Global air cargo traffic will grow at an average of 4.1% per year over the next two decades, with traffic within the East Asia region leading the pack at an annual growth rate of around 5.7%.
The numbers are driven by e-commerce, structural changes and freighter fleet developments, according to Boeing’s latest biennial World Air Cargo Forecast (WACF) for 2022-2041, released today.
The Intra-East Asia and Oceania market was previously expected to grow at 4.9% per year in Boeing’s 2020-2039 WACF, which also predicted a worldwide growth rate of 4%.
“Keep in mind that over twenty years, just under 4% annual growth rate will double the level of traffic,” Darren Hulst, vice president of commercial marketing at Boeing, said in a virtual briefing Tuesday.
East Asia-North America and East Asia-Europe will continue to be the two largest air cargo markets by far, with expected annual growth rates of 4.4% and 4.5%, respectively.
A major driver of air cargo growth and freighter demand is the development of e-commerce networks. “These networks continue to expand and it’s not just the mature operators; this is inclusive of significant activity in the startup space or new logistic markets and networks that are being created, especially in emerging parts of the world,” Hulst said.
“Whether it’s in China, Southeast Asia, India or Latin America, big e-commerce names are joining with airlines or creating airlines to create their own networks to satisfy the tremendous demand that exists in the e-commerce space. I think structurally this is something that sustains demand, especially in the standard-body freighter space as they build and mature these networks throughout the rest of this decade.”
A strategy shift
Another driver is a shift in supply chain strategies that has seen new operators entering the space or diversifying into carrying freight in addition to passengers. “I think all of that speaks to the strategic value of air cargo and the resilience and the importance of air cargo as part of the supply chain and the global economy,” Hulst said.
When it comes to dedicated freighter aircraft, as Cargo Facts reported from the Farnborough International Airshow in July, Boeing’s 2022 Commercial Market Outlook (CMO) predicts 2,795 units to join the global fleet between now and 2041, 185 more than had been predicted in its 2021 CMO. These consist of 515 production large widebodies, 425 production medium widebodies, 555 widebody conversions and 1,300 narrowbody conversions. The manufacturer now anticipates the total fleet to grow from 2,240 freighters at the end of 2021 to 3,610 by the end of 2041.
An aging fleet
At the same time, around 1,435 freighter aircraft are expected to leave the fleet and be retired, according to Boeing.
“There’s a significant portion of aging freighters — not only those that I think just naturally need to be replaced, but those that relatively unnaturally were used over the course of the pandemic because of the tremendous revenues and yields that were being generated despite the fact that the aircraft were probably normally past due in terms of retirement,” Hulst said. “In fact, some aircraft came out of the desert to serve almost emergency freighter purposes over the past two years. And there’s a significant amount of pent-up demand for replacement as we look at the market that is generating near-term demand for new orders.”
Over half of the large-widebody freighter fleet is more than twenty years old, according to Boeing. These consist of 747 Classics, MD-11s and 747-400s. “While there is a significant amount of 777 and 747-8 freighters that are new, efficient and capable, there are also a tremendous number — almost 400 aircraft — that do need replacement. This will require new and efficient large freighters going forward and I think that’s a very stable base of demand as we look at the next ten or twenty years.”
‘A robust and diverse market’
Almost 40% of all new deliveries and conversion redeliveries in the next twenty years will be for the Asia-Pacific region, compared with around 32% for North America, accounting for approximately 900 units, according to Boeing. Europe will absorb 16% of all additions, while the Middle East and Africa region and Latin America will take 9% and 5%, respectively.
“There is a robust and diverse market for freighters in terms of both region and types of aircraft that are required in the marketplace,” Hulst said.
He added that the revenue generated by air cargo remains “a huge bright spot for commercial aviation” and is a testament to the value and reliability of air cargo around the world.
“The freighter market has been an unbelievable market, and while it may be slowing slightly because of normalization, it’s clearly proven its strategic value as part of the commercial aviation ecosystem and still provides well over half of global air cargo capacity, and will continue to do so even as things normalize further in the passenger market going forward,” Hulst said.