As the air cargo market begins a slow recovery, Boeing expects the Asia-Pacific region to bounce back strongly and Chinese airlines to generate increasing demand for freighters. However, the Gulf carriers are becoming a powerful force in the cargo sector and will likely capture an increasing share of the Asia-Pacific freight market.
Anticipating the freight revival, Boeing could decide this year to launch a cargo conversion programme for the 737 Next-Generation, while studies are also advanced for a conversion of the 777-200ER.
In its latest market forecast, Boeing sees demand for 2,300 freighters over the next 20 years. While 850 of these are expected to be new-build aircraft, the manufacturer forecasts much stronger demand for converted freighters, with some 1,450 conversions predicted in the next 20 years.
Boeing sees the Asia-Pacific market as the largest for cargo aircraft, with the region’s carriers absorbing over 37% of deliveries – 860 aircraft. But for this forecast to become a reality, the air cargo market must recover sustained growth.
“Since about mid-2011, cargo traffic has been stagnant. However, beginning early in 2013 we began to see some improvements. The past eight months have seen worldwide traffic growth,” says Jim Edgar, regional director cargo marketing at Boeing Commercial Airplanes. “When we get full-year data, we expect 2013 to show a 1-1.5% improvement in world cargo traffic over 2012.”
Boeing’s last published long-term cargo growth forecast shows 5% per annum, but it is in the process of revising that, says Edgar: “I would expect that to come down into the ‘fours’.”
While the Asia-Pacific carriers have been faring relatively worse than the rest of the world in terms of growth, Edgar expects the market will recover in tandem with other regions: “Usually it leads – higher highs and lower lows because it is very sensitive to changes in world trade.”
He adds that carriers in the Middle East – and some in the Asia-Pacific, like Cathay Pacific – have been investing heavily in their hubs and equipment to position themselves for the rebound.
“Cargo is all about economic efficiency and will tend to go over hubs more so than passengers, and it’s always going to be about the most efficient platform in carrying the cargo,” says Edgar. “The Middle East carriers have been enjoying much higher growth rates – for example, through to November they’ve seen about an 11% increase in traffic for 2013, while Asia-Pacific carriers are down about 2.8%.”
The Chinese market is central to the recovery of the freight business both for Asia-Pacific and on a global basis. Boeing attributes improvements in the country’s economy as a key driver in the 2013 recovery, and sees the Chinese airlines being well placed to benefit the most as the turnaround continues.
"We expect higher than average growth among the Chinese carriers as they have the built-in advantage of language, cultural and business relationships to enable them to capture an increasing share of the PRC-originating traffic going intercontinental,” says Edgar.
China’s domestic market will also be a driver for demand in the passenger-to-freighter market, says Edgar. “Demand for narrowbody conversions comes from all over the world, but there is increasing interest from China among the express carriers, which are growing very fast,” he says.
Boeing’s forecast puts narrowbody freighter demand at 940 conversions over the next 20 years, and it is evaluating the launch of a programme for the 737NG to allow a converted freighter to enter service in around three years time, as the cargo market recovers.
The conversion market has been sluggish in recent years due to the downturn in the cargo sector combined with the large number of freighters available, but Boeing expects this situation to improve within three years.
“Obviously if you have an over-capacity situation, then sales [of conversions] are going to reflect that. We expect that demand and available capacity will be back balanced around the 2016/2017 timeframe,” says Edgar.
There have been a number of retirements and temporary storage which are helping to gradually redress the balance.
“We’re seriously studying [a 737NG programme], talking to customers and looking at the issues. Cost is a big consideration – we’ve got to be competitive,” says Edgar. “I would expect a decision probably this year. I guess [service entry could be] two to three years after that decision.”
Edgar says that with the oldest 737NGs having been delivered over 15 years ago, some will soon start to become eligible for conversion in terms of age: “They would be a natural replacement for a lot of the standard-bodies in service.”
Flightglobal’s Ascend Online database shows there are over 4,700 737NGs in service, of which some 450 are at least 15 years old and a further 1,140 are in the 10-14 year bracket.
Boeing is still evaluating how it will structure the programme, whether offering third-party data-licensed conversions or in-house “Boeing Converted Freighter” methods for existing programmes.
Meanwhile, with the oldest 777s now almost 20 years old, the manufacturer is also evaluating a conversion programme for the widebody twinjet. The drivers behind a decision to launch this programme – and one for the 737NG – are a combination of reaching the right price point for feedstock, the cost of conversation and a sufficient number of launch customers and units, says Edgar.
“The most likely candidate for conversion would be the 777-200ER platform. Our studies indicate we would be looking at around an 80t payload for a 777-200ER conversion,” he adds.
Boeing already offers a new-build 777 Freighter based on the much heavier -200LR platform, which has a payload in excess of 100t.
Edgar says the 777 conversion would be “a pretty extensive modification” because of all the composites used. For example, all the floor beams will have to be replaced with stronger ones
Ascend Online shows that there are currently around 500 777-200 and -200ERs in service, of which 430 are older than 10 years – including 230 in the 15-20 year range.
Source: Flight Daily News
