Download - Market Trends in the Air Freight Industry
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Presented by
Didier Lenormand
Director - Business DevelopmentCustomer Affairs
Market Trends in the Air Freight Industry-A Chinese Air Cargo Industry Perspective
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Market Trends in the Air Freight Industry-A Chinese Air Cargo Industry Perspective
Air cargo is a growth market: Some industry trends
Asia and China are keeping the lead
What freighter aircraft for China
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Air freight is a growth marketPassenger aircraft role in air freight will decrease
FTKs (billion)500
66%
34%
59%
41%Belly Holds+4.8%p.a.
DedicatedFreighters+6.5%p.a.
Total Cargo+5.88%p.a.
141.1
442.7
400
300
200
100
02003 2023
Traffic volume will more than triple over the coming20 years
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Nearly 60% of cargo FTKs will be flown onUS-Europe-Asia Pacific routes
Share of 2023 FTKs(FTKs growth: average per annum 2003-2023)
Source: Airbus Global Market Forecast, 2004
9 . 7 6 %
2 6. 1 5 % ( + 6
. 5 % )
1 9 .7 8 % ( + 6 .3 % )
2 . 9 6 % ( + 5 . 6 %
)
3 . 6 %
( + 5 . 3 %
) 2 . 7 3 % ( + 5 . 7 % )
2 .8 5 % ( + 5 .5 % )
11.53%
0.5%
~9 .9 % Other flows
2 6. 1 5 % ( + 6.
10.23%(+4.3%)
(+ 4.9%)
(+7.3%)
(+5.0%)
80% of air cargo traffic will be long-range,intercontinental, hub-to-hub
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The freighter fleet will more than doubleThe freighter fleet will more than doubleThe freighter fleet will more than double
477
2,412
727
0
500
1,000
1,5002,000
2,500
3,000
3,500
4,000
2003 2023
1,506
3,616
Number of aircraft
Conversions
New freighters
Retained in service
+4.3% p.a.
A large replacement requirement, 727 newfreighters and a market dominated by conversions
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More than 3100 freighters will be delivered
189
391
913919
0187
142
398
0
200
400
600
800
1,000
1,200
Small jetfreighters
Regionalfreighters
Long-rangefreighters
Large freighters
919
1,100
331
Number of aircraft
789
Total new a/cTotal converted a/cTotal a/c
7272,4123,139
2004-2023
Regional operations: low utilisation
Mostly conversionsLong range flights: high ut ilisation
Nearly equal mix of new & conversions
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2003-2023 freighter fleet by region
Latin America2003 fleet 2023 fleet
67 183 Africa2003 fleet 2023 fleet
38 88
Middle East2003 fleet 2023 fleet
18 37
Asia-Pacific2003 fleet 2023 fleet
173 592
Europe2003 fleet 2023 fleet
230 466
North America2003 fleet 2023 fleet
980 2,250
World2003 fleet 2023 f leet
1,506 3,616
By 2023, the Asian fleets will have more thantripled from their current sizes
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Widebody freighters have grown in importanceWorld Freighter Fleet 1970~2003
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003
%
F l e e
t
WidebodySingle-aisle
44%
56%
and will continue to do soFleet at mid-year point . Includes factory built and converted aircraft. Source: Airclaims CASE
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World international traffic - Densities
( Includes belly and freighter cargoes )
135
140
145
150
155
160
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
kg/m3
Standard AverageExpress
Beside the major changes in the freight industry,on-board densities are stable around 155Kg/m 3since 10 yearsSour ce: MGI 2005
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2005 - 2015 Main drivers of traffic growth:
Economic expansion of Asia/Pacific region. Very large emerging economies are taking off.
ChinaIndia
Concentration of population, wealth, and industries
leading to higher local consumption. Continued trade liberalization :
December 2001 : China becomes 143th WTO member
January 2002 : Taiwan becomes 144th WTO member July 2004: China-US bilateral allows five-fold increase of direct capacity by 2010
Global companies need global cargo services :Lean inventory strategies : Just-in-Time, made-to-order call for frequenciesRelocation of production in low-labor-cost countries
Hub and spoke and direct interlined operations: compatible aircraft
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Market Trends in the Air Freight Industry-A Chinese Air Cargo Industry Perspective
Asia and China are keeping the lead
From the top 20 freight markets in 2023: 13 are
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From the top 20 freight markets in 2023: 13 arelinked to Asia, representing 48% of world FTKs
0 10 20 30 40 50
Domestic USAPRC - North America Asia - North America
Europe - North AmericaNorth America - Europe
Asia - EuropeDomestic PRC
North America - AsiaPRC - EuropeEurope - AsiaEurope - PRC
Japan - North AmericaNorth America - Japan
North America - PRCEurope - JapanJapan - Europe
South America - North America Africa - Europe
Europe - South AmericaSouth America - Europe
FTKs (billions)
2003 traffic 2004 2023 growth
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The Asia/Pacific freighter fleet will more than triple
15892
207
293
90
104
0
100
200
300
400
500
600
2003 2013 2023
173
592Number of aircraft
Conversions
New freighters
Retained inservice
+7.4% p.a.
352
+5.3% p.a.
At 6.4%p.a. growth Asia will require in 2023 morethan three times more all-cargo aircraft than mow
A need for mid sized freighter is not only feeder
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A need for mid-sized freighter is not only feederservices in Asia but a market in its own right
A fast growing regional cargo market exists within Asia andit consists of:
Mail, parcels and documents
High value goods JIT and supply chains Valuable cargo
It is mostly high value - low density commodities
Intra Asia is a maturing market with specific requirements Night ops is the preferred choice, late pick-up / early delivery: Belly
only capacity not adequate Intra Asia is a volume driven market: Wide body aircraft are better
fitted
Intra-Asia will require a cargo fleet on its own right:Not long-haul tag-ends nor simply belly-only services
Intra Asia : Late pick up early deliveries a need
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Intra Asia : Late pick-up, early deliveries - a needfor dedicated night, all-cargo services
Only all-cargo aircraft can offer late afternoon pick-upand more particularly, late night delivery flights
0200400600800
100012001400
160018002000
0 . 0 0
- 2 . 0 0
2 . 0 0
- 4 . 0 0
4 . 0 0
- 6 . 0 0
6 . 0 0
- 8 . 0 0
8 . 0 0
- 1 0 . 0 0
1 0 . 0 0 -
1 2 . 0 0
1 2 . 0 0 -
1 4 . 0 0
1 4 . 0 0 -
1 6 . 0 0
1 6 . 0 0 -
1 8 . 0 0
1 8 . 0 0 -
2 0 . 0 0
2 0 . 0 0 -
2 2 . 0 0
2 2 . 0 0 -
2 4 . 0 0
Intra Asian network: DeparturesHourly tonnes offered
FedEx
A typical belly onlyoperation
More main deck cargo capacity is required in the
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More main-deck cargo capacity is required in theChinese regional market
Years
Tonnes
19?? 20??
Belly capacity
Cargo traffic
Need for Dedicated freighter
China will also follow this evolution with a fastrising need for dedicated regional all-cargo lift
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Air freight in China
The freight industry eyes at the large and fast growingexport driven long-haul market ex-China
However a domestic and a regional market exist
China is a large country about the size of Europe Communications across China are not easy Ground infrastructure serves the major cities inter-land only
Air transport plays an increasingly large role Recent ACMI / orders for mid-size freighters witness this
necessity
More than 30 A300/A310 Freighters on order or in
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More than 30 A300/A310 Freighters on order or inservice in Asia: A recognised role as regional aircraft
Air Hong Kong8 A300-600RF
Air MacauWet-leased A300B4Fs
2 A300-600RP2F
AIR M ACAU
China EasternWet-leased A300B4Fs
3 A300-600RP2F in 2008
China Eastern
Dragonair Wet-leased A300B4Fs
FedEx A310F in regional operations
China SouthernChina Southern
6 A300-600RP2F
Sagawa1+1 A300-600RF
T ffi i b l d Chi USA l
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Traffic imbalance today: China-USA example
Large imbalance mostly due to consumer and high-tech goods: Exports to imports, consumer goods: 10 to 1 Exports to imports, high-tech goods: 6 to 1
Airfreight,China to US
1000Ts2004
%
Consumer 326
238
94
76
75
3
Food 1 0%
812
40%
High tech 29%
Capital 12%
Intermediate 9%
Other 9%
Primary 0%
Total 100%
Airfreight, US toChina
1000Ts2004
%
Intermediate 69
53
40
31
18
10
Food 4 2%
226
30%
Capital 23%
High tech 18%
Consumer 14%
Other 8%
Primary 5%
Total 100%
So far an export driven marketSource: MergeGlobal
Traffic imbalance the opposite case:
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Traffic imbalance the opposite case: A mature market, Europe-USA
Moderate imbalance driven mostly by difference in capital goods flowsand consumer habits
Europe and USA have very similar level of development and productioncapacities. Traffic tends to be fairly balanced.
Airfreight,Europe to US 1000Ts2004 %
Capital 343
272
271177
144
79
Primary 21 2%
1308
26%
Consumer 21%
Intermediate 21%High tech 14%
Other 11%
Food 6%
100%
Airfreight, US toEurope 1000Ts2004 %
Intermediate 285
209
184132
82
69
Primary 34 3%
995
29%
Capital 21%
High tech 18%Consumer 13%
Other 8%
Food 7%
100%
Source: MergeGlobal
As local demand grows, the Chinese traffic willtend to become more balanced
China's industrial production continues to
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China s industrial production continues togrow fast
Industry share of real GDP, constant US$
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Bn$ US
USAEuropeChina
Source: Global Insight
By 2020 Chinese output will exceedthat of Europe
More and more Chinese households will be
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More and more Chinese households will beable to afford imported goods
0
20
40
60
80
100
120
140
160
180
200
1985 1990 1995 2000 2005 2010 2015 2020
Source: Global Insight
Millions household with PP incomes above 30K$, real 1997 dollars
History Forecast
USA
China
Chinese market will soon become a large consumer market:Paving the way for more diversified and larger importsreducing dramatically the current traffic imbalances
Drivers for Chinese airfreight
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Drivers for Chinese airfreight
Just-in-time manufacturing export driven Driving long-haul export growth
General economic development - not only for exports: More high-value goods are purchased by Chinese consumers:computers (+35% urban areas*), mobile phones (+72% rural areas*)... A fast growing consumer market heading to improve traffic balance
Manufacturing moving to more remote cities with lowerlabor cost Beyond trucking reach from major gate-ways: Feeder role rapidly emerging Emphasis on development of Western region
The Chengdu example: The next Chinese cargo gate-way?(recently open cargo services with DLH and KLM)
On the long run we will see a dramatic improvement of theimbalances of the traffic between China and
the rest of the world* Source: China Statistical Yearbook 2004
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Market Trends in the Air Freight Industry-A Chinese Air Cargo Industry Perspective
What freighter aircraft for China
Frequencies are key to the industry: Hub and spoke
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q y y pwill sustain the market requirements for daily services
Hub and spoke is a key condition for daily services,as a result
efficient interlining is becoming key to success - industry wide
Long haul operations : Between hubs with larger aircraft
Regional operations : Intermediate capacity for daily serviceswherever it is required
Airbus wide-body freighters:
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y g A310P2F, A300-600RF, A330-200F
Beijing
SIN
DXBDEL
ANC
TAS
KHI
SVO
85% most adverse annual winds85% most adverse annual windsISA temperatureISA temperature3% Airways allowance3% Airways allowanceTypical international flight rulesTypical international flight rules
Highest MTOW, GE enginesHighest MTOW, GE enginesGeneral cargo configurationGeneral cargo configurationMax structural payloadMax structural payload
A310-300P2F39.6t, 3300nm
A300-600RP2F
48t, 2550nm
A330-200F64.3t, 4000nm
Ideally suited for China, Asian & far beyond!
A330-200F: Development study
A330F: Flight operational commonality with the A380F
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A330F: Flight operational commonality with the A380F
A320 family
A330 Family, A350 Family &
A380
Cross crew qualificationQualifying from one aircraft to another
Difference Training rather than a Full Type Rating
Mixed Fleet FlyingOne pool of pilots flying different aircraft types
Reduces training time, reduces number of crews,simplifies maintenance
A unique Airbus advantage
A380F : Designed with the airlines inputs
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A380F : Designed with the airlines inputs
Airlines inputs for the A380F, since 1996, froma knowledgeable group of major cargo players
A380F: more range = more lift, furtherF ll l d LAX d AMS/CDG/FRA
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gFull payload to LAX and AMS/CDG/FRA
Beijing Amsterdam
Anchorage
Los Angeles
Vancouver
Sydney
ParisFrankfurt
Out-bound winds3% airways allowance85% Annual Probabil ityISA
A380-800F:5600 NM @ 150 t
Out-bound traffic ex Beijing: A380F with full payload to Los Angeles and Europe
A380F: More range = less aircraft in fleet
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A380F: More range less aircraft in fleet
PEK
PVG
CDG LUX
ANC
LAX
SEA
SFO ORD
JFK
DFW
ANK x x
624 stops per year in PEK to/from Europe = 1,248 hours / year
676 stops per year in PEK from USA = 1,352 hours / year 1,404 stops per year in ANC to/from USA = 2,803 hours / year
Assumes current frequencies, 1 stop = 2 hour ground time & typical aircraft ut il isation
Cutting technical stops in Beijing & Anchorage
saves 5,408 hours per year Equivalent to 1.4 aircraft
A380F one aircraft, 3 design densities offeringi il l d
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similar revenue payloadsHigh volume layout: Express freight37,870 cu.ft.*
Tare : 8,875 kg
Max revenue payload140,820kg
Design density = 8.2 lb / cu.ft.
35,370 cu.ft.*
Tare : 8,375 kg
Max revenue payload
141,300kg
Intermediate layout
Design density = 8.8 lb / cu.ft.
31,990 cu.ft.*
Tare : 7,375 kg
Max revenue payload142,320kg
High density layout: General cargo
Design density = 9.8 lb / cu.ft.* excluding bulk
Close to the Chinesemarket requirements
Close to the Chinesemarket requirements
The A380F offers both high and low design densities
These densities reflect the specific traffic patterns exChi
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ChinaPRC-North America
110
120
130
140
150
160
170
180
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
kg/m3 PRC-Europe
110
120
130
140
150
160
170
180
1 9 9 5
1 9 9 6
1 9 9 7
1 9 9 8
1 9 9 9
2 0 0 0
2 0 0 1
2 0 0 2
2 0 0 3
2 0 0 4
kg/m3
World average
8.2lb/ft(8.2lb/ft3)
Low densities result from volumesof apparel and other consumerproducts.
High-tech equipment exports growfaster, resulting in a slight increasein densities
Increase in density have stabilizedat a low value, in line with transPacific markets
Source: MGI 2005
A380F : Outsize cargo - it does carry them
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: g y
WIDER than 747F door WIDER than 747F door
744F744F 3.05 mclear
3.40 m clear
2.62 mclear
4.27 m clear
A380F A380F
Large automobiles eg Mercedes S Class 5.2m long
Large cylindr ical object 10m long x 2m dia.Running loads permit weights up to 30t in this section
Bell 206 Jetranger helicopter (9.5m long)
777F777F 3.07 mclear
3.58 m clear
WIDER than 777F door WIDER than 777F door
2.62 mclear
4.27 m clear
A380F A380F
A380F has the widest main deck cargo door
A380F upper deck cargo loader:Where is the issue?
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Where is the issue? Airbus has facilitated an industry working group to
develop upper deck loader solutions Meetings held between May 2003 and April
2005 involving Airlines
GSE Manufacturers Standardisation bodies Handling agents
Solutions from 7 manufacturers are now beingoffered on the market:
, Trefel, FMC, TLD
First 2 vehicule will enter in service with
FedEX in 2007 Upper deck loaders can indeed be usedfor other wide-body aircraft:DC10F/MD11F and Airbus wide body
Upper deck loaders are now in production and will be testedbefore the A380F enters into commercial service
A380F: More efficient on the ramp smaller aprondeepth than 747 8F
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deepth than 747-8F
6510sqm6510sqmRamp spaceRamp spaceRamp spaceRamp space
747747 --400F400FSource: Boeing ACAP manual
5810sqm5810sqmRamp spaceRamp space
65m65m
89.3m89.3m
747747 --400F400FSource: Boeing ACAP manual
5810sqm5810sqmRamp spaceRamp space
65m65m
89.3m
A380 A380 --800F800F
5840sqm5840sqmRamp spaceRamp space
73m73m
80m80m
747747 --8F8F
92.9m92.9m
5810sqm 6350sqm
68.4m68.4m
+16.6m+16.6m
747-8F requires 9.2% more ramp space than A380F.Back-of-stand clearance problems (with adjacent taxiway)is also identified in Shanghai-Pudong airport for instance
To conclude
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Cargo market will continue to grow strongly World average +5.9% p.a. to 2023: traffic will more than triple Asia and China will keep the lead of that growth pattern
Chinese airlines are emerging as major global cargo players The Chinese economy has become a major global industry player A strong middle class is emerging in China:
This will help balancing long-haul traffic
Freighter fleets will more than double world wide Wide-body freighters will continue to dominate the market From a Chinese perspective, the A380F is the best solution for
the Chinese airlines long-haul market growth requirements
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(Thank You)(Thank You)
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