The express fleet in 2016 – Part II

Yesterday we began an analysis of the jet freighter fleets operated by and for the world’s express companies. In Part I we looked at the fleet as a whole and the way it has changed over the years (you can read that analysis here). Today we turn to a more detailed examination on a company-by-company basis.

China Postal Airlines is one of four customers to have placed a firm order for Boeing's 737-800BCF conversion. In total, seven customer have placed 30 firm orders and 25 commitments.

China Postal Airlines is the only express company whose fleet did not change over the past year. But with orders in place for ten Boeing’s 737-800BCF conversions and at least six 757-200PCF conversions from Precision, there will be big changes in the years to come.

Just as there were changes to the overall fleet, there were also significant changes in the fleets of the individual express operators. We start with the smallest:

Canada-based Purolator has had a dedicated contract freighter fleet for almost twenty years. This fleet is used to transport Purolator-branded parcel and freight shipments, as well as to move mail for Canada Post (which owns 91% of Purolator). For most of that time, the fleet was operated by Kelowna Flightcraft, but effective 1 April 2015, the Purolator/Canada Post flying was taken over by Cargojet, using a fleet made up of a mix of 757-200Fs, 767-200Fs, and 767-300Fs. The fleet Kelowna operated for Purolator included thirteen 727-200Fs. With those gone, there is now only a handful of this once-dominant type still flying for the integrators.

Integrator Fleet 1Q 2016China Postal Airlines was the only express carrier that made no change to its fleet over the past year. China Postal acquired its first jet freighter, a 737-300F, in 2003, and steadily increased its fleet ever since, primarily with 737-300Fs, but also with 737-400Fs, and more recently with 757-200Fs (operated on an ACMI basis by Air China Cargo). That expansion ended last year, but the halt is only temporary, as China Postal recently ordered ten 737-800BCF conversions from Boeing and six 757-200PCF conversions from Precision Aircraft Solutions. In addition, Cargo Facts believes another six-unit 757 conversion order will follow, so we expect a return to growth beginning late this year.

SF Airlines, the Shenzhen-based air arm of China’s SF Express, ramped up its expansion, adding ten freighters – four 737-300Fs and six 757-200Fs – over the last year, bringing its total fleet to twenty-nine units. SF Express also buys considerable lift from a variety of Chinese airlines, including some main-deck space, but the exact number of freighters involved is not known. Three years ago, SF announced plans for rapid expansion, both of its own fleet and of purchased lift, and since then has added twenty-one freighters.

How fast SF’s fleet will expand over the coming years is something of a mystery. The company’s announced plans call for massive capacity growth, including widebodies. In fact SF last year ordered five 767-300 passenger-to-freighter conversions from Boeing, and has already taken redelivery of two of them. But as we went to press, neither of these new freighters had been put into service. Likewise, SF recently appears to have declined to take redelivery of a freighter-converted 737-300, with the freighter instead going to another, unnamed, airline, that will operate it for SF.

It is not clear what has put the brakes on SF’s expansion, nor whether it is something that will affect other carriers. But with the wild growth of e-commerce driving demand for express lift in China, it is hard to imagine the slowdown being anything but temporary.

TNT may be about to disappear – its acquisition by FedEx will likely be completed in a few weeks – but over the last year it reversed its recent trend of reducing its fleet, adding a net total of six jet freighters. In addition to aircraft in its wholly-owned TNT Airways and Pan Air fleets, TNT also ACMI-leases freighters from a variety of European carriers, including Bluebird Cargo, Cygnus Air, ASL Group, Jet Time, and West Atlantic. In addition to the ongoing retirement of its BAe 146s and 737-300Fs, and the addition of 737-400Fs, the most significant change from last year was the addition of three 767-200Fs operated by West Atlantic. TNT also operates a 757-200 in combi configuration for NATO on an ACMI basis.

Looking at the bigger players, FedEx, which had been slightly reducing its fleet in recent years, added a net of six units in 2014/15 and four more in the last year, bringing its total jet freighter fleet to 344. The overall change was the result of twenty-nine additions and twenty-five retirements. FedEx continued the relentless growth of its 757-200F fleet, adding thirteen units and bringing the total of the type to 110.

It also continued the renewal its widebody fleet, adding fourteen 767-300Fs and two 777Fs. On the retirement side of the FedEx fleet ledger were thirteen A310-200Fs/-300Fs, nine MD-10-10Fs, one MD-10-30F, and two MD-11Fs.

FedEx has eighty more 767-300Fs and sixteen more 777Fs on order with Boeing, as well as about ten more 757-200 P-to-F conversions on order with ST Aerospace, so the changes in its fleet will continue for some time.

While FedEx is adding and retiring freighters on an almost-weekly basis, UPS is operating almost exactly the same fleet today as it was at this time last year, the only change being the replacement of one 767-200F by a 767-300F (operated on an ACMI basis by Star Air). UPS reduced its owned fleet to just five types several years ago, the lowest number of any of the big four integrators. In addition to its own fleet, UPS uses twelve 767 freighters operated on its behalf by Denmark-based Star Air, and two 737-400Fs operated by Atran, a subsidiary of Russia-based Volga-Dnepr Group.

Unlike TNT and DHL, FedEx and UPS depend almost entirely on owned aircraft for their jet freighter lift, and they have, by a considerable margin, the world’s largest freighter fleets. Between them, the in-house airline units of these two companies operate some 36% of the world’s freighters – that is, more than one-third of the world’s freighter fleet is owned by just these two airlines.

DHL has the largest main-deck fleet outside of FedEx and UPS, and its operation is, by far, the most complex of any of the integrators. On its own, or through various joint-venture and ACMI arrangements, DHL has freighter operations in Europe, North America, Asia-Pacific, India, Latin America, and the Middle East. Its owned airlines include EAT Leipzig (the former European Air Transport), DHL Air (UK), DHL Airlines International Middle East, Blue Dart Aviation (India), and DHL Aero Expresso (Panama). In addition, it has partial ownership in, or control of, various carriers, including AeroLogic, Air Hong Kong, Polar Air Cargo, Tasman Cargo, and Vensecar. DHL also purchases ACMI support from numerous airlines, which it declines to name, but including ABX Air, ASL Group, Air Ghana, Allied Air, ATI, Aviastar, Cargo Air, K-Mile, Kalitta Air, Raya Airways, Rio Linhas Aéreas, Southern Air, and Swiftair.

DHL’s three biggest joint ventures are worth noting because they provide the company with such a substantial amount of lift:

  • Air Hong Kong (in which DHL is a 40/60 partner with Cathay Pacific) operates three 747-400Fs and ten A300-600Fs.
  • AeroLogic (a 50/50 jv with Lufthansa Cargo) operates eight 777Fs.
  • Polar Air Cargo (a 49/51 jv with Atlas Air Worldwide Holdings) operates six 747-8Fs, seven 747-400Fs and three 767-300Fs. In addition, Atlas, DHL’s partner in the Polar jv, operates nine 767-200Fs for the German integrator.

All three of these joint-venture fleets operate primarily for DHL, providing widebody capacity between Asia and Europe (AeroLogic), Asia and North America (Polar), and intra-Asia (Air Hong Kong).

The exact number of freighters operated by and for DHL is always something of a mystery, as the company does not disclose detailed information about its air operations, but by our reckoning the total is up by fourteen, from 180 last year to 194 now. The additions, by type, include one 747-8F, one 777F, three 767-300Fs, two A300-600Fs, two 757-200Fs, and nine 737-400Fs. The subtractions include one 767-200F, two 727-200Fs, and one 737-300F. Looking ahead, we believe DHL will continue to add 737-400Fs, as well as replace many of its older 757-200Fs with newly converted units.

While the total number of freighters in the combined fleets of the integrated operators increased by thirty-two units over the past year, there was significant change within the fleets, as sixty-three freighters were added and thirty-one were retired. In general, the retirements were of older types (BAe 146s, 727s, A310s, 767-200s, MD-10-10s/-30s, and MD-11s, while the additions were primarily more-recent types, such as 737-400s, 757-200s, and A300-600s, as well as three types currently in production (767-300F, 777F and 747-8F).

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