex-China to US up 37% in March), but the structural effect of de minimis removal is to cool small-parcel air volumes later in the year - especially ex-China - reducing upward pressure on rates after the rush.
Peak season likely “normal-ish,” not 2020–22 style.
Xeneta frames 2025 with “cautious optimism”: healthy e-commerce, but manufacturing remains subdued and geopolitics can whipsaw lanes. Expect a seasonal Q4 uplift, yet not a runaway peak. This mirrors the industry’s stabilized peak in late 2024, when proactive capacity management kept the climb contained.
Regional nuances to watch
Asia-Middle East to US: Most sensitive to US trade policy. Expect episodic pre-tariff surges followed by softer patches as consumer imports rebalance and e-commerce parcel flows adjust to higher landed costs. Net-net: rates remain range-bound with periodic bursts, not a steady climb.
Asia-Middle East to Europe: Still supported by modal shifts when ocean reliability wobbles (like Red Sea–related diversions), but less frothy than late-2023/2024. Rates likely remain flat or move mildly to softer unless ocean disruptions re-intensify.
Europe/N. America intra-regional: Stable, with mild fluctuations tied to belly capacity growth and inventory cycles. Don’t expect structural tightness.
What could change the trajectory
Bullish shocks: A renewed ocean disruption (e.g., extended reroutings or port bottlenecks), a major consumer electronics launch spike, or a fuel price shock that tightens effective capacity (payload constraints, network adjustments) could lift rates into Q4. (Inference grounded in 2020–24 pattern and current market commentary.)
Bearish shocks: A deeper pullback in cross-border e-commerce to the U.S. post-de minimis, weaker consumer demand, or faster-than-expected belly growth would cap or compress rates.
Outlook
Global air freight rates are most likely to be flat to slightly lower versus late 2024 through the remainder of 2025, with lane-specific surges around policy deadlines and any fresh ocean reliability hiccups. Expect a “normal” Q4 peak - noticeable but disciplined.
Read More: Middle East 2nd Quarter Air Cargo Demand Weakens Amid Rising Capacity