Watch: CFA highlights unprecedented demand for freighters

Cargo Facts this week concluded the second virtual Cargo Facts Asia conference, where it was clear that the industry is optimistic about the opportunities for those involved in air cargo and freighter aircraft. Jim Edgar, Senior Consultant of Cargo Facts Consulting, joins Associate Editor Jeff Lee to reflect on some key themes from the event. They then discuss the unprecedented demand for freighter aircraft, before turning to the race between Airbus and Boeing for the next large widebody freighter. Don't miss all of our coverage from Cargo Facts Asia. A transcript is available below. This transcript has been generated by software and is being presented as is. Some transcription errors may remain. Jeff Lee Hello and welcome to this episode of cargo facts connect the podcast and video series of cargo facts, the newsletter of record for the air cargo and freighter aircraft industries for over 40 years. I'm Jeff Lee, Associate Editor. It's Friday, April 23. And this is our weekly wrap. Special thanks to our sponsors and advertisers 321 precision conversions, ancra international, AEI, C cubed aerospace, EFW, IPR conversions and ULD Rentals.com. I'm pleased to be joined today by a special guest, Jim Edgar, Senior Consultant of cargo facts consulting, who was Regional Director cargo marketing at Boeing for 25 years, and overall has more than 50 years of aviation experience. Hi Jim. Jim Edgar Hi, Jeff, how are you? Jeff Lee I'm good. How are you? Jim Edgar Doing good this post CFA 2021. weekend. Jeff Lee So yeah, it doesn't seem that long ago, but we held our first virtual conference last April, actually. And this week, of course, we just had our second virtual cargo facts Asia. Generally, what did you think of this event? This time around? Jim Edgar Well, um, I thought, uh, three words that kind of sum things up for me and I'll, I'll talk about each one very quickly. But the very first word that I thought of immediately, during and at the conclusion of the event was opportunities, tremendous opportunities for cargo and a, an unusually universal recognition of the importance and significance of air cargo. You know, there was an article today that talked about the IATA report and forecast and the one section was the remain Supreme. And I think that really does sum things up and the unprecedented opportunities for everybody. I think there were two factors that at the pandemic contributed to cargos. resurgence, in terms of significant that is, first of all, the lockdowns all over the world that stimulated and already expanding ecommerce. market and buying. And then number two, the huge constraint of not having so much passenger lower hold capacity. So between ecommerce growth, and the lack of lower hold capacity, I think all kinds of opportunities. So that's the first word the second word is substantive. And, and since I didn't have a part in making those decisions, but I really felt the topics that were covered every one every panel, the forecasts that Fredrik provided the interview with Eddie Lu, China Airlines cargo, both Gill bears and Tom's sponsored briefings were just excellent quality panelists quality topics to delve into. And then the third might surprise you a little bit. But I thought transparency was a good word in that I really felt taking a step back and listening to so many conferences over the years and even webinars that have proliferated during the pandemic, that the panelists those that were interviewed, were unusually transparent, and that maybe that was a function of the lack of in person because of course, the air cargo industry is very relational. So opportunities abound in our segment of the industry. And I heard from different panelists on the low side of three years for this unusually high growth to last all the way to five years. So opportunities substantive and transparency would be my takeaways, if that was one word descriptors, good Jeff Lee keywords and I yes, I agree with you on on all three and then I think there was a there was a uniformity and then the sort of overall mood feeling about Air Cargo industry and obviously for freighters. But you were talking about transparency, though, do you think maybe that is related to the the optimism that the industry has and the you know, the demand for free to aircraft going forward? Jim Edgar Well, certainly optimism plays a role. But I'm, I've observed over my 50 plus years in the industry that unlike the passenger business, the the cargo business is much more collegial, and cooperative. And I know we have a ways to go, you can always have more cooperation and all of that, but it's extremely competitive. But people really do work with one another. Well, and I think that the optimism and then the natural longevity of players that are involved in air cargo, I think contributed to the unusual transparency. There was a lot I think, I think especially of Eddie Lou's interview, and how fascinating it was the Chinese airlines cargo actually made money. And and Eddie described in in quite a bit of detail, what China Airlines cargo did, when faced with the pandemic. And really each of the panelists, certainly on my panel and the other panels, were very willing to share their strategies, the near term, long term future. And so, again, that just jumped out at me as I evaluated. This really had a lot to it. And besides being substantive, I think the the panelists and those being interviewed, were much more forthcoming in what they shared with our audience. Jeff Lee Yeah, and I think we kind of are in an unprecedented situation when it comes to the demand for cargo aircraft and freighter conversions on weight. And the it really is an interesting topic, when it comes to conversions. Because we have this, basically, almost all freezer conversion programs are now firing on all cylinders. And consequently, the slop constraint is becoming a real challenge, isn't it? Jim Edgar Yeah, and I would go back first word that describes cF 2021. And that is opportunities. I think that basically, the demand is very strong, especially compared to passenger. But because of the simultaneous suppression of passenger demand and the availability of relatively new and cheaper feedstock, I think between the demand and the availability of right priced aircraft, that's what's fueling the conversion boom, as you call it. But I think those two in conjunction with each other are really interesting. And again, I think, as I look at panelists, and those that spoke during the conference, it always strikes me how even in difficult and challenging situations, there's those that can take advantage of it, and work it to their profit, and certainly with the newer, less expensive feedstock that helps the conversion market. Jeff Lee Right, and they really are snapping up slots left and right. And that obviously, those who move first of all, take advantage of that. I thought it was interesting, and, you know, kind of shocking that then you could be looking at a weight of up to you know, three years for conversion start. And that's just that's kind of crazy, isn't it? But that's, on the other hand with the large wide body in that segment. There isn't really now a lot of choice when it comes to freighters and that's, you know, both Airbus and Boeing are kind of I guess they're being hesitant when it comes to launching a new production free type program. Jim Edgar Yeah, there doesn't seem In Part of this is again driven by the pandemic and that is that so much traffic is being diverted to freighters and the We had a pretty significant Park fleet. And so, so much of the park fleet in the large wide body segment has been pulled into service. But of course, Boeing has offered the only large wide body freighter for quite a while ever since the a 380 freighter, they decided not to go into production with that. So this, as we look at a production freighter, you usually expect about a 20 years service life, and then the OEMs start looking for what's next, and what is the market need. And and obviously, the 478 f next year, that'll be the end of that production run, sadly, but the triple seven F is only about halfway through that 20 year, which you'd expect the service life. So they've got a little Boeing's got a little bit of time. And, you know, they're they're the market leader. They're the only one that provides a production freighters in that large wide body segment. But I would also remind everybody that Boeing has its hands full even more than Airbus, in terms of the challenges that they face near term. Obviously, the 737 Max, and there's still large numbers that are on the ground and need to be delivered. And they need to the 8321 XLR is a challenge. So Boeing to look at what's next in terms of the large wide body freighter as a triple seven 200 f replacement. I the timing isn't real favorable for Boeing, they've got more than they can handle. Airbus on the other hand, even though they haven't really ever offered a large wide body freighter, you know, production freighter was the a 330 200 F and of course, that's a medium wide body. But Airbus in some sense is in a better position near term. And we can have another podcast on the comparative merits of the triple 7x f versus the a 350. f. But in any event, my understanding is that the a 350 f could make a very competitive freighter. So it really I wouldn't expect Boeing to do a lot in this regard. They've got a proven product. It's sold, you know, 200, roughly 200 units so far, and they've got a real lot of strength in the production freight market. But I think Airbus if they decide to, could offer some formidable competition. But I, I'm not as familiar with all the challenges besides the financial and you know, what Airbus would be up against. But my sense is that both Airbus and Boeing are trying to manage their way through this pandemic, even now. And thus, it will likely be a while until they do anything in terms of a multi billion US dollar commitment that any derivative freighter would present. So that's my snapshot. Jeff Lee Interesting. I mean, I, I would love to be a fly on the wall at either Boeing or Airbus when it comes to having these discussions of, you know, what do we do? And, you know, what would this thing looked like? And what would be the performance like and to think of, you know, what they would be thinking of the competitor to that would be also really fascinating to hear. I yeah, it would be, I don't envy them being in that position. But it will be interesting to see who moves moves first, and what the other company does in response, I think. Jim Edgar If if history repeats itself, obviously, as an interested observer in the past, normally, Airbus will begin releasing charts and looks at possibilities for freighters that they're considering. So I would, I would if, if, like I said, If history repeats itself, I would expect some releases of that information. And it sounds like from press reports that they're talking with customers. And of course Boeing talks with customers all the time, too. But that would be the next step. I would think if we start seeing something being released, or floated around in terms of capabilities and what they're actually talking about, that might give us an indication that they're very, very serious about doing something sooner rather than later. Jeff Lee Right. I mean, it sounds like they're already doing that, to some degree. So it will be, but we covering back and following it with with much interest. But that's all we have time for today. So thank you so much for your time, and we'll definitely talk to you again soon. Thank you to our listeners and viewers for joining us as well on this weekly wrap on cargo facts. For more multimedia content like this, check out cargo facts.com and search cargo facts connect on iTunes and Spotify. Subscribe to Cargo Facts Connect on iTunes or Spotify , or download the episode on Transistor .

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