DHL Express orders fourteen 777Fs, who is next?

At the Farnborough International Airshow today, DHL Express announced an order of fourteen new 777 freighters, with options for delivery of up to seven additional 777Fs. Based on the most recent Cargo Facts Express Fleet Analysis, the order would double DHL Express’ current 777F fleet.

Delivery of the first four aircraft in the order is expected during 2019, but the order will not increase the express company’s capacity. DHL Express CEO Ken Allen said the order instead “reflects a gradual replacement of our older intercontinental fleet,” and offers cost, efficiency, and reliability benefits. The exact capacity that is destined for replacement by the new 777Fs is unclear.

Also of interest is the fact that the fourteen 777Fs in the order will be fully-owned by DHL Express, which has traditionally leased aircraft in its network. Whether this order represents a new fleet strategy for the express carrier is unclear, although, in its statement on the purchase, DHL Express said of the departure from its leasing strategy, “the purchase of fully owned freighter aircraft will improve the cost position of the DHL Express division going forward.” However, DHL Express is also still utilizing substantial 777F capacity via lease – most recently, in March, Atlas Air Worldwide Holdings acquired two 777Fs (38091, 41518) from Chile-based LATAM Cargo and will operate them on an ACMI basis for DHL Express. Atlas’ Southern Air subsidiary had operated one of the freighters on a CMI basis for DHL Express since 2015, but as of this year is operating the aircraft on its own certificate.

This most recent order of 777 freighters follows last month’s order by FedEx of twelve 777Fs and twelve 767Fs from Boeing. In addition to DHL Express’ order (part of which Boeing said is represented in its “unidentified” orders), Boeing lists fifty-three unfulfilled 777F orders in its Orders & Deliveries website. The spate of orders and deliveries for the freighter this year led us at Cargo Facts to question last week whether 2018 was shaping up to be the “year of the 777F.” Considering DHL’s optimistic outlook for cross-border e-commerce growth – projected to grow 19.2% per year through 2021 to $4.48 trillion – the aircraft’s long-haul range makes it increasingly likely the next several years could be the “year of the 777F.”

Speaking of orders from unidentified customers, last month Boeing reported an order from an unidentified customer for ten 777Fs, bringing the total number of 777F orders from unidentified customers to 13. A number of these orders are linked to today’s order, but others are not.

Whether or not the identity of this customer will be revealed at the show remains to be seen. Cargo Facts would not be surprised, however, if the order is somehow linked to the sponsor of this year’s Cargo Village at the Farnborough Airshow, the Volga-Dnepr Group. In the past, the Group has used Airshows as a platform to announce major orders and agreements, like the MoU with Boeing for up to twenty 747-8Fs placed in 2016. Regarding the MoU, Volga-Dnepr was taking regular deliveries of the 747-8F at a rate of about two-aircraft year but has not taken a delivery since September 2017. With an estimated thirteen 747-8Fs from the original MoU still unfilled, Cargo Facts believes the Volga-Dnepr Group may choose to convert some or all of the outstanding 747-8Fs into orders for the 777F.

Of course, the 777F is a hot commodity this year, and there are a number of other airlines that could have placed the unidentified order. If it the mystery customer does not turn out to be Volga-Dnepr, our second guess would be Atlas Air Worldwide Holdings Inc. Atlas already operates a number of 777Fs through its subsidiary carrier, Southern Air. Additionally, by the end of this year, Atlas will be operating twenty 767Fs for e-commerce giant Amazon. As Amazon enters an increasing number of international markets, the company is widely expected to launch trans-oceanic widebody flights. Not to mention the massive world air hub under construction at Cincinnati/Northern Kentucky Airport (CVG). For such a mission, 777Fs could be quite appealing to Amazon.