By Karen E. Thuermer, AJOT
Once upon a time, airlines and aircraft manufacturers looked upon freight as the illegitimate child of the airline business. But with more cargo taking to the skies than ever before, the market for air cargo carriers is booming.
Today cargo carriers and the companies that build their planes can no longer ignore air freight. In fact, the needs of freight customers has become so important to the Boeing Co. that this mammoth airplane manufacturer held summits around the world recently to learn what was on the mind of cargo carrier customers. The reason: Boeing wants to build them more efficient airplanes and win their business.
If orders contest to work well done, Boeing can take credit. Boeing provides more than 90% of the world’s freight airplane capacity, including over 50% via its 747 Freighters alone. In fact, Cargo Facts, published by the Air Cargo Management Group (ACMG), reports that today Boeing has 820 wide body aircraft in service or on order; 399 of them are 747Fs. By comparison, Airbus has only 310.
‘Our business is 2 to 1 that of our competition,’ states Tom Crabtree, regional director—Marketing, Air Cargo Industry Analysis, Boeing Commercial Airplanes. ‘Boeing provides more than 90% of the world’s freighter airplane capacity. Over 50% of that is by the 747Fs alone.’
Two decades of growth
Boeing may have listened to customers at the right time. Economic projections indicate that the global economy, as measured by gross domestic product (GDP), will grow at an average 2.9% per year during the next 20 years. Demand for air cargo transport, measured in revenue tonne-kilometers (RTK) is strongly linked to GDP. Based on three decades of Boeing economic analysis and modeling experience, the industry reference Boeing World Air Cargo Forecast projects that rising world GDP will drive an average 6.2% annual growth in demand for air cargo transport. At this average growth rate, air cargo transport demand will triple in 20 years.
It is projected that nearly 2,900 freighter aircraft will be added to the world fleet to meet that demand, with about 1,100 of these replacing freighters that will be retired between 2004 and 2024. This will leave a net fleet growth of 1,800 new and converted freighters.
Asia is a big factor for this activity. Among the three strongest growth markets are Intra-Asia, the Trans-Pacific route between Asia and North America, and Europe-Asia. The Boeing Co. calculates that Domestic China will account for 10.6%; Intra-Asia, 8.5%; Asia-North America, 7.2%; Asia-Europe, 6.7%; and Europe-Southwest Asia, 6.4%.
Growth for intra-China air cargo is pegged at 22%—the fastest growth market in the world, but one that is also starting from a small base.
‘China does not have full-body aircraft in service, but does have widebodies,’ states Crabtree. ‘We forecasted several years ago that in the next decade China would have 150 to 230 freighters flying within its domestic market.’
China Southern has bought domestic carriers, and is a customer of the 747-F program. China Cargo, 70%-owned by China Eastern and 30%-owned by China Ocean Shipping, operates a fleet of 11 MD-11s. It has placed an order for two extended-range 747 freighters for delivery in July 2006 and August 2007.
The growth rate for intra-North America is expected to fall the most (4.1%) of any markets between 2003 and 2023, largely because the annual growth rate is less than the world average.
‘In North America, trucking is more cost effective,’ Crabtree explains.
Various markets require different products. For example, US-based air express carriers will emphasize growth in the medium and large wide-body fleet segments, whereas Asia-Pacific and European airlines will move toward large long-haul freighters, especially new and converted 747s. Boeing, unlike its competitor Airbus, offers the most complete line of