Listen: 2022’s greatest hits and the year ahead

In this week’s episode of the “Cargo Facts Connect” podcast, Cargo Facts Editor Jeff Lee and Associate Editors Andrew Crider and Robert Luke are joined by Cargo Facts Consulting Senior Consultant Jim Edgar to look back on an eventful 2022. Major highlights have included new players joining the market and others leaving, new programs and certifications, and intense competition in the large-widebody segment. The group then turns to some of the biggest developments to look forward to in 2023. Tune in for a discussion of these topics and more in this year’s final episode of the podcast. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Andrew Crider Hello, and welcome to this episode of cargo facts connect the podcast of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I'm your host Andrew Crider, associate editor of cargo facts. Robert Luke And I'm Robert Luke, associate editor of cargo facts. Jeff Lee And I'm Jeff Lee, editor of cargo facts. Andrew Crider To wrap up the year. We thought it would be special to bring on our guest this evening, senior consultants at Cargo Facts consulting Jim Edgar. Jim, thank you for joining us this evening. Jim Edgar My pleasure. Andrew Crider I want to open up very broadly, it's been a very eventful year in the Freighter industry, when is it not? But what do you think your takeaways or highlights from this year have been? Jim Edgar I think, from my perspective, and looking over the past 12 months and even longer is the effect of the pandemic on on our industry traffic obviously, was much higher compared to the other parts of our industry particularly passenger. But even as passenger begins returning and domestic is almost there international intercontinental, recovering nicely, but air cargo has really air cargo and freighters the topics have really come into their own. And I go back to Farnborough this past summer, and comments that we made during a podcast after that event that I think were significant in that the number of stories and items that were reported even in the general air transportation press revolved around air cargo and freighters. And that hasn't always been the case. And so I think that the prominence of our industry, not just of world commerce, but in air transportation. So you usually hear much much more about passenger developments, but I think air cargo and freighters have really come on strong and will continue to in the future. So it's reflected in the number of model types offered the breadth and depth of the kinds of freighters all the way from the largest which used to be the dominant down to to really drones and UAVs and everything in between regional freighters, turboprops jets, narrow body so I'm just really struck by how much exposure and attention our industry is, is getting. Robert Luke That's a great point. Jim. I want to just interject here as well as we reflect on this year. And I personally think there's a transition that's taking place. And also at the same time we're seeing a wonderful swan song. As we kind of wrap up this post COVID era, you saw a lot of the classics, whether they were the 767 200 adds to the 737 Classics really define their value and what their contributions were to the market. As we prepare to also say goodbye to the era of the 747, we began to also welcome the new age of twin engine freighters, whether it's the triple seven 300 conversions that are being developed to the eight 320 ones that are starting to pick up some momentum here on the market. The course everlasting strong presence of the 7378 Hundreds and the introduction of a 350 factory built freighter from Airbus plus the a 330s. I would just say let's let's talk about those a little bit. And just Jim, what are your thoughts based on what we're seeing happening with the older freighters and the introduction of the new ones? Do you think I think it was just a smooth ending for me personally, but what are your thoughts on it as far as what they brought to the market and what the new phrase emerging into the market will bring? Jim Edgar Well, I think it's something that we've anticipated for a very long time but the emergence of the A 321 and the various providers of those in the A 330 conversions are really proliferating and we're going to continue to see those fleets expand dramatically. Obviously the 737 800 has been a strong leader and model type but boy that the a 321 and a 330s are really you just you hear more and more about them and order As an interest and then obviously the at the top end between the a 350, which will be two years earlier than the triple seven dash eight f is also a huge item of interest for me personally, but I think for the industry as well as 7474 hunters are retired. And so I think the 321 and the 330 are big stories and bear watching as the next year progresses, for sure. Andrew Crider On the a 330s and a 320. Ones note I almost want to ask how many a 320 ones does it take to screw in a light bulb that was left from the 747 and production? But do you think that the development of these Airbus freighter types being both the A 330 and a 321 may affect the current race that we see for between the A 350 F and the Triple seven dash eight F in replacing the queen of the skies. Jim Edgar I know that the the Airbus folks would maybe take issue with me but I don't see fleet commonality between wide bodies and standard body freighters as being so significant. Obviously, the Express carriers, the E commerce carriers have mixed fleets as wide bodies and standard bodies. But I don't think it's as significant factor as it would be in the passenger side and particularly sidestick versus yoke center yoke. But I think it's very possible that the operators of both types will get Airbus and Boeing, freighters, standard bodies and wide bodies, there seems to be fleet commonality doesn't seem to be as big a factor as it is on the passenger side. Jeff Lee I think that's, I would kind of disagree with that. And we have seen, you know, some operators that are seemingly taking advantage of fleet commonality. And I suspect we'll continue to see more of that. And so, you know, for example, Smart Links is one that I'm thinking of whether it's passenger fleet of Airbus family narrowbodies. And we are seeing them of course, move into and build a pretty what will be a pretty large fleet of a 321 freighter. But then, in a year or so, they will also be moving into the wide body of A330. Segment. And that I feel like is, at least partly based on the commonality aspect of it. So I think the commonality aspects does come into play quite a bit. Jim Edgar I think we have examples of, you know, particularly mixed fleets among the Express in the E commerce and part of it is just a matter of adding capacity. But I'm thinking of as an example of Lufthansa Cargo, who had MD elevens, unique airplane type in their fleet, triple seven freighters, unique airplane type and their fleet Cathay who had 747 Dash eights, but no passenger versions. So so we'll have to wait and see what happens. But certainly commonalities of factor I don't want to dismiss it entirely. But I guess as I see the fleet's development, Smart Links is a particularly good example to make your point, Jeff, but I'm just not sure that it's going to be as big a factor but, you know, that's, that's why we monitor the Jeff Lee Cathay that's going to be an interesting one to to observe, isn't it? Course they have passenger a 350s. But right now, at least the the freighters are, they don't have any passenger, seven, four sevens in their passenger fleet. And that's the that's the kind of thing you were talking about with Lufthansa as well, they don't mostly have air buses on their passenger side, but they'll be taking the new triple seven dash eight to add to the existing triple seven freighters. So yeah, and that's this really has been, I feel like has been the year of this this shift in the large wide body space. And, you know, started off with the bumper launch order from Qatar with Boeing for the triple seven dash eight F. And now both that triple seven dash eight, F and the 350s are well into the double digits now in terms of their orders. And so this this rivalry just continues and we, we do expect quite a few more of these combination carriers and other cargo carriers to make their choice. In this in this segment, Robert Luke I'm gonna step in real quick if you guys don't mind and I'm gonna ask a question. With the inevitable retirement of the tri and quad engine freighters are first part of my question is, are we going to see? How successful or will the twin engine why bodies coming in to replace them require more in fleet numbers to meet the volume and passenger and payload excuse me that these are tri and quad engines jets are capable of carrying? And if that's the case? Are we still seeing the same amount of carbon emissions being released into the environment that these current traders are currently disposing? And when they take flight and are currently in service? Jim Edgar You asked an awful lot of questions all at once. But I think it's it's fair to say that there's fleet replacement involved in new orders and growth and the the a 350, as well as the triple seven, eight F are very comparable to what they're replacing. So I'm not sure we're going to see a tremendous number of orders based on slightly less capacity. They're much much more fuel efficient and environmentally friendly. So I think those are going to be things we're going to be hearing more about because as the older aircraft, the older freighters are replaced with the newer, more efficient, more environmentally sensitive freighters. That's going to be the contribution of our industry and in resolving that so yeah, I I just think it's, it's, you know, you can look at the various forecasts out there, including our own from CFC and see how much replacement versus growth but I think it's pretty much a one for one, they're pretty close in terms of capacities, they aren't that dramatically different at the high end. Andrew Crider So there's a lot of market shifts. And for certain viewers like me, who I'm not a fan on either player, I just love the game and I hope both teams have fun. I want to know if these new entrants whether they be the rise of the Airbus platform or even new offerings from ATR and dash eight and and Embraer. I want to see if you think that this is a sign of increasing competition in the space, or just general growth of the industry and changing market conditions, Jim Edgar I think you answer in the affirmative to both. Again, it's there's much more competition, we've seen the the huge increase in number of conversion providers, just unprecedented multiple used to be two or one, maybe three different choices for each model type. And it's it's way beyond that now. Just look at the triple seven as an example. But so, you know, I, I mentioned at the beginning, the breadth and the depth, so the breadth would cover the number of choices within a model type, but the depth would cover the model types. You know, we've got very competitive aircraft at the top end, and very competitive alternatives at the lower end, the lower capacity and including, you know, what you've been reporting continuously regarding drones, so it's, everything is is growing, it's becoming more competitive, it's becoming more specialized. So lots and lots of choices lots and lots to report on and, and for our for events next year. Look really looking forward to those. Jeff Lee But at the same time, I mean, we are seeing and continue to see the number of operators and the diversity in freighter operators just that just grows week by week and the new operators new leasing companies entering the freighter space and just, you know, it's so fascinating to see airlines that either haven't had freighters for a long time or have never operated freighters now really taking a serious look and some already making the moves into the freighter space. And so many of these have been through either a 320 ones or 7378 Hundreds. And I think that's just a sign that the market is still strong. And yeah, I can't wait to see which new entrants will see in the year ahead. Jim Edgar And I think it is consistent with our opening comments about the prominence that our segment, air cargo and freighters are receiving in the industry, people are taking industry people are taking notice, and they want to get, they want to get involved. And so it makes it all the more important that we keep the information, the reporting the analysis coming, and keep our customers informed so that they can make the best decision for their particular competitive strategies. Jeff Lee But speaking of new operators, we have to mention, of course, that we lost a few operators as well, because of the Russian sanctions, including, you know, major, seven four seven operator airbridge cargo. And, you know, some 7 three sevens. And the interesting thing about that is that, because of that, and because of the other legal issues surrounding those aircraft, and we have already seen some movement on that front, and we're seeing these aircraft, kind of find new operators, new homes, but we mean, there are still a few that are waiting to be picked up. And are not in Russia. So those do I think have a chance of being being acquired or picked up by by other people. Robert Luke Yes, I agree. I think there's definitely room for growth with those available assets. And I think the fortunate part of this whole conflict that has been evolving for, you know, going on about a year and some change now is that is it happened during a time period where the industry was already in the process of transitioning. So it wasn't as difficult to cope with if it was pre 2019, so to speak, where it would have really had a huge impact on the market. So I think it was just, you know, not the greatest thing to happen. But it happened. It couldn't happen at a better time. Andrew Crider I wanted to ask, I feel like the mood was kind of a little mellow, in October about the idea of maybe a impending slowdown of the global economy or everyone was sitting on bated breath. But when you bring up what is a truly by now a global conflict, I feel that we're switching into a wartime economy and to does this does this move the ball as far as giving the industry just a little longer of a growth period? Yeah, I think it can go either way, personally, but I want to see what the room feels on that. Jim Edgar There's no shortage of uncertainty, geopolitical, you know, the pandemic isn't over. Nor are the effects, consumer willingness to spend. There are a lot of things going on. There's always a lot of challenges, but this is this is an unusually volatile time. With that said, we're obviously we've got a soft period right now. But so it remains to be seen if those that say that we're over capacity authorized or with all the orders and the conversions in line that will be over capacities at some point. I don't see it yet. I know that some carriers are parked some amount of their fleets but I think generally the the industry is doing pretty well. Usually reflected in the the yields. That's kind of the the the first indicator you look at what the yields are upcoming yields and they'll give you an indication of how strong traffic is how strong forward demand is. Jeff Lee So looking ahead, let's just do a quick round of the major milestones or events or developments that we are looking forward to most for next year. Robert, you want to start? Robert Luke Well, what I'm not really looking forward to is the final farewell ceremony of the esteemed beautiful 747? You knew that was coming, Jeff. So I mean, I'm not looking forward to that. I've always been a fan of that aircraft. It's been not just iconic. But it's been a emblem of American history for quite some time, and it's going to be sorely missed. What I am looking forward to, I would definitely, because I've always been a fan of this particular turbo prop, especially having worked at as a former ramp agent with Northwest Airlink. It is the actual dash q 400. And the 400 variant of the dash 8 Q series. Being certified and fully put into operation, I would I'm very curious to see how that's going to be because I do believe that, you know, with the up and coming e one 90, we're seeing a significant transition, where the 737 was pretty much you know, the oligopoly aircraft Raider and those markets, you're seeing these two aircraft that are coming in that are going to be able to take some market share from that 737 classic space. So those would be the ones that I would focus on. Jeff Lee Jim? Jim Edgar Yeah, Jeff, you touched on it, I'm really looking forward to some of the major carriers who haven't announced for the newest, large freighters between the a 350, and the triple seven, eight, F. So you're looking at FedEx, Emirates, and you know, whether the market will sustain orders, I'm sure they're both or all of the remaining carriers that we're kind of waiting on, are evaluating what the risk might be timing and so on. But I'm really looking forward to some of those carriers making decisions. And then I mentioned earlier, the for cargo facts, events in the various regions of the world, really, really looking forward to getting back with the industry experts, and always a good time in the sessions. So those are two things. I'm looking forward to advance orders and our events coming up. Jeff Lee Andrew? Andrew Crider I think 2023 is going to represent a paradigm shift for the drone industry, which I there's extreme potential, I think, much greater likelihood that it would become in and of itself, its own market and industry with within the last mile logistical system. But you're gonna we're looking at a lot of certifications predominantly in Europe, expected in 2023, where you can start seeing these drones really start flying on scale. Now, drone delivery has been, I think, the biggest yawn of the last 10 years because in the early 2000s 10s, were like this is the next best thing. Tomorrow. which it never came. The market wasn't ready for it, the regulations certainly weren't. And then outside of the developing world, there was a struggle for use case. That's no longer the narrative. We're seeing certifications, we're seeing orders, and hopefully a lot of deliveries in the next year. But with that being said, that is going to be all the time we have for today. Jim, I want to thank you for joining us to share your knowledge and insights with our listeners. And I want to thank our listeners for joining us this year. Rob, I think you'll join me in the enthusiasm, this was our first year for this podcast and on on the publication. Robert Luke completely awesome. Loved it. I look forward to 2023. And to our listeners and my fellow co pilot podcast members. I just want to extend a warm thank you and a happy holidays to everyone and I look forward to continuing this into 2023. And sorry for the interruption. Andrew, please go ahead. Jeff Lee Can I interrupt? You didn't ask you didn't give me a chance to say what I was looking forward to. Because I I was gonna mention the triple seven 300 ersf. We'll see it fly hopefully next year, early next year. And we'll see it, progress toward the eventual certification goal and into service shortly after that. So that's definitely one of the main things I'm looking forward to. But yeah, so this also looking back on this year, of course, I was we have you, the two of you joining me on the publication and it's been fun. It's been great and continue to try and do our best next year. Andrew Crider Videos off. You couldn't imagine the facepalm I had I hope you'll save me in the edit. But for those of you listening thank you. For more multimedia coverage like this search cargo facts connect on iTunes and Spotify and search cargo facts.com. Thank you very much for tuning in. Join us again next time. Happy holidays. Jeff Lee Happy holidays. See you next year. Robert Luke Happy holidays. Jim Edgar Bye. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor . Cargo Facts EMEA, the essential event for stakeholders in Europe, the Middle East and Africa, will take place live Feb. 6-8 in Dubai. Register today.

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