World air cargo market struggles continue; ominous sign for new-build main-deck freighters

A330F Deliveries

Figure 1. A330F once tallied more than 60, but many were converted to passenger models. Today there are just 38 orders. The delivery stream shows a tapering off. Click on image to enlarge.

Aug. 26, 2015: World air cargo markets continue to struggle, according to reports yesterday from Cargo Facts newsletter and The Wall Street Journal.

Neither report bodes well for new-build, main deck freights, although Cargo Facts concludes a demand remains.

The Wall Street Journal reported that Europe-to-Asia volume and rates are falling.

“Maritime and air freight rates for some of the world’s busiest trade routes are tumbling as slower growth in China combined with a sluggish eurozone economy dash forecasts for higher volumes during the normally busy late-summer season,” writes WSJ’s Robert Wall, who is based in London. “The air-cargo market is suffering on several fronts. Lower demand in Asia is coming at the same time air-cargo capacity is climbing. A large chunk of the air-cargo market is transported in the hold of passenger planes. With major airlines adding flights globally this year, that is weighing on cargo rates. Falling fuel costs also are delaying plans by airlines to retire older jets, exacerbating the problem.”

Cargo Facts takes a different view on the belly capacity.

777F Deliveries

Figure 2. Boeing 777F orders and deliveries were robust (for freighters) in the early years after launch of the program in 2005, but the decline in global air freight took its toll on the 777F. Click on image to enlarge.

“There has been much talk in recent years about a shift of air cargo from main deck to belly, and some well-known carriers have either abandoned freighter operation or considerably reduced their freighter fleets,” Cargo Facts writes. “This has led some observers to conclude that freighters are rapidly becoming irrelevant, but the data simply do not support this. While [there clearly is] an increase in cargo traffic flown by belly-only carriers (particularly domestic traffic) over the last five years, [there are] similar increases for airlines that only operate freighters – both general freight all-cargo operators and express operators.

“[W]hile it is true that carriers like Air France-KLM, IAG Cargo, and Finnair are either cutting back or abandoning freighter operation, there is no sign that ‘freighters are dead.'”

Still, data from the Airbus and Boeing websites show orders and deliveries continue to struggle. Figure 1 shows the delivery stream of the Airbus A330F tapering off during the next few years. At one time there were more than 60 orders. Many were converted to passenger aircraft as the cargo market softened. Today the total orders is fewer than 40.

747-8F deliveries

Figure 3. Boeing’s 747-8F delivery stream dries up after 2017. The passenger model deliveries also end in 2017, according to the Ascend data base. Click on image to enlarge.

Boeing’s 777F started out robustly when the program was launched in 2005, but like the A330F, demand has tapered off significantly. For Boeing, this is especially problematic as it tries to bridge the production gap between the 777 Classic and the 777X. Passenger demand for the 777-300ER has largely dried up and Boeing has been counting on the 777F to supplement orders. One from FedEx for 10 777Fs is believed to be the 10 “commitments” of the 44 “orders and commitments” (there are 34 identified orders) officials spoke of on the 2Q2015 earnings call. Now that a pilot contract has reached a tentative agreement, and FedEx has made an offer for Europe’s TNT, we expect the commitment to be firmed up before the end of the year. We don’t have information about the delivery stream, however, the important gap-filling goal Boeing has (Figure 2).

As for the Boeing 747-8F: this program is in deep, deep trouble. Figure 3 shows the delivery stream for the freighter zeros out in 2018. The delivery stream for the 747-8I similarly dries up.

With scores of main-deck freighters of all types stored in the desert, and more Boeing 747-400Ps being retired soon, there is plenty of cheap lift to throw at a recovering air cargo market–but the recovery has been predicted now for years, without materializing to the level needed to spur new-build demand.




13 Comments on “World air cargo market struggles continue; ominous sign for new-build main-deck freighters

  1. While belly cargo and the rapidly growing big twin fleets have taken a bite out of main deck freighters, I assume they will be back, but it can take years. As you state there’s lots of 747 stock in the desert, and some more good ones soon (e.g. 20 KLM 744 Combi’s).!_-_Pinal_Air_Park_(13852437903).jpg

    Probably maybe operators are waiting for the A330F NEO’s / 777-8F, or the many 777Ps and A330Ps that will come up for conversion later this decade.

    Boeing has been traditionally strong in cargo. So when the market is up, they cash, when it doesn’t they suffer proportionally.

    I just noticed Boeing stock has gone down rapidly lately, there’s a new CEO, NB requires action, 787 high rate production still negative, on the defense site its no different.{“range”:”6mo”,”allowChartStacking”:true}

    McNerney era heritage? IMO time for the new team to depart strategies, include new types, new people, new alliances.

    • McNerny heritage?
      At the moment all shares are going down.
      ( Though they are not in freefall yet )

      Boeing went ahead of the main bunch ~jan 17 2015 ( why that? nothing spectacular published .. ) but lost it all again. Now back in the main group.

  2. Airbus basically has only a token share of freighter sales. There’s no evidence any carriers are waiting for the 330neo f model. At some point in the next couple of decades the old Antonovs will be too old to be serviceable and it will be interesting to see what happens for outsized freight.

    No more 747s with nose loading will be getting built, and I don’t see any kind of replacement available really. A small market, sure, but an important one if you want to move something quite large quickly. Perhaps some of those 12 year old ek A388 could wind up finding use here with some sort of enormous side door modification.

    Don’t klm, like lh 747s, have about 120k on them by the time they retire? I know a lot of the klm 744 sure seem tired/worn on the inside.

    • There seems to be missing in all this how many 477-400Fs of various types are parked.

      While I have not seen data, I do see Kalitta flying one (unknown version)

      When Kalita buys something its low cost. Nothing against Kalita but they specialize in finding good low cost 747s and making them work. they still fly some very old iron (200s I believe) and are still in business.

      So while there will be a plethora of 747pax types, there are also going to be a lot of 747-400F of all types available and not depending on BCF types (though those will be available as well)

  3. Cue the “sky is falling” placard someone. The stock price fluctuation is a result of the volatility in Asia and the devaluation of the Yuan. The 3 month average has it between 140-147. It would be a different story if Boeing itself was the headline maker causing the drop. Bombardier is about trade below a dollar soon. Where’s the panic? Airbus and everyone else have their problems too. A380 still not profitable with no long-term prospects outside of EK, A330f sales in the red, A400M with software issues. Nobody is immune to problems.

  4. I fail to see how a discussion of world air cargo can become a thread on A vs B. I am sure we are going to see interesting times for everyone in the near future. Who is best insulated from he blows is a moot point but I would guess that in the respective company’s it will be less of a case of doing better or worse than the other and more of a case of steering through some potentially very choppy waters

  5. I assume that A330F design work might be used to develop P2F program. The A330 might become a very popular converted freighter. Good economics and large installed base. Only issue is the nose-down attitude when parked.

    • Ancra is already testing the (powered) cargo system for the tilted A330 maindeck.

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