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.
Posts tagged as “Freighters”
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.
The US domestic air cargo market today is about as big as it was in early 2017 – despite a boom in e-commerce. After growing at about 3.7% per year between 2012 and 2021, flown traffic has dropped by almost 20% since early 2022. The bad news is that we may see more declines in the next 18 months. The good news is that declines are likely to be more moderate. This article looks at the outlook for the US air cargo market and discusses what it means for the demand for air capacity.