The air cargo market went through a tough time during the recession. Cargo traffic fell nearly 10% across 2008 and 2009, rebounded 19% in 2010, but then stagnated for three years. In 2014, there finally came a return to sustained growth, with IATA announcing that freight-tonne kilometres (FTKs) were up 4.5%.
A return to growth coincided with an economic recovery in the USA, as well as the US dollar appreciating against almost every currency – making imports cheaper. Falling fuel prices also helped, with some relief of the cost pressures on air cargo. The highest FTK growth in 2014 was by airlines based in Asia and the Middle East.
However, the optimism has been tempered by mixed results as 2015 progresses. IATA data for the first half of 2015 showed a 3.5% growth in traffic against a 5.4% rise in capacity but demand has been slowing, to just over 1% in June. Weaker world trade, especially in demand out of China, has been observed, and load factors have fallen. Airlines in Asia-Pacific, North and Latin America, and Europe all reported freight business smaller in June 2015 than in the same month of 2014. Only the Middle Eastern and African airlines recorded growth in FTKs.
In terms of aircraft, the all-cargo fleet has been almost static for the past 15 years, although there has been a gradual shift from narrowbodies to widebodies, meaning there has been a steady increase in available capacity. However, dedicated freighter capacity has been almost flat since 2007.
In fact, almost all the recent increases in available capacity have come from passenger widebody bellyholds. In terms of total available tonnage, air cargo capacity provided by in-service aircraft fell by 7% between 2007 and 2009, but has recovered and now exceeds 2007’s levels by 6%. Last year brought a record number of passenger widebody deliveries, with the firm backlog sufficient to double the current level of belly capacity. While around 40% of these aircraft are for replacement needs, it does imply a significant step-up in available cargo capacity.
Looking at the widebody freighter fleet, which serves the core long-haul and high-capacity sectors, deliveries of over 300 of the new Boeing 777F, 747-8F and Airbus A330-200F occurred at a time of weak cargo demand. This wave of new capacity led to a collapse in conversions, as well as a sharp increase in aircraft being parked in the desert.
The latter mainly arose from a reduction in the older-generation fleet, including Boeing MD-11s, MD-10s, A310s, A300s and converted 747-400s. This is continuing, as focus has moved to the newer-generation types. Overall, the number of widebody freighters in service has grown by only 14 aircraft in the past 18 months, to 985, with tonne capacity up just 1%.
Boeing 747s still account for around 40% of tonne-capacity, but production of the 747-8 is falling to just one per month. It has the highest capacity in the market and offers flexibility with its nose door, but the smaller 777 Freighter is finding favour at more airlines. It has now overtaken the MD-11 as offering the most tonnage capacity after the 747. Eva Air is the latest new customer for the 777F. Boeing has also seen increased demand for the 50t 767F, with a recent FedEx follow-on order for 50 a welcome boost.
There has also been a shift in the cargo airline scene. Middle Eastern airlines have been especially active, doubling their fleet in the past 10 years. This has been led by the Gulf hubbers, with Emirates, Etihad and Qatar Airways all building fleets as they seek to replicate their success in the passenger market. They now operate over 35 widebodies between them, alongside Saudia, which has 20.
European airlines have had mixed fortunes. Air France KLM is drastically reducing its freighter fleet and British Airways exited its own operations in favour of taking capacity on Qatar Airways. Cargolux and Lufthansa remain committed to the market and the fleets of AirBridgeCargo in Russia and Turkish Airlines are growing.
Much of the long-haul cargo market hinges on the Asian market, with over 190 widebody freighters and some stored aircraft now coming back into service. Korean Air, Cathay Pacific, China Airlines and Nippon Cargo Airlines have the largest fleets, while the three largest Chinese operators – China Southerns, China Cargo Airlines, and Air China Cargo – have been renewing their fleets, especially with 777Fs.
There is a moderate revival in conversions occurring with 767s, especially into China. For the future, the A330 P2F (passenger to freighter) conversion programme is under development at ST Aerospace and EFW, with EgyptAir the launch customer for two. Boeing continues to talk about a 777 cargo conversion but with no immediate signs of a launch.
The 2020s are expected to bring new-build freighter versions of the A350 and the 787 and 777-8X, but in the next 10 years there will be a focus on the existing types.
The 2015 Flightglobal Fleet Forecast is predicting 20-year demand for over 800 conversions and 500 new deliveries in the widebody sector. Even though belly capacity will take around half the market, demand for main-deck freighters will still be a key component for world trade flows.
Chris Seymour is head of market analysis at Flightglobal’s Ascend consultancy
Source: Airline Business
