Air Cargo Management

Airbus Global Market Forecast: Key trends in freighter sector

Airbus, global market forecast
photo_camera Belly cargo is forecast to grow at a faster rate than main deck freight

Airbus recently released its much-anticipated Global Market Forecast for the next 20 years and highlights from the report include key trends for the freighter sector.

The world’s passenger and freighter aircraft fleet are set to more than double from today’s nearly 23,000 to almost 48,000 by 2038 with traffic growing at 4.3 per cent annually, also resulting in a need for 550,000 new pilots and 640,000 new technicians.

Airbus, freighter forecast
The Airbus Global Market Forecast press conference

The freight market today

Air freight grew an estimated 4 per cent in 2018, above the long-term trend. However, in the final few months of 2018, the end of a restocking cycle and increasing global trade tensions led to a slowing trade environment. This served to slow and even reverse some of the growth in air freight experienced in the last three years as 2019 started.

More positively, however, some economists have suggested, that should GDP forecasts be realised then some upward revision in trade growth might be expected in 2020, particularly if trade tensions can be eased, with air freight possibly benefiting as a result.

Ironically, pressure on trade and economic activity in the short term could lead to lower demand for oil and therefore potentially lower fuel costs for airlines improving their bottom lines.

Despite these headwinds to the air freight market, stored aircraft levels have remained low. At the time of this writing in the middle of 2019, freighter storage was at historically low levels of ~6 per cent of the fleet. For comparison at the time of the financial crisis in 2009, the level was nearly 23 per cent.

As well as low freighter storage levels, freighter retirements in 2018, were also at extremely low levels. In the 10 years before 2018, freighter retirements averaged 108 aircraft a year. In 2018, just over 30 were reported to have been retired.

Both positive indicators that the freight market was not facing overcapacity issues at this time, that needed to be managed with freighter aircraft storage or retirements.

Airbus: freighter forecast
A combination of new build and converted freighters will be needed

The freighter fleet grew for the fifth consecutive year to just under 2000 aircraft, growing 20 per cent since the financial crisis in 2008/2009.  In 2018, two thirds of the aircraft added to the fleet were freighter conversion in the small and mid-size freighter categories.

Freight market

In the long term, world international trade, a key driver of freight traffic, is expected to grow at 3.3 per cent per annum over the next 20 years, almost doubling from today’s levels to ~$45 trillion. This is a slight downward revision to the forecast that was used in the 2018 forecast.

Asia-Pacific will become the largest region in terms of international trade over this period, growing its share from ~36 per cent today to ~43 per cent in 2038. With intra- Asia Pacific forecast to be the largest trade flow, expected to grow 2.4 times over this period.

Whilst air freight represents a relatively small share of the international trade in terms of tonnage ~1 per cent, it accounts for nearly a third of the value, with benefits of speed and security helping to drive this ratio.

This year, Airbus forecasts that air cargo traffic will grow 3.6 per cent per annum to 2038. This will mean that cargo traffic is expected to double. Belly cargo is forecast to grow at a faster rate than main deck freight at 4.3 per cent per annum compared to 2.8 per cent.

This means that by 2038, ~60 per cent of freight will be carried by passenger aircraft. This is unsurprising given the growth in the passenger fleet over the same period. By using spare lower deck capacity in passenger flights to move freight provides revenue benefits to airlines and greater environmental efficiency.

While nearly 80 per cent of air cargo is expected to be general cargo, express freight is expected to grow significantly over the next 20 years, with more than 2.5 times the volume in FTKs forecast to be transported in 2038 compared to 2018.

Airbus, global market forecast
Christian Scherer (L) and Bob Lange from Airbus presenting the forecast

As a result of the growth in demand for the transportation of freight by air, the fleet of dedicated freighters is forecast to grow over 50 per cent, to just over 2,800 aircraft, from the ~1,800 freighters in service today.

The largest freighter fleet today, and in 20 years, will be domiciled in North America with ~40 per cent of the aircraft, and Asia-Pacific with nearly 30 per cent in 2038, up from ~20 per cent in 2018.

A combination of 2,500 new build and converted freighters will be needed with 60 per cent for replacement and 40 per cent for growth of the freighter fleet.

From these, 850 aircraft are expected to be new build.  Most new build freighters, ~500, are forecast to be in the mid-size freighter category, where aircraft payload ranges from 40-80t. Some 360 new build aircraft will be needed in the large category with payloads above 80t.

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