Boeing, Airbus raise 20-year outlook for air cargo on express growth

Continued growth in demand for shipping goods by air will translate into a global freighter fleet in 2041 that is 80% larger than today, Boeing said over the weekend in a market outlook slightly more bullish on air cargo than a year ago and compared to rival Airbus’ new forecast. 

The rosier analysis explains why Boeing projects a need for 540 more dedicated cargo jets than Airbus over the next 20 years.

The world’s dominant jet manufacturers issued their visions of how the passenger and air cargo markets are likely to look 20 years from now on the eve of the prestigious Farnborough International Airshow in England, where they are expected to announce more aircraft deals. 

On Monday, All Nippon Airways finalized a recent expression of interest for two all-new 7777-8 freighters, and Delta Air Lines (NYSE: DAL) officially signed to buy 100 737-10 MAX single-aisle passenger jets. Also, Aircompany Armenia and partner company Georgian Airlines announced an order for three 737-800 Boeing Converted Freighters as part of the group’s plan to add more dedicated cargo airplanes to its operations in the Caucasus region.

Boeing projects air cargo volumes will achieve 4.1% compound annual growth over the next two decades, an uptick of one-tenth of a point from last year’s report, based on expected growth in GDP, industrial production, global trade and e-commerce. The 10-year outlook envisions 4.3% growth.

More conservative Airbus said freight traffic will grow at an annual rate of 3.2% through 2041, with the express sector outpacing general cargo at 4.9% versus 2.7% growth. The Airbus estimate is higher than last year, when it pegged express cargo growth at 4.7%. The express share of global cargo volume is expected to increase to 25% from 17% in 2019, it added.

The U.S. aerospace giant, working its way back from the fallout of the pandemic, the 737 MAX grounding and production snafus with the 787 Dreamliner, predicted that sustaining that traffic will require nearly 2,800 additional freighters, including 940 new widebody models, to be delivered through 2041 — half to replace older, less fuel-efficient aircraft and half to support greater shipping demand. Two-thirds (1,855) of the additional cargo jets will be used passenger aircraft converted for a new mission, and 70% of those will be standard-body aircraft such as the Boeing 737 and Airbus A320/321 families.

Boeing’s commercial market outlook counted 2,250 jet freighters around the world at the end of last year, up from 2,010 before the pandemic as operators delayed retirements and pulled older planes out of deep storage to support the boom in cargo demand after airlines halted most passenger flying. 

The company’s 2041 forecast for the fleet to reach 3,610 units with a 3% average annual growth rate represents a nearly 7% increase over last year, reflecting expectations for higher traffic growth and replacement needs. Estimates for factory-built and converted freighters are higher than in the 2021 outlook.

In the narrowbody segment, the global fleet is projected to nearly double (plus 90%) from 2021, with widebody growth of 75%. Boeing said half of its current 660 large freighters are nearing retirement age and that the industry will require 515 units for replacement and growth needs. Last year it estimated a need for 450 new large widebody freighters.

Airbus’ lower estimate for air cargo demand influenced its projection for freighter needs. The European airframer said the industry will need 2,440 cargo jet deliveries, with nearly 900 of those from new production and the remainder modified passenger aircraft. It puts the total freighter fleet at 3,070 units in 2041, with 1,400 representing replacement aircraft, 1,040 coming from growth and 630 current units remaining in operation. The freighter estimate over 20 years increased from 2,980 aircraft in the 2021 outlook. 

Both market outlooks assume world trade will double in 20 years, based on an annual growth of about 2.85%. That growth rate is slower than the 4.8% experienced for the 20 years before the pandemic.

Air cargo gains momentum

Several forces besides macroeconomic trends are driving increased air cargo utilization and interest in all-cargo aircraft. 

Airlines have generated record cargo revenues and enjoyed yields double those in 2019 as a result of tight capacity and changes in consumption patterns as economic lockdowns threw economies out of sync. Air cargo volumes in 2021 increased nearly 7% over the pre-pandemic level. Extensive disruptions in ocean shipping have made schedule reliability nearly nonexistent and stratospheric rate increases for containers have significantly narrowed the gap in pricing. Three years ago, shipping by air was 10 to 15 times more expensive than ocean transport. Today, average air rates are only five times more than ocean. The changing market conditions led many businesses to convert a portion of their shipments to air. 

Goods movement is still constrained by the lagging recovery of long-haul passenger travel, which is only about 65% back to 2019 levels and typically happens on widebody aircraft that can also accommodate large amounts of cargo. Prior to the pandemic, about 50% of global cargo traffic moved in passenger bellies. Today, main-deck freighters haul two-thirds of global air cargo. 

The pandemic put a premium on speed and reliability, airfreight’s core strengths. It also forced many companies to reevaluate their supply chains and how to reduce risk associated with labor and supplier problems, weather events or geopolitical events. Boeing said the trend toward resiliency could benefit air cargo as manufacturers and logistics providers consider ways to diversify supply chains. The supply chains with more nodes in the system can benefit from the flexibility of air cargo and point-to-point service, Boeing said.

The largest change in favor of long-term air cargo growth is e-commerce, which has doubled its share of retail sales over the past five years and heavily relies on express delivery networks with same-day and overnight air capabilities to meet demanding customer expectations for rapid delivery.

Boeing is building 767 medium-widebody freighters and larger 777 freighters through 2027, with the next-generation 777-8 taking over after that. Boeing has yet to develop a replacement for the 767 freighter, which was made obsolete by pending international emissions rules. It also has a large program for converting used 737-800s for freight.

Airbus has lagged behind Boeing in freighters but is making a big push with its new A350 large freighter, as well as a new conversion program fcr the A320/321 and a revitalized passenger-to-freighter program for the A330. 

Passenger market

Overall, Boeing forecasts demand for more than 41,000 new airplanes through 2041, representing a market value of $7.2 trillion. Airlines will grow the combined passenger/freighter fleet at a 2.8% compound annual growth rate, bringing the total inventory to 47,080 units from 25,900 in 2019. The current fleet forecast is 7.6% smaller because of pandemic-induced structural industry changes, such as downsizing and a move toward larger single-aisle jets, and the exclusion of potential sales in Russia and Central Asia due to sanctions over the war in Ukraine. 

Widebody aircraft will continue to represent about 18% of the total aircraft population, but the estimate for 7,230 units is down 11% from 2019. Small and medium widebodies, such as the 787, have gained share over the largest planes, like the A380 and 747, because airplane range is less dependent on size these days.

Airbus, again, arrived at a lower figure for the total airfleet. It forecasts demand for 39,490 new passenger and freighter aircraft over the next 20 years with a total in-service fleet of 46,930.

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