Dueling freighter predictions

   Predicting air cargo growth isn’t an exact science and forecasting a future need for passenger and freighter aircraft is even more difficult. 
   Every other year, Airbus and Boeing release freighter forecasts that are similar enough in approach, but vary in key instances. Simply put, the slow sunset of the freighter has been vastly overstated, at least according to the two aircraft manufacturers.  
   In its Global Market Forecast 2014: Freight, Airbus sees a 4.5 percent growth rate through 2033, with most of the activity coming from emerging countries, and this will create new trade lanes that are a good fit for midsized freighters. South-to-south trade lanes, for instance, show 16 percent growth by 2033, when they had been growing at an 11 percent rate in 2013. These emerging markets won’t make use of large freighters because of ample belly availability and high freighter operating costs. 
   According to Airbus, emerging markets will have 75 percent of total air cargo traffic by 2033. Advanced economies will grow behind the average, with North American cargo volumes seeing 3.2 percent growth annually and European cargo rising 4.3 percent each year.
   Freighters will still be important to the air cargo market. Airbus sees a need for 601 large freighters, 1,145 midsized freighters, and 612 small freighters. Many of these will come in the form of passenger conversions, but more than 800 will be new orders, with 414 midsized freighters and 389 large freighters coming from factories. 
   “Thanks to their flexibility, mid-size freighters will be increasingly utilized,” Airbus said. 
   China, with its booming express market, will see a rise in the use of midsized freighters, according to Airbus. In the next 20 years, China’s express fleet will grow from 50 freighters, 10 of which are of the midsized variety, to 330 planes.
   Airbus also sees belly capacity as a major player, with it taking 56 percent of the market by 2033, up from 51 percent currently. 
   “Passenger traffic is expected to grow faster than cargo traffic, especially on long-haul flows as in recent years,” the forecast said. “Belly capacity is therefore set to continue to capture the greatest share of traffic on these long-haul flows.
   “Large freighters flying on long-haul flows will face increasing competition from the belly capacity of regular passenger aircraft,” it added.
   Boeing’s forecast puts the annual cargo growth rate slightly higher — 4.7 percent, or 4.8 percent with express freight factored in — and reported the number of new freighter orders slightly higher than Airbus’ figures. 
   In 2013, Boeing measured 1,690 freighters in the market, with the largest percent taken up by standard-body freighter conversions. That won’t change in the next 20 years — standard-body conversions will remain the largest portion of the market — but Boeing sees the share of large production freighters jumping from 21 percent to 30 percent. The need for medium-widebody freighters and widebody conversions falls proportionately. 
   By 2033, there will be 2,170 freighter deliveries, with 1,130 of these freighters replacing existing planes. Here is where Airbus and Boeing differ, with Boeing seeing a greater need for large freighters. This need for large planes, according to   Boeing, will be driven not by emerging economies, but continued Asian growth. Boeing sees the region taking 40 percent of all freighter deliveries over the projected period — with a significant number of them being large freighters — while North America takes 30 percent of the freighter share, going mostly to express carriers. 
   Overall, Boeing seems to have a sunny outlook on freighters, especially since the general trend is toward a reduction in freighters in favor of larger passenger planes with more belly room.
   “Freighters are … projected to carry more than half of the world’s air cargo for the next 20 years, even as lower-hold cargo capacity expands faster than freighter capacity,” Boeing said. “It should be noted, however, that the faster growth and economical pricing of passenger lower-hold capacity makes the freighter share of the cargo market volatile when air cargo traffic growth is constrained.”
   This growth will be led by Asian air cargo traffic routing to North America and Europe, with the Asia-North America route showing the biggest gains over the next 20 years. Freight traffic inside Asia will also grow quickly.
   Airbus and Boeing’s overall growth numbers are similar to those published by the International Air Transport Association, which stated air cargo tonnage will grow globally by 4.1 percent through 2018. Global cargo tonnage in September rose 5.2 percent, compared to September 2013, as capacity increased 3.8 percent, according to IATA.
   The September increase comes after August’s 3.8 percent tonnage growth, year-over-year. From month to month, September volumes ticked up 0.6 percent, and capacity was up 0.4 percent.
   In the first nine months of the year, IATA recorded a 4.4 percent growth in tonnage, year-over-year, and a 3.5 percent increase in capacity. To see what’s driving this growth, look to GDP for a very cursory idea of air cargo trends. In the second quarter, GDP grew 4.6 percent, but an initial estimate put third-quarter growth at 3.5 percent.  
   But GDP contains a number of economic measures that have nothing to do with air cargo, and so for a better idea of what’s driving growth look to something like semiconductors. Global September semiconductor sales were up 8 percent over September 2013 to $26.9 billion, and grew 1.9 percent over August. For the third quarter, semiconductor sales rose 5.7 percent compared to the third quarter of 2013.
   Whether you tend to believe Boeing or Airbus, or simply turn to IATA, the overall idea seems to be the air cargo market is growing solidly and sustainably. The future of air cargo may not be freighters, but if these projections are at least partially correct, freighters may gain back a little market share over the next two decades.

This column was published in the December 2014 issue of American Shipper.