Air transport’s Cinderella will go to the ball
The air cargo sector has long been the Cinderella of the air transport industry in terms of investment and innovation – but that is all changing, says Alan Peaford.
It is fair to say that the air cargo industry has been seen as the poor country cousin, often operating in the dead of night from airfields in the middle of nowhere in aircraft that may well have enjoyed a reasonable lifespan, carting passengers around the globe before losing their windows, seats and galleys.
But no more.
This year’s Farnborough Airshow was a case in point. Although pushed out to the western extremities of the show’s static park, there was a steady flow of visitors making their way to the see the huge giants of the industry, the Antonov An-124 and the Boeing 747-8F freighters, showing their cavernous bellies to the world.
"Air cargo is back"
Air cargo certainly deserves some attention. It represents more than 35% of global trade by value, with around $7 trillion of goods being transported by air every year. While it is the big Goliaths that caught the eye at Farnborough, the majority of the perishable and urgent goods are carried in the holds of passenger airlines, giving a boost to airlines that IATA says is worth almost 10% of revenues – double that of the first-class segment.
And although there is over capacity in the market due to the expansion of the passenger business alongside an increase in the freighter fleet, there is plenty of confidence in the sector.
Indeed at Farnborough, Boeing was positively cooing over the prospects with its vice president of marketing, Randy Tinseth, claiming: “Air cargo is back”.
“As well as the market returning, we have seen a boost in consumer confidence and, importantly, there is an improving balance in trade in and out of China,” said Tinseth.
Tinseth said there had been a “definite uptick in air cargo” over the past two years as a result of an economy that’s now going above trend, as well as a return in trade and a return in industrial production.
With a forecast of 4.2% annual growth, Boeing predicts a total demand for 980 new freighters over the next 20 years, 510 of which will be large aircraft such as the 747-8F and 777F, and 470 medium freighters like the 767-300F.
That optimism was reinforced at the show, as Boeing secured 48 orders and commitments for the 777F and five for the 747-8F.
Volga-Dnepr Group and sister UK company CargoLogicHoldings took the five B747-8Fs, as well as a letter of intent for 29 of the 777 freighters for its UK airline, Cargologicair.
Qatar Airlines and DHL were also growing their fleets.
IATA forecasts a rise in cargo carried to 62.5 million tonnes in 2018 (+4.5% on the 59.9 million tonnes in 2017), representing less than 1% of world trade by volume, but more than 35% by value.
The larger of the world’s airlines are benefiting from this. With the capacity to add cargo to their hubs, airlines such as Ethiopian in Africa, Emirates in the Middle East, Cathay Pacific, China Air and Korean Air in Asia join the leading freight specialists Fedex, UPS and DHL to dominate the market
But how far can it go? Major airports are already at choking point and the squeeze could affect the cargo operators.
Some in the freight industry have likened the current situation to the rise of low-cost airlines 20 years ago, which saw smaller planes dock at massive gates designed for larger aircraft.
The mismatch of bays and aircraft on the airside is going to be matched by similar challenges landside. Docks that were set up for large trailers are not the right set-up for the necessary increasing number of smaller vehicles making more frequent trips creating bottlenecks and traffic jams.
Analysts see the future involving a higher number of flights with smaller planes carrying shipments that require more special handling and bespoke handing solutions.
And this is where the innovation comes.
We did a fascinating interview on FINN with Astral Aviation’s founder and CEO, Sanjeev Ghadia. Astral operates a mixed fleet ranging from the Fokker 27 through to Boeing 747 freighters and is a key player in Africa’s growing freight routes. But Ghadia sees a cargo future that is more direct and is working with his Kenya regulator for approvals for two different unmanned solutions, one along the lines of the greatly publicised Amazon delivery system and the second has capability of a two-tonne payload. He plans to start using it on humanitarian aid relief and then moving to oil and gas and mining industry development.
What was really fascinating there is that the multi capability could see the aircraft in a crop spraying role on one day and delivering freight the next.
And this multi-role idea is capturing the attention of many others.
Hybrid Air Vehicles, which is pushing its Airlander airship through to certification, may capture the headlines with its business/cruise leisure configuration, but the company recognises the aircraft has a number of options and cargo carrying is high on the list.
Neither of these projects needs a major international airport to operate from so they open the door to provide carefully targeted operations direct to customer.
Boeing also sees a buoyant demand for conversions. Its forecast sees a requirement for around 1,670 converted freighters by 2037. Some 500 of these will be wide-bodied aircraft and 1,200 single-aisle transports.
It probably didn’t consider a couple of the great conversions that brightened up the summer. The first was Lockheed Martin’s LM100J, a civil conversion of the great military workhorse, the C130J which stunned the Farnborough crowds with a loop during its flying display. The second was the Airbus Beluga XL based on the A330 airliner, and the successor to the Airbus Beluga. It is being designed, built and will be operated by Airbus to move oversized aircraft components and made its first flight on July 19 2018.
The operators are keen to see a future that includes new airframes specifically for cargo aircraft,
During a panel on developing cargo aircraft at the Farnborough show speakers argued that the types of new or used aircraft that air cargo carriers can acquire today are limited. Neither of the world’s two major commercial airliner OEMs, Airbus or Boeing, have dedicated air freighter airframes, other than to support new orders with converted passenger jets. Operators such as CargoLogicAir are hoping that will change. Fleet development director Paul Nolan said the UK operator and its Volga Group partner would "be very happy to work with Boeing and IAI and very happy to work with Airbus on the development of a long-term commitment for developing a dedicated cargo airplane fit for purpose."
It certainly looks as if this Cinderella will go to the ball.