Yesterday’s outcast is today’s golden child

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While the air cargo pundits debate the intensity of the air cargo market in the months to come, one thing remains clear – maindeck capacity is very much in demand, writes Donald Urquhart.

And while air cargo demand has moderated somewhat from last year and new obstacles – most notably rising fuel prices and the threat of a full blown US-instigated trade war – the market still retains a robustness that that keeps last year’s severe capacity shortages alive in the industry’s collective memory.

“Demand is definitely good and it’s a seller’s market at this point,” one air freight industry analyst told Air Cargo Week. Not since the industry recovery of 2010 – after nearly two “heinous” years – as for Boeing Commercial Airplanes regional director – airline market analysis Tom Crabtree, describes it – of the 2008/09 economic downturn has there been such robust cargo demand. And that demand caught much of the industry off guard last year resulting in a mad rush for capacity.

Boeing Commercial Airplanes regional director – airline market analysis, Tom Crabtree

So far this year things are looking good – not as stellar as the latter half of last year, but nonetheless encouraging. With IATA figures suggesting around 5.1 per cent growth for the first four months, the global airline body is forecasting four per cent growth going forward. At Boeing, they are somewhat more optimistic with their analysis or airline data pointing to a six per cent growth in the first four months.

Going forward Crabtree says they are looking at between four to five per cent for the remainder of the year, “driven by the fact the industry is capacity constrained.”

The year-end build up of 2017, sucked up pretty much every available viable freighter that was sitting idle. That, with latent demand continuing on into the early part of this year –resulted in little or no maindeck capacity being idled. If anything, it is the opposite and indeed, the desert parking lot has never looked more barren.

Available freighter capacity is all fully switched on as ‘once bitten, twice shy’ shippers and freight forwarders have even now, only halfway through the year, book up space wary of being bitten by lack of capacity for a second peak season.

“Quite simply there are no freighters, wide or narrow body, that are parked looking for a home,” observes Strategic Aviation Solutions Int’l president and CEO Stan Wraight. “Even the charter market is struggling to find space available except backhauls etc,” he adds.

The industry analyst noted that pretty much every available freighter that’s on the market gets picked up pretty quick. He cites the example of Etihad which earlier this year decided to phase out five A330-200 freighters. These have been placed with a “large express” company, for at least two or three months already, he says, adding that half a dozen companies were keen on picking them up.

The problem he notes is that if a carrier orders from a manufacturer, there is a delivery date – some 15-24 months out – and it comes when it is delivered. The conversion market is quicker he notes, but these too have built up a substantial backlog.

“Airlines are really desperate so this is the state of the market today and I would say this will probably continue into next year and even if the freight market starts turning down, the overhang of the demand will still be there so it will take some time to swing back to a balance.”