International air cargo growth at European airports is tracking at about 3% so far this year. But that number hides some big differences in growth between the traditional top cargo hubs and a lot of more freighter focused airports across the continent. While the top 10 airports still account for about 66% of international cargo volumes there has been a shift underway.
Posts published in “Analysis”
The 777-200F sets the standard in terms of long-haul freighter operating economics. With around 300 units have delivered since 2009, it is now the most popular large widebody freighter. Market level prices for new units have fluctuated between $148m and $175m a unit, but transaction level pricing is not public. Based on a mix of customs, order and delivery data, we have estimated actual delivered prices over a 25-year period. We find that differences of US$27-28 million between the lowest and highest price during the same reference period are typical. This article discusses our findings and the reasons for some of these differences.
An increasing share of international air cargo and most of the industry’s growth expectations are riding on the movement of low value cross border e-commerce items, mainly out of China. The five major platforms have massively increased cross border volumes over the past 3 years and while the transpacific has copped a beating over the past months, growth to Europe and some other markets has more than made up for that. However, e-commerce companies consistently lose or make very little money on this business. That is a problem that the air cargo industry needs to think about. This article looks at the international operations of Alibaba, Amazon, eBay, Pinduoduo, Shein with a focus on the financial performance, geographical scope and implications for the air cargo business.
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.
Many passenger airlines are not getting the full potential out of their cargo businesses – particularly those that do not operate freighters. For these carriers cargo accounts for about 3% of total revenues, but ranges anywhere from next to nothing to as much as 10%. Some of this is due to hard factors like geographical footprint or type of capacity, but distribution network and the level of cargo expertise is also a key point of difference. Adding freighters can grow the cargo division’s contribution to company results but needs to be considered carefully as it can add a whole new level of risk.
Air cargo is generally not a good business. At least for airlines who take most of the long-term capacity risk. In the last five year the business went from dull to awesome. Many companies made more profit in the last five years than in their entire history. The first half of this year was pretty good and companies continue to naively believe that everything will be ok. We take the view the ice age may be just around the corner. Or at least go back to being dull. This article looks at the different Eras in the life of air cargo and outlines some scenarios that could unfold over the next years.
The Australian international air cargo market generated about 1.15m tonnes in the last 12 months, with inbound accounting for almost 60% of this. If recent growth in inbound cross border e-commerce traffic continues then the market could grow by almost 5% per year for the next five years. Exports could grow by as much as 4% if volumes recover to the 2018 peak levels. Without this we would expect lower growth rates for both imports and exports of around 1% per year. This article discusses long-term Australian air cargo market trends our latest forecast for inbound and outbound air cargo between 2025 and 2030.
Imports make up about a quarter of goods supplied to the US economy. From an industry output perspective, around 10% of the price paid for goods in the US is linked to imported intermediate inputs. For certain sectors such as automotive or machinery this is higher. For example, we find that a 20% tariff is could increase prices of automotive goods by 4%. This article which includes an interactive dashboard illustrates the importance of imports for both overall supply of commodities as well as industrial output.
Global trade is (again) in a phase of major disruption. Yet the commentary around the most recent quarterly company announcements shows that while engaging in tactics, businesses are failing to develop long term strategies. Yet much of what is happening should not come as a surprise and is consistent with longer term trends that have emerged over the last 10 years or so. Focusing on the air logistics business, this article examines the strategic choices that companies need to make to remain competitive.
International air cargo is highly reliant on global supply chains and cross border e-commerce traffic. Both look like they will take a beating in 2025. In January we were still expecting growth of between 3.5% and 7.4% but our latest forecast foresees a range of between -0.1% and +0.7%. This is driven a weaker economic outlook globally as well the potential loss of about one third of transpacific air cargo volumes due to US de-minimis rule changes.