Toward the end of May, an MD-11F (48458) that had arrived in Victorville (VCV) in February 2020 left the desert and flew across the Pacific Ocean to Singapore (SIN). After around two months of maintenance, it rejoined the FedEx fleet and began flying within North America in late July. Soon after, in August, another MD-11F (48478) that had been parked at VCV since February 2019 made its way to SIN ahead of its return to active service.
Even before the emergence of the COVID-19 pandemic, 2020 began with a less-than-stellar outlook for express fleet growth. By the close of the first quarter, the unprecedented uncertainty had FedEx “reviewing in great detail” its planned capital spending, while UPS was taking a “strict approach” to capital and cost controls, making further retirements a possibility.
The tables quickly turned by mid-2020 as the pandemic catalyzed multiple waves of transportation demand, some of which have been ephemeral, like express demand for personal protective equipment and testing supplies. Other waves reflect supply chains that were left disfigured by pandemic control measures, and broader changes in consumer behavior as spending has shifted from experiences and brick-and-mortar retail to e-commerce. Against the backdrop of uncertain ocean shipping and low availability of international belly freight, the integrators were well-equipped to provide flexible and reliable capacity. DHL Express, FedEx Express and UPS closed out 2020 with international export volume up 10.5%, 9.1% and 14.5%, respectively.
Fleet retirements were put on hold, and the express carriers quickly mopped up most available ACMI freighter capacity in the market.
As we enter the fourth quarter, 2021 is shaping up to be an even stronger year as business-to-consumer express demand remains strong while business demand continues to recover. Between January and June, DHL and UPS reported international export volume growth of 23% and 20% respectively.
FedEx, UPS and DHL widebody and narrowbody fleet distribution as of 9/30/2021
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As of late September, the in-service fleet grew by 8% compared to this time last year to a total of 1,026 jet freighters, according to Cargo Facts analysis. In comparison, the express companies added or hired a net increase of just six units between 2019 and 2020.
Here we focus on the jet freighter fleets of the three major global express integrators, including own-operated aircraft as well as those known to be operated for them on an ACMI or CMI basis.
It is perhaps unsurprising that DHL Express, which has historically been more prone to utilizing belly freight capacity compared to its peers, has seen the number of freighters operating on its behalf increase by around 12%, to 268 aircraft. When it comes to DHL Express, as ever, it is much more difficult to pinpoint exactly the number of freighters flown by or for the integrator, given that it has a wide-ranging portfolio of own-operated flights, joint venture airlines, charters, and ACMI and CMI arrangements. Examples include DHL’s own airlines like EAT Leipzig, DHL Air UK, DHL International Aviation Middle East, and DHL Aero Expreso; partially owned airlines like AeroLogic, Blue Dart Aviation, Polar Air Cargo, and Tasman Cargo Airlines; and ACMI or CMI carriers like ABX Air, Aviastar-TU, Bluebird Nordic, Cargo Air, iAero Airways, Mesa Airlines, Kalitta Air, Raya Airways, SmartLynx Malta, Southern Air and Swiftair, among others.
FedEx and UPS added significant capacity as well, to the tune of 6% and 7%, respectively.
With many of the widebody deliveries and redeliveries over the past twelve months ultimately ending up in the fleets of, or in service on behalf of DHL Express, FedEx Express and UPS, widebody freighters accounted for 67% of the jet aircraft flying for these three integrators, compared with 66% in September 2020, while narrowbodies’ share saw a slight drop from 34% to 33%.
The field widens for narrowbody ACMI
Although the narrowbodies’ share of the express fleet decreased slightly, the variety of aircraft types and the number of carriers participating in narrowbody ACMI has undergone rapid diversification throughout the past year.
As the integrator with the largest backlog of freighter conversions on order, and the heaviest user of ACMI lift among the major express carriers, DHL Express has impacted carrier fleets across most active platforms and regions. DHL’s global network now includes 737-800s converted by all three STC holders for the type: Aeronautical Engineers Inc. (AEI), Boeing and Israel Aerospace Industries (IAI). As of late September, all three of DHL’s 737-800BDSFs are operating on a CMI basis in the iAero Airways fleet. Thailand-based K-Mile Air, an affiliate of the ASL Aviation Group, began operating a 737-800BCF in ACMI service for DHL earlier this year, while iAero recently also leased a 737-800SF of its own to fly on behalf of the integrator.
DHL active fleet as of 9/30/2021
FedEx’s narrowbody renewal underway in Europe, meanwhile, has contributed to the expansion of the 737-800BCF fleet. UPS operates the majority of its own fleet but recently began ACMI leasing both an A321-200P2F and a 737-800SF.
FedEx, which at the end of September 2020 wet leased six 737-800BCFs, has now added eight more. ASL Airlines Belgium operates six; ASL Airlines France four; while the Sweden-headquartered West Atlantic Group continues to operate four aircraft on an ACMI basis for FedEx, although three of those are now through the group’s Swedish AOC.
UPS in June began wet leasing its first 737NG freighter, a 737-800SF from Bulgaria-based Cargo Air, with a flight from Cologne (CGN) to Milan (MXP) and Naples (NAP). In late August, UPS also started A321F operations in Europe, with Titan Airways Malta flying an A321-200P2F (1238, ex-Thomas Cook) between CGN and Rennes (RNS).
DHL preceded UPS as the first integrator to lease in A321F capacity when an A321-200PCF (891) entered service with SmartLynx Malta on its behalf in June. Titan will soon also begin flying an A321-200P2F (1017) for DHL.
767s: one-quarter of the express fleet
More than a quarter of the integrator widebody freighter fleet consists of 767 freighters, with factory-built 767-300Fs being the most common type. A total of thirty-two 767-300Fs, mostly new units, were delivered since Cargo Facts’ last express fleet analysis. While it is perhaps no surprise 767 freighters dominate the medium widebody fleet in service with or on behalf of express carriers, the large widebody freighter most widely used in express service is the out-of-production MD-11F.
FedEx active fleet as of 9/30/2021
All three express integrators added a combined total of thirty-two 767-300Fs to their own-operated fleets, with FedEx and UPS exclusively opting for new production units but DHL taking only freighter-converted aircraft.
The 767-300 platform’s share of the total express fleet is now 22.2%, up from 20.7% last year.
With contracts on some older 767-200BDSFs expiring during the pandemic even as younger converted 767-300Fs were being delivered, DHL Express delayed retirements and shuffled some CMI contracts. A total of nine 767-200BDSFs that had been operated by Atlas Air until recently were gradually moved to other operators. Amerijet now operates five: four with General Electric CF6-80 engines and one with Pratt & Whitney JT9Ds, while ABX Air and 21 Air are now each operating one Pratt-powered 767-200BDSF. Two other Pratt-powered 767-200BDSFs are still inactive.
At the same time, DHL took redelivery of two more A330-300P2Fs and now has seven, with three in operation in Asia and four in Europe.
Older types delay 777 dominance
When it comes to large widebodies, UPS has added seven new 747-8Fs since September 2020 and has now put into service all five of the ex-Lufthansa MD-11Fs that it purchased toward the end of 2019.
UPS active fleet as of 9/30/2021
The 747-8F and 777F each increased their share of the overall express fleet by 0.5 percentage points and now stand at 2.9% and 8.2%, respectively.
DHL has taken delivery of six 777Fs in the past twelve months and has divided up CMI contracts between AeroLogic and Kalitta Air for this batch of deliveries. Boeing has now fulfilled DHL’s 2018 firm order for fourteen 777Fs with the delivery of unit 66863 at the end of August.
Overall, DHL’s fourteen owned 777Fs are operated on a CMI basis by three carriers: eight at AeroLogic, four at Kalitta Air, and two at Southern Air.
The yellow 777F fleet is set to grow further next year. In early 2021, DHL announced that it had placed another firm order for eight more 777Fs, with deliveries beginning in 2022. CMI contracts for the next eight have not yet been awarded, according to operators familiar with the bidding process.
FedEx, the largest operator of 777Fs by far, has also continued adding to that segment, with five new deliveries since September 2020. The company now has fifty in service, with nine more on firm order and options for twenty-three more.
FedEx, clearly in need of large widebody capacity, brought two MD-11Fs out of long-term storage in recent months, and even entered into an ACMI deal with Atlas Air for regular year-round 747-400F flights.
With widebody fleet growth across every major express carrier and the ACMI operators which provide lift on their behalf, finding capacity is no longer the only challenge — flight crews too are limited. “There’s a lot of competition for pilots these days, there’s no question about that,” an executive representing a major ACMI operator told Cargo Facts. While ACMI carriers are working to qualify pilots as quickly as possible, that process still takes at least three to four months.
The 777F and 747-8F both saw their share of the fleet increase 0.5 percentage points to 2.9% and 8.2% respectively. Given the outstanding 777F orders held by DHL Express and FedEx Express, the 777F will continue to see its share grow over the next few years.
Another variant of the 777 will come into play in 2023, with Kalitta Air and Cargojet — both ACMI providers of DHL — expecting to add the 777-300ERSF platform.
A net of eleven MD-11Fs were also placed into express service, growing the type’s share of the widebody express fleet to 9.8%. While a few units have been leased-in on an ACMI basis, notably with Western Global Airlines, both FedEx and UPS acquired aircraft coming out of the Lufthansa Cargo fleet. While a robust maintenance program can extend an aircraft’s useful life, the average age of FedEx’s MD-11F fleet is twenty-eight years old, while UPS’ is twenty-seven.
The next big production widebody
Qatar Airways has been a vocal advocate in recent months, pushing Airbus and Boeing to launch new widebody freighter programs. Those program launch decisions, however, will necessarily be impacted by the modernization strategy for the 101 MD-11Fs in the express fleet.
Presenting Airbus’ first-half results in late July, CEO Guillaume Faury announced that the board of directors had given the green light for the company to proceed with developing an A350 freighter. Although Faury came short of announcing a launch order or customer, Airbus is no doubt in discussions with at least several carriers on the jet — as is Boeing on a potential 777X freighter.
The future of the next generation of large production widebodies will likely become clearer in the months ahead. What is clear is that in the years to come, MD-11Fs will continue to be a mainstay of the global express fleet, but at some point, express carriers will have to reckon with that looming question: What will replace the MD-11F?
This story originally appeared in the October 2021 issue of Cargo Facts.
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