A pandemic-induced boom in air cargo is providing an auspicious backdrop for Airbus and Boeing to launch new large cargoes, but longer-term trends – particularly the strength of the global economic rebound – will determine what succeeds. Is.
Airbus on Monday secured its first deal at the Dubai Airshow for a cargo version of its A350 jetliner – a model that the European conglomerate hopes will break Boeing’s long-standing dominance of the market for flying cargo.
Meanwhile, Boeing is working on a possible cargo version of its 777X model, although a launch has yet to be announced, with potential buyers including major cargo player Qatar Airways.
After two years of loss of air passenger growth due to the pandemic, a boom in online shopping, supply chain disruptions and a drop in passenger plane flights, the freight market has been a rare bright spot for planners – who often Carries cargo in itself. Holds – is demanded.
But there are big risks associated with the new models, which will be delivered only in the second half of the decade.
These include a rapid improvement in passenger flights, companies moving to source more goods closer to home, and an increasing number of passenger jets being converted into freighters.
There is also huge uncertainty over the strength of the economic recovery from the pandemic and the future of global trade, which was in recession before the pandemic due to US-China trade tensions, which have not been resolved.
“It’s not a risk-free decision,” said Stuart Rubin, managing director of aviation at Airbus’ consulting firm ICF and Boeing’s cargo plans.
Neither company has disclosed the cost of developing the new models.
short-term boom
The lack of passenger aircraft’s carrying capacity during the pandemic pushed up freight rates, delayed the retirement of older models such as the MD-11 and the rush to convert older unwanted passenger aircraft to freight.
“Freight-wise, everyone can make money right now,” said Friedrich Horst, managing director of Cargo Facts Consulting. “We’re seeing a lot of weird things that you wouldn’t normally see. You’re looking at 737 narrow freighters flying from Europe to Asia.”
Large widebody freighters such as the proposed A350 and 777X typically carry dense, business-linked products such as auto parts, semiconductors and pharmaceuticals on long-distance routes from Asia to North America and Europe.
Converted passenger planes instead carry lighter, more heavy cargo such as e-commerce packages.
Cargo companies such as FedEx and major airlines such as Korean Air Lines and Lufthansa have also benefited from the unprecedented disruption to supply chains and container shipping rates during the health crisis.
Tom Sanderson, director of product marketing at Boeing, said last month air transport was about four to six times more expensive than sea freight, which was 12 to 15 times more expensive than usual.
There are grounds to think that some of the pandemic-induced increase in air freight will continue.
For example, Airbus estimates that the e-commerce market will grow by 4.7% per year over the next 20 years, compared to 2.7% for general cargo.
“If you get a good price, ordering a freighter in the current market isn’t really audacious,” said independent industry consultant Bertrand Grabowski.
In the depths of the pandemic last year, Boeing, which controls 90% of the freighter market, forecast the global large widebody cargo fleet to grow from 610 in 2039 to 850 planes in 2039 due to increased demand.
Environmental trends are also working in favor of new, more fuel-efficient freighters.
Boeing’s soon-to-be-discontinued 747-8, as well as the 777F and 767F, cannot be produced after 2027 due to new environmental standards, unless product changes are made.
Boeing has said it can apply for a relaxation of the rules as one of several options under consideration for freight traffic plans.
vanishing profit
Still, analysts say there are also signs that some of the pandemic’s benefits for air freight are starting to fade.
Container rates have begun to fall as supply chain disruptions ease and some companies bring production closer to home to avoid future shocks.
European fashion companies are shifting manufacturing from China to places like Portugal, Turkey and North Africa, said Marco Bloemann, cargo advisory lead at Accenture’s Seabury Consulting.
A growing market for converting 777 passenger planes to freighters — such as Israel Aerospace Industries (IAI) and the AerCap 777-300ER program set to produce its first freighters next year — could also limit demand for new models.
ICF’s Rubin said the converted aircraft will not be able to carry denser cargo as effectively as their newly built counterparts, but they can ride the boom in e-commerce.
Emirates on Monday signed an agreement with IAI to convert four 777-300ERs into freighters, citing the ability to carry high volumes of e-commerce as a key factor. The airline also ordered two more factory built 777 freighters.
Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor
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