Watch Now

Demand for freighters spurs investment in new airframe conversions

ATSG’s 360-degree customer commitment offers diverse services for shippers to scale and meet demand quickly

(Photo Credit: Flickr/wilco737)

When the pandemic halted most international and domestic air travel, shippers that depended on passenger aircraft to move freight around the world had to quickly come up with alternative strategies. To complicate matters, consumers shifted buying habits from brick-and-mortar stores to e-commerce, putting more pressure on the air cargo segment for its ability to meet the ever-growing consumer expectation of speedy delivery. Without being able to rely on the cargo capacity provided by passenger airlines, shippers and aggregators began a fierce race for full freighter airplanes.

“High volumes of airfreight have been moved around the globe on passenger aircraft sharing space with luggage,” said Kym Parks, marketing director at ATSG, the world’s largest lessor of freighters. “However, the pandemic changed the global landscape of airfreight movement due to decreased international travel. Demand for dedicated freighters is on the rise and ATSG has positioned itself as the source to meet that demand along with delivering additional value-added services to the global air cargo market.”

Originally, ATSG operated as Airborne Express, the third-largest express freight company in the U.S., but over time it diversified its portfolio of services, becoming the global leader in freighter leasing. With that depth of experience and service, it offers clients ⁠— the largest of which are Amazon, DHL and UPS ⁠— a 360-degree customer commitment. Customers can select services that meet their needs for additional capacity or improve their cost structure, rather than absorbing the overhead cost of an entirely new lane of service. 

“Let’s say somebody has the opportunity to take on an air cargo program but they currently don’t have the additional aircraft,” said Parks. “That may not be something that you have enough volume for and it doesn’t really pay for itself. If you know this customer is going to lead to bigger things, we can provide you the business you need to fit that customer. We can lease you an aircraft, get you a crew, provide you line station support, ground handling support ⁠— all of those things you don’t necessarily have to invest in for the long term until you know that it will actually pay for itself.

“The ATSG 360-degree brand promises to deliver a set of top-quality capabilities and a tenacious approach that overcomes challenges and allows our opportunities to take flight,” Parks said. “A customer may need additional air freighter capacity so they lease a Boeing 767-300 but in order to meet their service timeline they also need a CMI agreement to operate the aircraft, and they might need heavy maintenance support or possibly gateway and ground support at the new airport location. You can choose any of those value-added services through ATSG companies that provide a fixed-cost initial investment while allowing them to quickly provide world-class service to meet market demand.”

For those shippers needing to build capacity with air freighters, ATSG has secured more than 70 conversion slots through 2025 and is expecting to deliver all of those aircraft to the market, as long as there is ample feedstock. Historically this Ohio-based company has delivered Boeing 767 converted freighters from IAI in Israel, but it recently entered an agreement with Boeing to bring four Boeing converted freighters to the market. At Pemco Conversions (an ATSG company) in Tampa, Florida, it has two lines for A321 conversion that will be the next airframe offered by ATSG. Germany-based aerospace manufacturer EFW won the contract for 20 A330 conversions, which begin induction in 2023. 

With the A321 conversions, ATSG is jumping into the narrow-body freighter category, which will be a shift from its historic reliance on the Boeing midsize freighter, especially as it works to further penetrate the European and Pacific e-commerce markets. The A321 freighter offers similar capacity as the Boeing 757 freighter with more efficient operational costs. ATSG also is adding the A330 converted freighter to complement the A321 freighter. Both Airbus aircraft have a fly-by-wire cockpit and pilots can easily transition between the two, offering an advantage over the Boeing aircraft family. Because of the growing demand for time-sensitive package deliveries, interest in these freighters has been high since ATSG made the announcement adding them to their available fleet starting in 2022.  

Not only are the growing e-commerce markets in Eastern Europe, Asia-Pacific and South America driving air cargo demand, but cross-border e-commerce is providing growth in established e-commerce markets in North America and China. E-tailers, unlike traditional retailers, are able to provide services helping smaller sellers move products through customs, opening up additional markets for products. The continued expansion of mobile and social purchasing is helping to sustain the market growth in e-commerce realized during the pandemic, which should continue to drive the demand for the ATSG freighters even after international travel and traditional belly freight capacity return.  

“Rich Corrado, president and CEO of ATSG, reminds us that every airplane we put in the air has thousands of customer promises riding inside of it,” said Parks. “So we have to make sure we’re doing everything to ensure those promises arrive when expected. Our history as Airborne Express allows us to understand that commitment on a different level and how important it is to the customers who depend on us to consistently deliver those promises.”

Corrie White

Corrie is fascinated how the supply chain is simultaneously ubiquitous and invisible. She covers freight technology, cross-border freight and the effects of consumer behavior on the freight industry. Alongside writing about transportation, her poetry has been published widely in literary magazines. She holds degrees in English and Creative Writing from UNC Chapel Hill and UNC Greensboro.