Baltic Air Freight Index up 0.9% to 20.9% above 2025 as jet fuel doubles

Start with the structure of the move, because it tells you where the pressure is coming from. The index is up 0.9 percent on the week, which is small, but it is up 20.9 percent on the year. A weekly move of under one percent is noise. A yearly move of 20.9 percent is a repricing. If you have not raised your air freight budget since last year, you are already 20.9 percent short on the assumption, and the fuel number explains why the carriers are not going to simply give it back. Jet fuel up 116.5 percent is the highest single input increase in the air supply chain, and unlike a labour cost it can move within a week, which is why the carriers index to it rather than absorb it.

Now split it by lane, because the average hides the real story. China to Europe firmed week on week, and the reason is the end of the EU de minimis exemption for small parcels. The ecommerce volume that used to move on postal and low value channels has been pushed toward commercial air freight, so a lane that had been losing volume is getting it back. China to US slipped slightly on the week but stayed well above 2025. Shanghai outbound rose 0.6 percent on the week and 19.7 percent on the year, and the Hong Kong all in index rose 0.3 percent on the week and 19.6 percent on the year. Those two numbers, 19.7 and 19.6, are the ones I would put in front of my finance team, because they are the lanes I actually use.

Let me put a cost figure on it, because a percentage alone never convinces anyone. Assume you move 20 tonnes a month from Shanghai to Europe, which is a normal ecommerce and apparel supplement volume. If the index is up 19.7 percent on the year and the current average rate is around 2.37 dollars per kilo, that annual increase is roughly 0.39 dollars per kilo. On 20,000 kilos a month that is 7,800 dollars a month, or 93,600 dollars a year of extra air cost. Now hold that next to the ocean alternative. On the same volume, if ocean is at 2,313 dollars per TEU on the Europe lane and you can fit roughly 12 tonnes of light cargo in a 40 foot container, 20 tonnes is under two containers, so the ocean cost is under 5,000 dollars. The air premium is now more than 90,000 dollars a year, and that is the number that should drive your channel decision, not the weekly index move.

The fuel detail deserves its own paragraph because it changes how you should contract. When jet fuel is up 116.5 percent year on year, the carrier fuel surcharge is doing most of the work in your invoice, and the base rate is a smaller share than it was. That matters at renewal, because a rate negotiation that wins 5 percent off the base rate wins a much smaller share of the total than it did two years ago. If fuel is 40 percent of your landed air cost, a 5 percent base rate cut is 3 percent of the total. I have watched shippers spend weeks arguing about base rates while the fuel surcharge mechanism passed through the real increase without a conversation. So before you negotiate anything, get the fuel surcharge formula in writing, and check the trigger points and the index it references, because that formula is where your money actually goes.

On capacity, the peak season is tightening and this is the part that costs you more than price. When space gets tight, the carriers prioritise the accounts with commitments and the customers with less awkward cargo. If you are a shipper with a small regular volume and unusual dimensions, you are the first to get squeezed, and the cost of getting squeezed is not a higher rate, it is a shipment that does not move. So the practical value of your booking behaviour goes up right now. I would place my space requests further ahead than usual, I would confirm the acceptance of the actual dimensions and weight before cutoff, and I would get a written confirmation of the booked space rather than a verbal yes, because in a tight market a verbal yes is worth nothing.

There is a comparison that changes how people think about air freight, which is the relationship between the air index and the container index on the same trade. Air is up roughly 20 percent on the year, and ocean on the Europe lane just fell to 2,313 dollars per TEU, which is a 4.61 percent weekly drop. The two modes are moving in opposite directions. That means the air premium on your Europe cargo is wider today than it was a year ago, and any product where air was borderline viable last year needs a fresh look, because borderline has become negative. On my own desk, the rule I use is simple. If the air premium per unit is more than 8 percent of the selling price, the item should not fly unless it is perishable or contractual. Running that rule across a manifest at 19.7 percent annual rate growth usually moves a meaningful share of volume back to the water.

On the fuel surcharge specifically, there is a practical test I would run this week, and it takes about an hour. Take your last three air invoices and separate the base freight from the fuel surcharge, then express the fuel surcharge as a percentage of the total. If that percentage has grown compared to the same month last year, the mechanism is passing the fuel increase through, and the number is now the largest single component of your air cost. That is not a problem to complain about, it is a fact to contract around. At renewal, I would push for a fuel surcharge with a wider band before it triggers, and I would ask for the index to be one with a published and stable definition, because a vague index is a mechanism that always moves up and rarely comes down.

Let me talk about what actually causes air cargo to go wrong in a peak, because it is rarely the rate. When capacity tightens, the failure modes are missed uplift, cargo left behind after screening, and a late acceptance that pushes the shipment to the next flight. Each of those has the same root cause, which is a plan that assumed today's transit time would hold. In a tight market, transit times extend, not because the flying is slower but because the handling is busier. So I would add half a day to a day of buffer to every air promise this quarter and I would tell the customer the new date rather than the old one, because a customer who hears a realistic date is a customer who does not call you in a panic.

On the question of which shippers get space when it is tight, there is a hard truth that is worth stating plainly. Carriers and forwarders allocate scarce capacity by value, and value means either committed volume or premium paying cargo. If you are neither, you get the residual space, and the residual space is the space that moves at the last minute and costs the most. The way to change your category is to give a forwarder a predictable volume forecast for the next two quarters, even if the volume is modest, because predictable beats large in a tight market. I have seen a shipper with 8 tonnes a month get better treatment than a shipper with 30 tonnes a month, purely because the first one never changed the plan and the second one was erratic.

There is a lane specific decision worth making this month, which is China to Europe versus transhipping through another hub. With the de minimis change pushing ecommerce toward commercial air, the China to Europe direct lanes are the ones absorbing the volume, and direct usually beats a transhipment for both transit and damage risk. If your forwarder is offering a cheaper routing with a stop, the saving has to be weighed against the extra day and the extra handling. On high value ecommerce, an extra day at a hub costs more than the rate difference in most cases, because the customer is waiting and the return or cancellation risk goes up. I would pay for direct on the top 20 percent of my SKUs by value and take the transhipment on the rest.

Let me also deal with the question of whether this is a spike or a new floor, because the answer decides whether you plan for a quarter or for two years. Three things point to a floor rather than a spike. Fuel at 116.5 percent higher is a structural input cost, not a temporary event. The de minimis change on EU small parcels is a policy shift that pushes volume onto commercial air permanently, not for one season. And capacity is not rushing in, because adding freighter capacity takes time and the widebody passenger belly capacity that carries a lot of air freight depends on the passenger recovery, which is a slow variable. With all three pointing the same way, I would build my pricing and my channel mix on the assumption that air stays expensive, and I would treat any soft week as an opportunity to book, not as a signal that the market is turning.

On the inventory planning side, expensive and tight air freight changes the value of holding stock, and it is worth doing that math explicitly. If air is the way you cover a stockout, then a stockout now costs 20 percent more than it did last year, plus it is harder to get space when you need it urgently. So the cost of a safety stock buffer has gone down in relative terms, because the alternative has gone up. On the same 20 tonne a month program, if you move from air covering stockouts to air covering planned replenishment, you typically cut your air volume by a third, which on the 93,600 dollar annual figure is over 30,000 dollars. That is the single biggest saving available to an importer in this market, and it comes from a planning decision rather than a procurement one.

One more practical point about the forwarder relationship. In a tight market, the forwarder who can actually deliver space is the one with a carrier relationship and a predictable customer base behind them, not the one quoting the lowest number. A quote that is 5 percent cheaper and does not materialise is not a saving, it is a production stoppage. So this quarter I would weight reliability over price when I choose who handles my urgent cargo, and I would keep a secondary forwarder warmed up on a small volume so that I have an alternative on the day the primary cannot deliver. Two forwarders at 90 percent volume and 10 percent volume costs a little more and protects the whole program.

On the shipper side of the equation, one option is to revisit what actually has to fly. A 20.9 percent annual increase is a strong reason to reclassify your air cargo. Anything that was flying because it was convenient rather than because it was urgent should be re-examined. I would take my air manifest and sort it into three buckets: items that must fly because of a customer commitment or a product expiry, items that fly because they are light and high value but could go by ocean with a longer lead time, and items that fly because somebody in a previous quarter made that decision and nobody revisited it. The third bucket is usually 10 to 20 percent of the volume and it is the easiest saving you will find this quarter.

On the commercial side, this is a moment to rethink how you pass air cost to customers. If your pricing model uses a flat air freight assumption, it is now stale and it is being subsidised. On a 93,600 dollar annual extra air cost, if you absorb it, it is a direct hit to margin. If you pass it, you need to do it in a way that does not cost you the order. My approach would be to pass it on the items where air is a small share of the landed cost and the customer has no alternative, and to move the rest of the volume to ocean where the customer is price sensitive, rather than trying to spread a uniform increase across everything and losing the price sensitive orders.

Let me flag the documentation and security angle, because tight air capacity tends to surface screening issues. When space is tight, more cargo gets screened later and closer to cutoff, and discovered problems have less time to be fixed. If you ship lithium batteries, aerosols, or anything with a dangerous goods classification, the paperwork has to be perfect before it reaches the terminal, because there will be no slack in the system to fix it. I have seen a shipment miss a flight because a declaration was filed in the wrong format on a day when the handler had no time to call back. That is a preventable loss and it is the kind that costs you a customer.

On the forwarder relationship, this quarter is the one where a good forwarder earns their fee. Ask for a rate validity longer than a week if you can get it, ask for a space allocation on your main lane for October and November, and ask for the fuel surcharge treatment to be fixed rather than floating. If your forwarder can only offer week by week pricing, that is information too, and it means you should plan your shipping decisions weekly rather than monthly for the rest of the quarter.

There is one more thing about the China to US lane that is easy to get wrong. It slipped slightly on the week while China to Europe firmed, and the temptation is to read that as the US lane being soft. It is not soft, it is still well above 2025, and it slipped for a different reason, which is the de minimis change applying to the EU rather than the US. If the US ever follows the same policy path, the same volume shift would hit the transatlantic lane and the China to US lane would tighten further, not loosen. So I would not treat a soft week on the US lane as a signal to wait. I would treat it as the last comfortable window before a policy change that I cannot time. That is the kind of thing where being early costs you a little and being late costs you the shipment.

Let me close with the calendar. This week I would fix the fuel surcharge formula in writing and check the trigger points, because that is where the 116.5 percent fuel move is being passed through. By the end of the first week of October I would have October and November space commitments confirmed for my main lane, with the dimensions and weights accepted. Before the mid October peak tightens, I would have run the air versus ocean reclassification on my manifest and moved the volume that does not need to fly. And I would have updated my customer pricing model with the 19.7 percent Shanghai and 19.6 percent Hong Kong annual numbers, because those are the ones that will still be true in January. Writing as Leo, who watched a fuel clause quietly cost a client more than the rate negotiation saved.

• Get the fuel surcharge formula in writing this week and check the trigger points, since jet fuel at 116.5 percent higher year on year is doing more of your invoice than the base rate.
• Lock October and November space on your main lane before the peak tightens, with written confirmation that your actual dimensions and weights have been accepted.
• Rebuild your air freight budget on the annual numbers, 19.7 percent Shanghai outbound and 19.6 percent Hong Kong, not on the 0.9 percent weekly move.
• Run a three bucket review of your air manifest and move the 10 to 20 percent that flies only out of habit, which on 20 tonnes a month at 0.39 dollars per kilo is 93,600 dollars a year.
• Pay for direct routings on your top 20 percent of SKUs by value and take transhipment on the rest, since an extra day at a hub costs more than the rate difference on urgent ecommerce.
• Fix documentation and dangerous goods classification before cargo reaches the terminal, because tight space means late screening and no slack to correct an error.