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Derivatives marketplace the Baltic Exchange is expanding its air cargo data sets to include sport market pricing as it responds to ongoing volatility in the industry.
The new Baltic Air Freight Spot Indices were developed in partnership with airfreight rate data provider TAC Index and will enter a trial phase on 1 July.
The two partners said the new indices will provide a timely and accurate reflection of air cargo spot market movements, which they said had “become more pronounced in recent years”.
The existing indices provided by the two are based on a combination of both spot and contract pricing.
The development follows a private trial, which began in October 2024, involving airlines, freight forwarders, and financial institutions, as well as numerous large corporations with substantial air cargo spends.
”Baltic Exchange and TAC Index have worked together to enhance the existing suite of Baltic Air Freight Indices with the introduction of these new spot assessments,” the two said in a press release.
”Derived using Baltic Exchange’s FCA-regulated methodology, first established over 40 years ago with the Baltic Dry Index (BDI), these new indices are designed to support the development of physical air cargo contracts and derivatives trading.”
The spot market indices will be based on input from a panel of market participants that has been assembled to contribute ”high-quality data” for three major export routes originating out of Hong Kong — to Central Europe, the US east coast and the US west coast.
”These routes were chosen due to Hong Kong’s position as a key gateway for e-commerce exports from Southern China, historically one of air cargo’s largest export regions,” the partners explained.
Mark Jackson, chief executive of Baltic Exchange, said: “We’re delighted to move forward with the public trial of the BAI Spot Indices. These new assessments are a direct response to the industry’s need for trusted risk management tools in a fast-evolving market.
“The credibility of our methodology, supported by a growing and engaged contributor base, ensures that these indices will serve as a solid foundation for both physical and financial market applications.”
John Peyton Burnett, founder and managing director of TAC Index, added: “This collaboration with Baltic Exchange is a natural extension of our shared commitment to transparency and innovation in the airfreight market.
”By combining our domain expertise with Baltic Exchange’s proven methodology, the BAI Spot Indices are ideally suited for today’s dynamic logistics landscape.”
Looking ahead, Baltic Exchange aims to further expand the BAI Spot suite in response to growing market demand, including the potential addition of new routes and integration into broader trading platforms.
Rate indices can perform several roles in the air cargo market, firstly as a tool for participants to monitor whether the price they are paying reflects overall market trends, secondly as the basis for index-linked contracts where the price paid increases or decreases depending on overall market rates, and potentially in the future for the development of a derivatives market that can be used to hedge against market volatility.
In other markets, the latter has often been based on spot market pricing, so the launch of airfreight spot indices will be seen as a key milestone reached in the development of a paper futures market for air cargo.