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Boeing says e-commerce, trade shifts drive future demand for freighters

Manufacturer revises 20-year air cargo forecast based on fresh economic analysis, modeling

Boeing forecasts 2,400 more freighters in service by 2040. All-cargo aircraft have proven their value providing airlift for businesses in the absence of passenger flights. (Photo: Jim Allen/FreightWaves)

The Boeing Co. (NYSE: BA) on Tuesday marginally downgraded its 20-year outlook for air cargo because of an uncertain economic recovery from the coronavirus crisis and adjustments to its model, but the aerospace giant still projects the global freighter fleet will expand 60% to support projected growth in international trade and the explosion in e-commerce shipments.

Cargo traffic, led by East Asia, is expected to average 4% annual growth through 2039, spurring deliveries of 2,430 all-cargo aircraft for growth and replacement, according to Boeing’s biennial World Air Cargo Forecast 2020-2039. More than 60% of the additional freighters will be converted passenger planes, with an additional 930 coming from the factory.

In 2018, Boeing projected 4.2% growth for airfreight and deliveries of 2,650 freighters, including 980 new-production aircraft. 

The lower traffic growth assumptions are due to reduced economic, trade and industrial production forecasts, partially offset by more robust growth in pharmaceutical shipments and e-commerce that is driving business for express carriers.

Another reason for the lower fleet projection is that Boeing updated its models to account for greater utilization as carriers get better at fitting more cargo on each flight. 

“Also, our latest forecast reflects younger passenger conversions due to severe passenger market COVID disruption,” Boeing spokeswoman Brianna Jackson said. “These ‘younger freighters’ are able to work harder and more efficiently, thereby lowering the long-term world freighter fleet requirement.”

Global trade is projected to grow 4.7% over the next five years and 2.8% on average during the next two decades, according to IHS Markit as long-term economic trends reestablish themselves. 

As trade grows, continued capacity discipline among ocean carriers and the shift of manufacturing from coastal China to other parts of the Asia-Pacific region could push more freight to air, Boeing said. All-cargo airlines could also benefit from worsening imbalances in container trade whereby finished products fill capacity in one direction, but low export volumes incentivize ocean lines to quickly return empty containers to profitable origin points. 

Freighter networks have the flexibility to mitigate this directional imbalance, and help inland exporters, through more flexible and directional routings, the Chicago-headquartered manufacturer said.

Eventually, faster technology adoption could lead to increased demand in traditional air cargo-intensive sectors such as semiconductors, it added.  

Meanwhile, the rapid expansion in e-commerce over the past five years has further accelerated during the coronavirus pandemic as more people work and shop from home. Consumers are shifting money that previously went toward restaurants, movies and other services  to purchases of goods, which, combined with expectations for quick delivery, has driven a 14% increase in traffic carried by express carriers, according to Boeing.

FedEx Chief Marketing Officer Brie Carere recently said that three years of e-commerce growth has been pulled forward in just seven months. 

The international express market grew 8.5% during the past decade and jumped up 11.5% in 2019, with the share of overall air cargo traffic reaching 19%. Last year, global digital sales increased to 14% of all retail sales (16% in the U.S. and China), valued at $3.5 trillion. By 2023, the e-commerce market is forecast to reach $6.5 trillion. 

Boeing attributed 4.3% U.S. airfreight growth in 2019 to the expansion of domestic express networks. Express traffic is still below its pre-2008 peak but surpassed that level in 2017 and was 17% higher than peak last year, reaching 16.2 billion revenue-ton-kilometers, if freighter network activity is included. 

“The freighter network growth in recent years has largely been driven by Amazon as it continues to build out its network and fleet to insource more of its deliveries,” the report said.

All-cargo carriers have also benefited from the grounding of passenger fleets that typically carry 54% of all global cargo in the lower deck, along with baggage. Early in the pandemic, demand for airfreight was dominated by COVID-related medical supplies. Boeing said freighter traffic is up 6% so far this year as shippers look for transport alternatives. 

Air cargo volumes have steadily improved each month since the first quarter but were still 12% below last year’s level through September, due to lingering recessionary effects of the pandemic on manufacturing and jobs. Remarkably, the industry is enjoying 16% more revenue year-to-date on the strength of a 42% gain in yields as tight capacity forces shippers to compete for loading space. 

Air Canada, for example, recently reported cargo yields are nearly 100% higher through the first nine months of the year.

Freighter operators have responded to the shortage by leasing more aircraft and pulling planes out of storage. About 200 passenger carriers have also filled the breach by offering more than 2,500 aircraft for dedicated cargo service, 80% of which are widebody aircraft that can carry large containers and lots of freight, according to Boeing and the International Air Transport Association. Nonetheless, despite a 13% hike in freighter capacity, a quarter of the overall space for transporting goods by air is still gone.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.


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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]