The number of airplanes in the worldwide freighter fleet will increase by more than 80 percent during the next 20 years, as demand for air cargo services nearly triples.
Large freighters will play an increasing role in air cargo transport, as the large freighter category comes to represent 36 percent of the world’s freighter fleet by 2031, compared to 31 percent today and 22 percent a decade ago. By leveraging the significant efficiency and capability advantages of large freighters, carriers will be able to manage projected traffic growth without proportionately increasing the number of airplanes.
Despite natural disasters and a continuing series of political and economic challenges, air cargo traffic remains relatively flat, after rebounding strongly in 2010 from the global economic crisis of 2008 and 2009. Cargo operators have varied freighter utilization, temporarily grounded portions of the fleet and/or retired older freighters in response to market uncertainties. In the long term, the industry will benefit from this removal of surplus capacity and replacement of older freighters with more efficient airplanes.
Reflecting traffic stability, the number of airplanes in the freighter fleet has remained virtually the same since 2009 (1,755 planes in 2009 compared to a current 1,738 aircraft). The mix of airplane sizes has shifted, however, toward large freighters. The large freighter share of the fleet has grown from 26 percent to 31 percent since 2009. As deliveries of newer, larger freighters increased over the past 18 months, yields and load factors came under pressure. (Please note that the accompanying charts present actual data, as opposed to the rounded totals presented in the Boeing Current Market Outlook 2012-2031.)
The industry’s oft-demonstrated resilience is projected to prevail over recent adverse pressures. Demand for air cargo services will nearly triple by 2031 in response to the industry’s growing dependence on speed and reliability, continued product innovation and global interdependence. This demand growth will spur the world freighter fleet to expand by more than 80 percent — from the current 1,738 airplanes to 3,198 airplanes by the end of the forecast period.
About 1,300 of the 2,754 projected freighter deliveries will replace retiring airplanes, with the remainder expanding the fleet to meet the requirements of project traffic growth. Two-thirds of deliveries will be freighter conversions, 60 percent of which will be from standard-body passenger airplanes. Of the projected 935 new production airplane deliveries (valued at $250 billion), about three-quarters will be in the large freighter category.
Cargo capacity supplied by dedicated freighters will continue to rise slightly faster than lower-hold capacity in the passenger airplane fleet. By 2031, freighters will provide nearly 45 percent of the world’s cargo capacity, despite the continuing trend toward passenger airplanes with greater belly-hold capability.
The freighter share of the total commercial fleet will decline slightly to 8 percent, even as the number of freighter airplanes grows. Continual increase in average freighter size and the influx of newer, more efficient airplanes will facilitate higher airplane utilization and load factor to meet projected demand growth without a proportional increase in freighter numbers.
Significant Developments and Trends
Diverse factors affect world freighter fleet growth, often exerting contrary pressures. For example, rising fuel prices increase air cargo transport costs, depressing demand for services. At the same time, high fuel prices are an incentive for airlines to replace aging airplanes, bolstering demand for new freighters.
The forecast takes into account several significant world freighter fleet developments and trends. First, it’s concerned with the introduction of wide-body passenger airplanes with increasingly capable belly-holds, which continues to moderate freighter demand. Also, the advantages offered by freighter operations — including superior focus and control, timing and routing, capacity (volume, weight, hazmat, and dimensional), handling location and ramp proximity — weigh into the picture. Most important, however, the forecast weighs the reliability and predictability of freighters, often offset a lower-hold price advantage.
Freighter orders during the first six months of 2012 were far fewer than the near-record number received in 2011, as a five-year delivery backlog exceeding 200 airplanes was worked down. Volatile fuel prices accelerate freighter retirements and enhance the value of newer airplanes that offer higher operating efficiency. Near-term overcapacity exerts downward pressure on the fleet, as relatively new freighters are parked and even considered for retirement in the face of declining yields, load factor and utilization. Noise, emissions and aircraft-aging regulations drive carriers to accelerate evaluation of their fleet requirements.
Passenger carriers continue to emphasize the revenue potential of cargo. Airlines that operate both passenger airplanes and freighters typically enjoy 20-percent higher cargo load factors and increased yields in the belly-hold of their passenger airplanes. Cost-effective ground transport alternatives and abundant belly-hold capacity will moderate medium wide-body fleet growth in large established regional markets. Growth will concentrate in a few large express carriers and developing regions where difficult terrain or lack of alternative modes favor air transport.
Profitable long-haul operation of medium wide-body freighters is challenging, even with full loads, because of the 20-percent to 30-percent advantage in operational economics enjoyed by large freighters.
The model mix within the three freighter payload categories remains unchanged from previous forecasts. Our integrated top-down/bottom-up approach combines a thorough analysis of macro trends in the industry with detailed consideration of regional-and operator-specific information, developments and strategies. The current and projected fleet is divided into three payload categories by fuselage width and payload capability, regardless of range or presumed service markets. The three payload categories are standard-body (all freighters less than 45 tonnes); medium wide-body (40 tonnes to 80 tonnes); and large (greater than 80 tonnes).
We begin with a top-down analysis of worldwide air cargo flows and traffic. Next, we subtract current and projected lower-hold cargo capacity (adjusted for passenger baggage requirements) from the total air cargo demand, as developed for the World Air Cargo Forecast. We use analysis from the companion Boeing publication, Current Market Outlook, to evaluate available belly-hold lift for each carrier by region, as well as actual
reported load factors. More recent developments — such as the imposition of checked baggage fees and restrictive security requirements on belly-hold capacity — are considered. The freighter fleet lift requirement is the difference between total demand for air cargo services and the supply of revenue cargo capacity provided by the passenger fleet. Remaining air cargo traffic is apportioned to regional domiciles and specific carrier freighter fleets.
After identifying the likely nature and timing of future freighter offerings, an assessment is made of airplane capability, performance and availability. At the regional domicile level for each airline (or from the bottom-up), such variables as fleet type and age, airplane size, retirements, utilization, load factor, market share, service, and market strategies are factored in. The exhaustive top-down/bottom-up analysis is rounded out, balancing these variables with total air cargo lift, traffic and availability of passenger aircraft for conversion.
Freighter Fleet Development
During the past decade, the large freighter category boosted its share of the fleet from 22 percent to 31 percent. Average freighter size increased nearly 2 percent per year, highlighting the importance of size and efficiency for freighter operations. It is not surprising, therefore, that the fleet-wide operating cost improvement trend of about 1 percent per year is expected to continue, even as fuel price and other cost pressures intensify.
Several striking comparisons illustrate the crucial importance of freighter efficiency and capability. Wide-body freighters account for about 65 percent of the current fleet, yet they supply 95 percent of its capacity. Within the wide-body fleet, the large category of freighters alone currently represents 31 percent of the freighters in the fleet, and this number will grow to 36 percent by 2031. Large freighters, which supplied 66 percent of the fleet’s capacity in 2001, supply nearly 80 percent of that capacity today.
In particular, the largest line-haul freighter in service, the 747 freighter, represents less than 17 percent of the freighter fleet, with about 235 purpose-built and conversion freighters flying. Yet, its size, high utilization and high load factors allow the 747F to provide more than half of the world’s total freighter capacity. Freighter operating costs have improved, across the fleet, by an average of about 1 percent per year for more than 20 years. This trend, which extends all the way back to the replacement of piston-engine airplanes by jet freighters, is expected to continue throughout the forecast period.
Production and Conversion Freighters
While two-thirds of fleet additions will come from converted passenger airplanes, operators targeting premium, long-range service often find production freighters more attractive than conversion freighters. Greater reliability, utilization and capability can be significant competitive advantages. During the next 20 years, about two-thirds of fleet additions for replacement and market growth will come from modified passenger and combi airplanes. Production freighters, though, will continue to play an important role because their superior reliability, operating cost and capability can outweigh the significant on-ramp acquisition cost advantages enjoyed by conversions.
The breadth of the airplane family can be as important in the conversion market as it is in the production freighter market. Therefore, aircraft manufacturers and conversion providers continue expanding their product offerings, matching size and capability to market demand.
Cargo payloads, on average, generate only half as much revenue by weight as passenger payloads. Freighter profitability is, therefore, extremely sensitive to airplane size. The relatively tight revenue performance of smaller airplanes makes acquisition costs highly significant, favoring freighter conversions. All standard-body fleet additions will be conversions — mostly 737s, 757s, A320s and A321s.
The ratio of new freighters to conversions increases with airplane size. In the medium wide-body category, nearly 65 percent of fleet additions will be conversions. Because of the ready availability of newer medium wide-body passenger airplanes, many of these airplanes will be converted before the typical 15- to 20-year average service life for passenger airplanes. The most common wide-body conversions will be 747, 777, 767 and A330 passenger airplanes. In the large freighter category, only slightly more than 25 percent of fleet additions will be conversions.
Production freighters can achieve higher utilization and better profit potential in the high-yield, long-distance markets typically served by large freighters.
Continuing a years-long trend in the Asia-Pacific region, all-cargo and combination carriers will take the greatest number of large freighters, which are uniquely suited to long-haul, intercontinental markets. Express carrier networks will take the majority of medium wide-body freighters, ideally sized to support high-yield, time-critical operations.
Standard-body freighters will serve emerging regional and niche markets, as well as express markets. Nearly 40 percent of all freighter deliveries during the 20-year forecast period will be to carriers in North America, predominately to express operations.
Historically, up to three-quarters of medium wide-bodies, both production and conversion, have supported express operations, where relatively low airplane utilization makes converted freighters economically attractive. Asia-Pacific carriers will continue to receive the greatest number of large freighters to serve their long-haul, intercontinental routes. Standard-bodies will continue to support the needs of emerging regions, niche segments and express operations. Competitively priced surface transport and belly-hold airfreight alternatives constrain expansion of the medium wide-body fleet in Asia and Europe.
Deliveries to the Middle East and Africa will be more balanced in terms of freighter size. Latin America is forecast to receive mostly standard-body freighters for use within the region and will rely predominantly on medium wide-bodies, rather than large freighters, for service to other regions. The largest share of medium wide-body freighters delivered during the next 20 years will go to dedicated express operators or airlines supporting express operations.
High-yield express traffic is growing faster than the industry average, which helps make medium wide-bodies attractive for fleet growth, as express carriers seek to expand their networks as well as replace smaller freighters. Aircraft utilization tends to be relatively low for express carriers, so converted freighters are particularly suitable for these operations.
Long-distance and general cargo carriers tend to favor the economics of large freighters and the reliability of production freighters. Regional and niche carriers, challenged by cost-competitive ground transport modes, tend to favor standard-body converted freighters for their lower purchase price and low trip costs. The medium wide-body market is, therefore, bounded on both sides. The large freighter category consequently enjoys the highest potential for new freighter market growth.
— This text has been excerpted from Boeing’s World Air Cargo Forecast 2012-2013. A complete version of the forecast will be released this month at TIACA’s Air Cargo Forum & Exposition in Atlanta and online at www.boeing.com/commercial/cargo.The Revolutionary