Is the freighter capacity crunch here to stay?

January marked a period of "growth normalization" following a resilient 2025, as the global air cargo industry dealt with the dual forces of seasonal cooling and intense geopolitical volatility. The Baltic Air Freight Index (BAI00) fell 16% month-over-month, reflecting the expected seasonal normalization However, this headline decline shows significant regional divergence: while Shanghai (BAI80) dropped 24% as e-commerce flows keep adjusting to new trade realities, Frankfurt (BAI20) surged 8.5%, driven by a massive 24% spike in rates to the USA (BAI24). This could suggest a frantic "front-loading" of cargo ahead of the February implementation of proposed US tariffs linked to the Greenland dispute. Four Key Drivers of Market Dynamics The "Greenland Tariff" and de minimis impact: The landscape of 2026 is being defined by a new round of trade friction. President Trump’s proposed 10% tariff on eight nations (including Germany, the UK, and France) starting February 1 has triggered a January rush, particularly on the Frankfurt–USA lane. Simultaneously, the removal of the US de minimis exemption has fundamentally impacted Asian flows. While China-to-US volumes via Hong Kong and Shanghai softened (BAI34 down 15.26%), Southeast Asian hubs like Vietnam and Thailand saw tonnages to the US surge by 50%, as shippers bypassed traditional Chinese gateways to mitigate tariff exposure. Sea to air shift via the Red Sea: Supply chain predictability remains fragile. CMA CGM’s reversal of its planned return to the Suez Canal has further undermined shipper confidence in ocean schedule reliability. As carriers continue routing vessels around the Cape of Good Hope, adding 10–14 days to transit times, the extended lead times are sustaining demand for air cargo as a time-sensitive alternative. The persistent aircraft supply crunch: Capacity is no longer just about demand; it is about physical availability. The global aircraft order backlog which includes passenger and freighter aircraft has expanded to over 17,000 units, roughly 60% of the active fleet. With a delivery timeline stretching into the late 2030s, passenger airlines are holding onto older widebodies longer. This has tightened the supply of feedstock for freighter conversions, pushing the average age of a cargo widebody to 19.8 years. The result is a high-cost environment where airlines spent an extra $4.2 billion on fuel in 2025 just to keep less efficient, older planes in the air. Strategic freighter redeployment: Freighter operators are voting with their wings, shifting capacity away from the declining Transpacific market. Capacity from Asia to North America fell 9% in January, while Asia-to-Europe freighter capacity surged by over 30% according to the latest data by Cargo Facts Consulting. This shift reflects the 2025 trend where Asia-Europe became the industry's star performer, recording 32 consecutive months of growth. Carriers are chasing the more stable yields of the Asia-Europe e-commerce and high-tech corridors over the volatile, tariff-heavy US lanes. Regional and Route-Specific Insights Asia–Europe: tonnages from Asia Pacific to Europe rose 19% year-on-year in mid-January. Hong Kong to Europe (BAI31) saw rates ease by 19.06% monthly as capacity flooded the lane, but demand remains robust for high-fashion and electronics. Asia–North America: while the Hong Kong Outbound Index (BAI30) fell 16.67%, Southeast Asian origins are booming. Singapore's outbound index (BAI60) was the exception for this global trend, gaining 19.35% as it cements its status as a primary "neutral" hub for US-bound cargo. Europe–North America: the Transatlantic market saw the most dramatic price action. Frankfurt to USA (BAI24) hit a 24.09% increase, while London Heathrow (BAI40) rates climbed 18.4% in a single week in mid-January. Shippers are clearly racing to beat the February 1st tariff deadline. North America Outbound: Continued Softness Chicago O’Hare (BAI50) fell 14.76% in January and remains 30.1% lower year-on-year, reflecting the broader 1.3% decline in North American carrier demand. North America was the only region to post a full-year contraction in 2025. Freighter Market and Supply-Side Trends The secondary market for freighters is under extreme pressure. The half-life value of a 777-300ER has soared to about $48 million (up from $28 million in 2022), making the math for cargo conversions increasingly difficult for mid-tier operators. This shortage is helping sustain rate levels but is also driving up maintenance costs, which IATA estimates rose by $3.1 billion last year. Global capacity rose 4% in early January, primarily driven by a 6% increase in bellyhold space as passenger networks continued to expand. However, this bellyhold growth is unevenly distributed, favoring Asia-Europe and intra-Asia routes while leaving Transpacific freighter operators to face contracting margins and high fuel burn on aging fleets. 2026 Outlook: Moderation Cargo Facts Consulting projects air cargo demand to grow by 2.8% in 2026, a slight drop from the 3.4% seen in 2025. The immediate focus is on the post-Lunar New Year effect, which will likely cause a late-February dip in Asian tonnages. However, the true wild card remains the increase in global tariffs. For now, carriers are prioritizing network flexibility over aggressive expansion, keeping a wary eye on the over ten-year aircraft delivery backlog that continues to floor the market's capacity.

Is the freighter capacity crunch here to stay?

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