Express fleet continues modest growth

Today we begin a two-part analysis of the jet freighter fleets operated in express service worldwide. Tomorrow we will look at the fleet on an operator-by-operator basis, but here we examine the current makeup of the total fleet, and the way it has changed over the years.

At the end of the first quarter of 2016, the combined fleet of jet freighter aircraft operated by or on behalf of the world’s major express companies stood at 903 units, accounting for just over 55% of the global freighter fleet. This 1Q 2016 total is up thirty-two units from the same time last year, a 3.7% increase.

Looking further back in time, the number today is up just 7% from what it was in 2001. However, the years since 2001 have been turbulent, and while the average annual change has been almost nil, the year-to-year changes have been huge.

Beginning in 2004, the express fleet grew rapidly, peaking at 940 in early 2006, then fell back to 899 by the end of that year, reflecting the absorption of Menlo into UPS. This was followed by modest growth in 2007, but in late 2008 DHL abandoned the US domestic market, and by the beginning of 2009 the worldwide fleet had shrunk by 141 to just 787. The decline continued for another year, bottoming out at 766 in the first quarter of 2010, before returning to modest annual growth (up a total of 18% over the past six years).

But while the number of jet freighters operated by the integrators is not much greater than what it was at the beginning of the century, the available capacity has increased dramatically, as the express companies have moved from fleets dominated by narrowbodies to fleets dominated by widebodies. In 2002, for example, 62% of the 796 freighters in the integrators’ fleets were narrowbodies, vs. 38% widebodies. Compare that to last year’s fleet, in which the ratio was reversed, with narrowbody freighters accounting for 39% of the 903 total units, while widebodies make up 61%.

Over the last twelve months, however, the balance shifted back a bit, with the net addition of thirty-four narrowbodies, against the net loss of two widebodies, and the current ratio is 38.5% narrowbody to 58.5% widebody.

As shown in the chart at right, the biggest changes were the addition of twenty-three 757-200Fs, twenty 767-300Fs, and fourteen 737-400Fs, along with the disappearance of thirteen A310Fs and nine MD-10-10Fs. Types seeing smaller additions include A300-600Fs (up 2), 777Fs (up 3), and 747-8Fs (up 1), while types seeing modest declines include BAe 146s (down 1), 727-200Fs (down 2), 767-200Fs (down 3), MD-10-30Fs (down 1), and MD-11Fs (down 2). In all, thirty-one freighters were retired (three narrowbodies and twenty-eight widebodies), while sixty-three were added (thirty-seven narrowbodies and twenty-six widebodies).

The most popular narrowbody freighter, and by far the most popular individual freighter type in the integrator fleets, by a huge margin, is the 757-200F, with 267 units now in service to the integrators, and many more on order. The 727-200F, once the mainstay of the express companies, is going in the opposite direction, with only three units still in express service.

The most popular widebody remains the A300-600F, with 157 now in service. However, with feedstock no longer available, retirements will soon begin to reduce the number of A300-600Fs in the fleet. At the same time, 767-300Fs, both production and conversion, will continue to enter the fleet. This year saw the 767-300F overtake the MD-11F as the express industry’s second most popular widebody freighter, and it will not be long before it replaces the A300-600F at the top.

One driver of future growth of the express freighter fleet, although it is hard to quantify at this point, is the exploding demand for express delivery of goods ordered online, particularly in Asia, but also in the rest of the world. The citizens of China have taken to e-commerce with a vengeance, and the same is about to happen in India. Those two countries alone have a population of almost 2.5 billion, and neither is particularly well-served by surface shipping options.

In China, new carriers – both air arms of existing express companies and startups hoping to serve the express industry – are springing up like mushrooms. But the changes in the express industry are not confined to emerging markets. The express industry in the US and Europe has long been thought to be mature, and not subject to much change, but consider that Amazon has entered the express business in a big way – having signed deals to acquire forty 767 freighters – and it is clear that Asia is not the only location for change.

Tomorrow we will examine the express fleet on a company-by-company basis.