Freighter aircraft buffeted by economic downturn |
| Printed headline: Turbulence in the Cargo Arena |
The global airfreight industry has lost nearly a decade’s worth of growth in the last year and a half, thanks to a period of unprecedented turmoil that began late in 2008 and continued throughout 2009 . Airfreight has historically been a growth industry, yet traffic levels, which had been moderately positive in the first half of 2008, went into free fall in the fourth quarter. And those hoping for a rebound in 2009 were disappointed, as the worldwide recession produced year-over-year traffic declines in excess of 20% for the first six months .  Etihad Crystal Cargo, set to be first operator of Airbus A330-200F, has -300F on order, too.Credit: AIRBUSFull-year freight traffic totals for 2008 (measured in freight-tonne-kilometers of service—FTKs) were down about 5%, making 2008 the airfreight industry’s second worst year on record , after 2001’s 7% decline . The year-over-year declines in 2009 gradually grew less severe in the second half , and there are some signs that real recovery may start this year. However, when 12-month results for 2009 are tallied, it is likely air cargo traffic will reflect a decline of at least 15% compared with 2008. Such drops are new to the airfreight industry, and are key to understanding the outlook for the sector . Even if the world economy recovers this year and demand for airfreight returns to historic growth levels, we will have lost nearly a decade of growth. Taking into account the decline in 2009, and the smaller declines experienced in 2001 and 2008, we will begin the year with worldwide FTKs just a bit above 2000 levels. And even if growth in demand returns to its pre-2000 historic level of 6% per year, the impact of the lost growth will be far-reaching; anything resembling “normal” is a long way off for the airfreight and freighter aircraft industries. The root of the problem is a significant imbalance in supply and demand. The supply of capacity in freighter aircraft and in the belly compartments of passenger aircraft has not undergone a contraction as pronounced as that for cargo shipments. As a result, an overhang of capacity must be eliminated before any real growth in demand for freighter s can occur.  The Boeing 747-8F is due for its first flight early this year, with deliveries to begin late in the year. Cargolux is the launch customer.Credit: BOEINGOf course, capacity can be subtracted by placing aircraft in storage, and we have seen substantial movement toward that end . Even major airlines such as Lufthansa, Air France-KLM and Cathay Pacific have taken modern freighters such as MD-11Fs and 747-400Fs out of service, and several brand-new 777Fs have been placed in temporary storage. These are drastic measures; clearly paying hundreds of thousands of dollars per month for an asset that is sitting idle is far from a perfect solution to the problem of overcapacity. From the end of 2000 to the end of 2008, global demand in FTKs grew by 25%, including the impact of a 7% decline in 2001. This equates to an average increase of just 2.8% per annum over the eight-year period, less than half the historic 6% rate. Freighter fleet totals were nearly the same at the end of 2008 as in 2000, but there had been a pronounced shift to newer, larger wide-body types. As a result, freighter capacity (in available tonne kilometers) was higher in 2008 by more than 35%, and the supply-demand relationship was clearly out of balance. The sharp declines in demand, which first appeared in fourth-quarter 2008, persisted through 2009, causing an even greater supply-demand imbalance. Airlines sidelined 150 freighters during 2009, yet there is still an oversupply of main deck cargo capacity. So, where do we go from here? The simple answer is that we have to dig out of a very deep hole before there can be any net growth. Entering 2010, global air cargo traffic is down roughly 20% from the 2007 level. From that point, let’s further assume growth returns to its historic 6% annual rate this year. If it maintains that average over the next four years, the market in 2013 will have reached roughly the same level that existed in 2007, which represented a peak year for the market. Zero growth in demand from 2007 -13 should be matched by zero growth in freighter capacity if the market is to be in balance. Regarding capacity, Air Cargo Management Group (ACMG) has analyzed several fleet growth scenarios in its most recent “20-Year Freighter Aircraft Forecast.” The most pessimistic assumes zero demand growth through 2013. Even under a zero-growth scenario the freighter fleet will not remain stagnant, although the level of production and conversion activity will be much lower than in a growing market. At the same time , retirements of existing freighters will accelerate. ACMG’s zero-growth scenario fore sees a global freighter fleet of 1,548 units at the end of 2013, roughly equal to the current fleet total as shown in the accompanying table. During the period, approximately 350 freighters will be retired, offset by the production of about 150 factory-built freighters and about 200 freighter conversions (of all aircraft types and sizes). The retirements would include nearly all of the existing first-generation DC-9Fs, 727-100Fs, 707Fs and DC-8Fs, plus about half of the 737-200Fs, 727-200Fs, A300B4Fs and DC-10-10Fs. Furthermore, roughly two-thirds of the 747-200Fs and DC-10-30Fs would be removed. Production of new freighters would continue, but cancellations and deferrals will mean only 150 of the 230 units on firm order today would be produced (a mix of 767-300Fs, 777Fs, 747-8Fs and A330-200Fs). Conversion activity would average about 40 units per year, less than half of the level under a normal-growth scenario. The scenario above assumes a return to 6% growth this year, but there is no certainty this will happen. If the post-2009 growth rate averages only 4% per year, then demand will not get back to the 2007 level until 2015. If, on the other hand, post-2009 growth averages 8% per year, the recovery to 2007 levels will take place in 2012. Predicting demand growth rates is very difficult. Demand for airfreight capacity has grown historically at about twice the rate of worldwide growth of gross domestic product. This is, of course, an unsustainable pattern over the long term. Eventually, airfreight growth must come down relative to GDP growth, but when and by how much cannot be predicted with any certainty. Despite the gloomy picture , there are numerous positive developments to report concerning freighter equipment. The most notable shifts relate to new production freighters, but there are also positive developments in the freighter conversion field. In the aggregate, customers have a wider choice in the freighter market today than ever before. In reviewing freighter developments, it is important to recognize that they traditionally have carried about 50% of global airfreight tonnage, while the remaining air cargo has been carried in the lower-deck compartments of passenger aircraft. The fact that cargo traffic dropped more than passenger volume did during the 2008-09 recession caused a temporary shift toward a higher percentage of cargo moving in passenger aircraft bellies. On the other hand, tighter security requirements that in the U.S. will mandate 100% screening of cargo carried on passenger flights by August 2010, may lead to a greater reliance on freighters . As for new production types, Boeing stopped building the 747-400 and 747-400ER freighter models in mid-2009, but customers interested in large-capacity factory-built freighters have two new Boeing models to choose from. The first to enter service was the 777F, with initial delivery to launch customer Air France in February 2009. The 777F has about the same cargo capacity as the 747-200F, but consumes about one-third less fuel and has a range approaching 5,000 nm. Boeing’s second new large freighter is the 747-8F. Certification flight testing is expected to begin early this year, following a program delay announced last October. Initial deliveries are planned for the fourth quarter of this year. The -8F features a stretched fuselage (220 in. longer), higher gross weights (maximum takeoff weight approaching one million lb.), new composite wing and new 787-type engines, giving it enhanced capability and about 15% lower unit costs than the current 747-400F. The predicted efficiency of the 777F and 747-8F has proven attractive to customers, as evidenced by about 75 firm orders for each type. Airbus also has a new freighter moving closer to certification. The A330-200F competes in the medium-capacity freighter market, where it offers a significant increase in payload-range performance compared to Boeing’s production 767-300F, which until now has been the largest and most capable freighter in this segment. Boeing has a backlog for about 25 767-300ERFs , with deliveries stretching into 2012. The A330-200F, for which Airbus has approximately 65 firm orders, is scheduled for certification in March , with deliveries beginning in August. The A330‑200F will be the only production freighter from Airbus for several years; freighter versions of the A380 and A350 models are expected, but not until after 2015. The use of factory-built freighters has been common in the wide-body market segment, especially for high-capacity models flown in high -use operations. However, in the global fleet of freighters of all sizes, aircraft converted from passenger to freighter configuration outnumber factory freighters by roughly three-to-one , a ratio that is expected to continue . Such conversion involves removing passenger-related equipment, installing a large main deck cargo door and reinforcing the floor to carry heavier loads. At the top end of the market, Boeing and the Bedek Aviation Group of Israel Aerospace Industries each offer passenger-to-freighter (P-F) conversions of 747-400Fs. Together Boeing and Bedek/IAI delivered approximately 60 converted 747-400s through the end of 2009, although sales dried up that year due to the economic downturn . Boeing also offers a P-F program for the MD-11 , but those conversions will soon end due to a lack of passenger MD-11s to serve as “feedstock.” Next in line to become a large-capacity freighter conversion candidate is the 777, for which Boeing has begun product development studies. P-F programs are being considered for both the 777-200 and -200ER , with a decision to launch possibly coming in the first quarter of this year followed by certification and initial deliveries of converted freighters in 2013-14. Both of the models noted above have significantly lower takeoff weights than the production 777F (which is based on the high-weight 777-200LR ), so the payload-range performance of converted 777s will be significantly lower than for the production freighter. T he medium wide-body freighter range represents a market segment that grew tenfold from 1995-2005, due to the growing popularity of A300, A310 and 767 freighters. The medium wide-body segment is where Airbus entered the freighter market in the early 1990s, and where it retains a leading position . The manufacturer built more than 100 A300-600s in freighter configuration, mainly for use by express carriers, before the production line closed in mid-2007. The A330-200 F will ensure Airbus a continuing presence at the upper end of this size category. Airbus remains active in the P-F market through EADS Elbe Flugzeugwerke of Dresden, which has had a successful conversion program for the A300‑600 and A310-200/-300 for several years. A competing P-F program for the A300-600 was certified in December 2008 by U.S.-based Flight Structures Inc. In addition, Airbus executives have disclosed that they are studying the development of a P-F program for the A330-300 model. This aircraft, with a fuselage that is about 17 ft. longer than that on the A330-200F, would appeal to express carriers moving low-density, high-volume shipments. Initial deliveries of the converted A330-300F could take place as early as 2012. Although Airbus types have been the most popular medium wide-body freighters, the Boeing 767 is gaining ground . The 767-300F remains in production, and conversion activity has picked up on both the 767-200 and -300 . Boeing certified a conversion program for the 767-300ER in mid-2008, and delivered the first modified unit to All Nippon Airways ( three more by the end of 2009). Boeing’s partner in this 767-300BCF program is Singapore Technologies Aerospace, which provides touch labor . With a fleet of more than 500 passenger 767-300ERs in service, this conversion program has a great future. Elsewhere, Israel Aerospace Industries continues its successful program for the freighter conversion of the somewhat smaller and less capable 767-200 series. Furthermore, Bedek/IAI has teamed with Mitsui & Co. under the M&B Conversions brand, to develop a similar program for the 767-300. Certification testing of the first M&B 767-300 conversion began last fall, and delivery of the first unit to launch customer EuroAtlantic Airways was scheduled to take place in the fourth quarter . In contrast to high daily utilization rates common for large freighters, narrow-body models typically fly many fewer hours. This factor places a premium in this segment on low acquisition cost, which explains the airfreight industry’s extensive use of aircraft converted after first operating for 15-20 years in a passenger role. It is interesting to note that there are no narrow-body freighters in production today, although Boeing does offer the 737-700C (convertible) model that includes a large main deck cargo door. Fortunately, there are numerous P-F conversion programs for narrowbodies available from a variety of sources. Three companies—Pemco World Air Services, Aeronautical Engineers Inc. and IAI—offer conversions for the 737-300 and -400 . Three other companies—Precision Conversions, Alcoa-SIE and ST Aero—offer P-F programs for the 757-200 . These types are designed to serve as replacements for the 727-200 F, which is facing retirement after many years as the world’s most popular jet freighter. To date, Boeing and Douglas-built aircraft types have dominated the small-capacity freighter market, but that is about to change. Airbus Freighter Conversion GmbH. (AFC), a joint venture formed in 2007 among Airbus, EADS-EFW and Russia-based UAC and Irkut, is moving forward with development of an A320/A321 P-F program. AFC secured a launch order for 30 conversions from Netherlands-based leasing company Aercap in July 2008, and the initial converted A320 is expected to enter service in the first quarter of 2012, followed about a year later by the A321. These converted Airbus freighters will feature large main deck cargo doors aft of the wing, contrary to the more common forward location. Conversions will be performed both in Dresden and Russia, with total capacity building to 30 per year. The A320 and A321 will offer 10- and 13-pallet capability, respectively, placing them between the 737-300F and 757-200F in size, which could work to the advantage of the Airbus models. The various narrow-body models are expected to be popular among express companies in their well-developed freighter aircraft networks, and they will find extensive application in newly developing markets such as China and India. FedEx, for example, is acquiring 87 converted 757-200Fs to replace the 727-200Fs in its U.S. domestic fleet. Finally, in the narrow-body segment a new development in 2008 was the certification of a conversion program for BAe 146 s. The new program was developed by BAE Systems Regional Aircraft with the touch labor performed by Romania-based Aerostar. This program is the re-launch of one that saw about 30 new BAe 146s converted off the production line in the late 1980s, mostly for use by TNT in its European express network. In addition to the mainstream commercial freighters , a number of Russian-built models are in use . The Antonov An-124 and Ilyushin Il-76 were originally developed for the Soviet military, and they continue to play a role in the niche market carrying outsized shipments. Finally, a few Tupelov Tu-204 freighters are in operation, and the first Il-96-400T entered service late in 2009. However, Russian aircraft will continue to play a secondary role in the freighter fleet for the foreseeable future. Robert V. Dahl is managing director of Air Cargo Management Group, a Seattle-based aviation consulting firm. He also serves as associate editor of the CARGO FACTS Newsletter, an ACMG-affiliated publication. For more information, see www.cargofacts.com |
 |
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||
|
No comments:
Post a Comment