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Air Cargo approaching a Golden Age

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    Air Cargo approaching a Golden Age

    [updated:LAST EDITED ON 04-04-02 AT 04:48 PM (GMT)]very interesting.....

    AIR CARGO APPROACHING A GOLDEN AGE.....

    There are now more than 1,600 jet freighters in operation worldwide. The fleet size has doubled in the past 10 years to meet an ever growing demand for global air cargo services. Even so, passenger jets outnumber freighters by more than a seven-to-one ratio. That fact is not too surprising, considering that for each dollar of revenue taken in by the world's airlines, 85 cents comes from passenger operations, to just 15 cents from freight.

    However, cargo traffic is growing faster than passenger traffic. During the past decade worldwide air cargo increased from about 80 billion tonne km. (54.8 billion ton mi.) in 1990 to an estimated 150 billion freight tonne kilometers, FTKs, (102.8 billion ton mi.) in 2000. That traffic growth equates to an average annual increase of about 6.5%, about two percentage points higher than the annual growth for passenger traffic during the period.

    Of course, some years have seen more significant cargo growth than others. There was only about 1% growth in worldwide air freight traffic in 1998, linked mainly to financial problems in Asia, but traffic rebounded to register about 6% growth in 1999. Part-year results for 2000 indicate more vibrant market conditions. Airline trade organizations in the U.S. and Europe have reported 8-10% growth in cargo traffic for their members, and several Asian carriers have reported record cargo results based on full economic recovery in that region.

    One disappointing market sector has been the normally buoyant U.S. express business, where FedEx, Airborne Express and most other major competitors have reported shipment volume increases of 3% or less in recent quarters. Only UPS has been able to achieve nearly a 10% growth rate in this market sector.

    Over the next 20 years, freight traffic is forecast to grow at an average annual rate of about 6%. Growth in the passenger sector will not be much above 5%. Accordingly, airlines are expected to place an increasing emphasis on cargo.



    The planned freighter version of the A380 (formerly the A3XX) mega-transport underscores Airbus' interest in the air cargo market.

    The air freight market is growing in response to an ever expanding volume of global trade. Air freight is more expensive than other transportation modes, but it is ideally suited to meet the needs of shippers as they come to demand faster, more reliable delivery given increasingly more complex supply chains. High-value goods are particularly suited to transport by air; based on value, air freighted items represent an estimated 40% of all the goods moving globally. However, air freight represents less than 2% of the tonnage of goods transported worldwide.

    Accompanying the expanding demand for air freight will be a commensurate increase in the demand for freighter aircraft. The world's fleet of freighters consists of 1,623 units, ranging in size from BAe 146Fs, with about 25,000-lb. payload capacity, to 747-400Fs, with more than 240,000-lb. payload capacity. Fewer than 400 (25%) of these aircraft were delivered from the factory in an all-cargo configuration; more than 75% operated for a substantial period, typically 15-20 years, carrying passengers. Later, they were converted to freighter configuration, a modification process that has proven to be a practical way to extend the useful economic lives of commercial aircraft that otherwise would be retired from service.


    CONVERSION MARKETS

    Boeing and Airbus offer factory-built freighter versions of existing models, and each has new freighters on the drawing board. In recent years the new-build freighters have included 747-400Fs, MD-11Fs, 767-300Fs and 757-200Fs from Boeing and A300-600Fs from Airbus. The most popular aircraft for freighter conversion since the mid-1990s have been Boeing 727-200s, DC-10-10/-30s, MD-11s, 747-200s and Airbus A300B4s.

    Both major manufacturers are aggressively seeking to expand their roles in the freighter conversion market. In the past much of the conversion activity on aircraft such as 727s, 747s and DC-8s was performed by third-party modification firms, but the major airframe companies are now leading the way in developing freighter conversion programs for newer airplane types including the A300, 757 and 767.

    Boeing and Airbus realize there is money to be made in the modification market, and they understand that the existence of a follow-on market for used aircraft can stimulate new aircraft sales. As original equipment manufacturers (OEMs), they have complete engineering documentation/analysis related to the unmodified aircraft, and as such they can more readily satisfy the FAA and other regulatory bodies that any proposed modification will not adversely impact airworthiness. Third parties still have a role in the conversion business, but they no longer dominate as they once did. Boeing, for example, is teaming with outside parties such as Israel Aircraft Industries, Aeronavali and Singapore Technologies, creating joint ventures for freighter conversion giving such companies an ongoing role.


    3,100 ADDED FREIGHTERS NEEDED BY 2020

    There is a buoyant future market for both new and converted freighters. Global air cargo traffic will approach 500 billion tonne km. (342.5 billion ton mi.) by 2020, compared with 150 billion tonne km. (102.8 billion ton mi.) in 2000. Freighter productivity will increase, so the freighter fleet will roughly double while the traffic levels more than triple.

    The payload capacity of the average freighter is increasing. Many of the freighters added to the worldwide fleet in the 1980-95 period were small-capacity 727-100F and 727-200F units. These models, with payloads of 40,000-60,000 lb., were applied extensively in the freighter networks of U.S.-based express companies such as FedEx and UPS. More recently, the fastest growing segment of the freighter market has been the medium-capacity wide-body category. Such aircraft, exemplified by Airbus A300Fs and A310Fs and Boeing 767Fs, have payloads between 80,000-120,000 lb. The trend toward larger freighters is expected to continue.

    COMMERCIAL JET FREIGHTER FLEET SUMMARY (1,623 TOTAL UNITS)
    Small
    (Payload Capacity Less Than 60,000 lb.) Medium Narrow-Body (Payload Capacity From 60,000 to
    120,000 lb.)
    622 Total Units

    215 B727-100s
    283 B727-200s
    35 B737-200s/-300s
    25 BAe 146 QTs
    104 DC-9s (all models) 353 Total Units

    55 B707-320s
    80 B757-200s
    115 DC-8-50s/-60s
    103 DC-8-70s
    Medium Wide-Body (Payload Capacity From 70,000 to 140,000 lb.) Large Wide-Body (Payload Capacity Over 140,000 lb.)
    255 Total Units

    67 A300B4s
    45 A300-600s
    41 A310-200s
    16 B767-200s
    34 B767-300s
    40 DC-10-10s
    11 L-1011s
    1 MD-10-10 353 Total Units

    30 B747-100s
    137 B747-200s
    4 B747-300s
    50 B747-400s
    51 DC-10-30s
    3 DC-10-40s
    1 MD-10-30
    77 MD-11s
    Source: Air Cargo Management Group/Cargo Facts, December 2000


    Another factor that will reduce the demand for additional freighter quantities is a gradual increase in the daily utilization of the typical freighter. This factor results in somewhat higher productivity for each freighter, which in turn leads to the need for fewer freighters to meet total worldwide demand.

    It is also important to note that half the cargo handled by the world's airlines moves in the belly compartments of passenger aircraft. The ever expanding global fleet of wide-body passenger units (767s, 777s, 747s, and A300s, A310s, A330s, A340s) provides considerable competition to freighters. Large wide-body passenger models have space for five or six pallets of freight in addition to the space used for passenger baggage. However, such passenger aircraft are often flown on ultra-long-range routes, where fuel requirements frequently limit the amount of cargo tonnage that can be carried. Narrow-body passenger aircraft aren't very freight friendly, since their lower deck holds lack any provisions for carrying pallets or containers that are a nearly essential element of air freight operations.

    Taking all of these factors into consideration, the freighter fleet will probably expand to 3,750 units during the next 20 years. About 60% of the freighters flying today, or about 1,000 units, will be withdrawn from service by 2020, resulting in the need for more than 3,100 freighters to be added over the 20-year period for growth and replacement purposes.


    FREIGHTER FLEET COMPOSITION IS CHANGING

    The composition of the fleet will be considerably different in 2020. Today, two-thirds of the freighters are narrow-body aircraft, mostly 727Fs and DC-8Fs. In 2020, nearly 60% of the freighters will be wide-body models, including large numbers of A300-600s, 767s and 747s. Today, the most common freighter type is a small-capacity model with payload under 60,000 lb. By 2020, the most common type will be a medium-capacity wide-body with payload of about 100,000 lb.

    The fleet composition has already started to change. The fastest growing component of the freighter market during the past five years has been the medium-capacity segment, where twin-engine widebodies are being applied in large numbers in place of DC-8Fs and 707Fs that traditionally served this role. The medium-wide-body freighter market didn't exist much before the mid-1990s. It came into being with the launch of the production A300-600 freighter program by Airbus for FedEx and the launch of the 767-300 freighter by Boeing for UPS. Today, there are 250 medium-capacity wide-body freighters, including substantial numbers of A300B4s, A300-600s, 767-200s, 767-300s and DC-10-10s.

    The A300-600 freighter program was a major milestone since it represented the first successful venture of Airbus into the freighter field. Airbus-member companies also aggressively went after the freighter conversion market. German partner DASA (now part of EADS) developed an A310-200 freighter conversion program for FedEx, with first delivery in July 1994. Somewhat later, British Aerospace (now BAE Systems) and DASA both launched conversion programs for A300B4 series aircraft. EADS now also offers an A310-300 conversion program, with first delivery scheduled during the first quarter of 2001.

    The medium-capacity segment of the air cargo market, which is served by freighters such as this UPS 767, is quickly expanding. There are about 250 medium-capacity wide-body freighters operating in today's fleet.



    Boeing has discussed launching a conversion program for the 767-200, but has yet to secure a launch customer. Thus, Airbus has taken the lead in the medium-wide-body freighter segment. This is a significant development considering that as recently as five years ago the freighter fleet consisted entirely of Boeing and Douglas models. Boeing correctly points out that well over 90% of air freight today moves in Boeing aircraft (including McDonnell Douglas models). However, Airbus clearly will gain a bigger share in the coming years.

    The European manufacturer wants to get its share of the future freighter business. Both BAE Systems and EADS will soon launch separate conversion programs for the A300-600 model. The company's decision to offer a freighter version of the A380 is further proof of its intentions in this area. Assuming Airbus sticks to its development schedule, the A380 freighter would enter the market in 2007. The A380-100F would be able to carry a 150-tonne (165 tons) payload, and offer palletized/containerized cargo space on three decks. Its tonage capability would be about 20% greater than the 747-400F, the largest commercial freighter in operation today. In volumetric terms, the A380 could hold as much as 39,300 cu. ft. (assuming two-abreast pallet/container loading on all three decks), or about 50% more than the current 747-400F.

    Of course, Boeing is not content to let Airbus move ahead unchallenged into the expanding market for high-capacity freighters. Sales of the freighter version of the 747-400 have been extremely important to Boeing in recent months, and it doesn't want to relinquish this market segment to its European competitor. Note that Boeing sold 35 freighter versions of the 747-400 from January 1999 through September 2000, representing 70% of all 747 orders during this 21-month period. Boeing soon will offer a freighter conversion program for the 747-400, which is expected to be very popular.

    Boeing also is working on the 747X program, including a stretched model that would include a freighter variant. The new 747X Stretched Freighter would have a maximum takeoff weight of 1.043 million lb. versus 875,000 lb. for a 747-400F and 1.285 million lb. for the A380-100F. The stretched fuselage of the 747X model would give space for 36 main deck pallets, up from 30 on the 747-400F. Accordingly, the 747XSF would provide almost 25% more cargo volume than the -400F; it could carry 150 tonnes (165 tons) about 4,450 naut. mi., according to Boeing figures. By comparison, the A380-100F could carry the same 150 tonnes (165 tons) about 5,600 naut. mi.

    Boeing claims the three-deck layout of the A380F will be difficult to load, but Emirates has agreed to order two of the new Airbus freighters, and other airlines including Atlas Air, FedEx, Singapore Airlines, Cargolux and Lufthansa have also shown considerable interest.


    OTHER TRENDS TO WATCH

    Another significant development is the growth of specialist all-cargo airlines such as Atlas Air and Gemini Air Cargo. Such carriers lease freighters to other airlines on an aircraft, crew, maintenance and insurance (ACMI) basis. The lessees, typically major non-U.S. flag airlines, use the ACMI lift to augment the space they have in the bellies of their passenger aircraft and their own main deck freighter capacity. Together, Atlas (with a fleet of 747 freighters) and Gemini (with a fleet of DC-10-30 and MD-11 freighters) operate 50 large-capacity freighters. This total equates to one-sixth of the current total of aircraft in this important market segment.

    Changes in the market for small-capacity freighters have been considerably less dramatic than changes for larger capacity models. Clearly, a replacement eventually will be needed for many of the 727-100Fs and 727-200Fs in operation worldwide, a fleet that consists of more than 500 units today. Based on their price, capability and availability, about 100 more 727-200s could be converted to freighter configuration through 2005. However, the future viability of 727Fs will be strongly influenced by new noise regulations that are currently being debated. If efforts calling for early elimination of the noisiest Stage 3 aircraft are put into effect, 727Fs will be forced out of operation well before the end of their economic lives.

    On offer in this size category are 737-300 conversions based on a renewed effort by Pemco Aviation Group and a new program under development at Boeing Airplane Services. Boeing also will certify a convertible version of the 737-700 model in 2001, for airlines needing the flexibility such a configuration offers. Airbus presently has no small-capacity freighter offering, but a conversion program for the A320 model is under development for launch when residual values drop sufficiently to make it attractive.



    "one is the loneliest number.."

    #2
    RE: Air Cargo approaching a Golden Age

    Quite a lot to it, but it's very interesting. Cargo is going to be bigger than ever! Some good research Kabir.
    Michael

    Comment


      #3
      RE: Air Cargo approaching a Golden Age

      yeah - hopefully som eof the regionals might get more services - LBA had a B733F of Bluecargo for UPS last summer but that seems to have frazzled out, although a lot of the sceds from here (espec bmi) have quite a bit of belly cargo

      Brgds
      EGNM

      Comment


        #4
        RE: Air Cargo approaching a Golden Age

        Kabir , you're an encyclopaedia !!!!

        interesting and useful !!!

        Thanks

        Kind regards

        AT

        Comment


          #5
          Very interesting read. It has gotten more and more reliable over the last 16 years.
          It's a good time to be alive.
          ____________________________________
          Marius from air freight rates

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