Overall intercontinental cargo capacity is likely to remain constrained for the next five years. The large widebody freighter fleet is only likely to increase by about 1.6% annually through to 2030. This is lower than the 20-year average of about 2.7%. Passenger widebody delivery activity is also running at historically low rates. Depending on how the different demand scenarios unfold yields and profits could remain elevated. That is also good news for freighter aircraft values. This article discusses the reasons why capacity will remain tight, but also which companies are likely to feel the pain first if there is in fact a downturn in demand.
Freighter Deliveries to be Constrained
Production freighter deliveries and conversions will remain constrained at least until 2030. There are a multitude of reasons for this:
- No further 777-200F deliveries are possible beyond the current backlog due to the end of production in 2027
- A350F entry into service has slipped into 2027 – two years later than initially planned.
- 777-8F deliveries will not take place before 2028 and may well be delayed further.
- All 777 conversion programs are delayed by at least two years. At time of writing, not a single program has received certification. Borth IAI and Mammoth are at least reportedly close.
The chart below shows our estimate for retirements and freighter additions through to the end of 2030. This would indicate net fleet growth of about 60 aircraft, which equates to about 1.6% per annum over the next 5.5 years. This optimistically assumes that none of the programs are subject to further delays.
Net fleet growth will also be impacted by the retirement of existing aircraft. Our best estimate is that all MD-11F will be retired in the next 5 years and about 90 747s, mostly around the time when they reach the 4th D-Check (at about 32 years). That is in line with the historical retirement age for large widebody freighter aircraft.
The scope for additional aircraft orders is limited during the next five years. Both the A350F and 777-8F program are unlikely to see more than 5-15 deliveries per year in the first years and both programs compete for slots with their sister passenger programs.
No Quick Fixes to the Capacity Problem
There is little room for freighter operators to increase productivity. Since 2024 aircraft have been operating at daily utilisation rates comparable to late 2020 and 2021 – there is little upside potential. Moreover, European and most non-Chinese Asia based operators flying between Asia and Europe are required to avoid Russian airspace. This creates longer routings without creating additional revenue opportunities. Depending on the city and routing this can add between 2 and 5 hours per roundtrip, or an extra $30,000-$70,000. This equates to an effective capacity reduction of about 10-12%.
Passenger widebody belly capacity is also constrained. Even though at a global level, capacity at the end of 2024 was finally higher than in 2019, key freight routes (i.e. between Asia and Europe as well as on the transpacific) remain below previous levels. These are the lanes that have seen the biggest increases in demand driven by booming cross border e-commerce traffic. Yields still remain between 50-60% higher than 2019 levels.
Passenger capacity growth is unlikely to pick up before 2028. Since 2020, Boeing and Airbus have been delivering only half as many aircraft as they usually do – about 200 vs 400 per year. That is about 1000 aircraft less over five years. While delivery rates have been improving, normal levels are unlikely to be reached before 2028 – provided the 777X receives timely certification and no further supply chain issues hit production. The ongoing tariff policy may well impact aircraft deliveries depending on levies applied to material and component inputs.
The high yield levels have made it profitable to operate medium widebody freighter aircraft (767s and A330s) on long haul routes. These types are normally only found in intra-regional networks or on medium haul routes. By our estimates, 767 operators operating between Asia and Europe have a $0.90 – $1.05 per kg unit cost disadvantage compared to 777-200F or 747-400F operators. This is significant – but when yields are high it doesn’t matter. If we do see a market downturn then these operators will be the first to feel the pain. Next in line for pain are those carriers forced to fly around Russian airspace. The ones best able to weather the storm will be those 777-200F operators with low unit costs and direct flights.