Freighter race heats up during holiday cool-down

Today, as Air Cargo World pauses to celebrate the season with families and other loved ones, and supply-chain stakeholders breathe sighs of relief after the last of the Christmas packages complete their final-mile deliveries, it appears that the freighter market is just getting warmed up.

As reported yesterday in our sister publication, Cargo Facts, China-based carrier SF Airlines recently took redelivery of a Precision-converted 757-200 freighter in Chengdu, bringing SF’s freighter fleet up to 50 units. SF Airlines, the carrier affiliate of SF Express, has grown its fleet at a staggering rate, rising from just 10 freighter aircraft in 2012 to more than 30 in 2016, including its first widebody 767-300.

The SF news comes on the heels of reports from last week that Amazon will also bump its fleet from 40 widebody freighters to at least 50 by 2020. Amazon said on Dec. 21 that it will lease 10 additional freighter-converted 767-300Fs from Air Transport Services Group (ATSG) over the next two years to support the growth of its dedicated freighter network. The aircraft will be leased by ATSG’s leasing subsidiary, Cargo Aircraft Management (CAM), and operated on Amazon’s behalf by an ATSG affiliate carrier.

All this dedicated freighter growth is coming despite some strengthening headwinds that have developed this month. In its mid-December assessment, the International Air Transport Association (IATA) said it expected growth in demand for airfreight next year will reach its slowest pace since 2016. IATA forecast a 3.7 percent annual increase to a total of 65.9 million tonnes in 2019, compared to the 4.1 percent increase it had forecast for 2018.

The final word on this year’s peak season has yet to arrive, but early indicators point to relatively modest growth, with WorldACD reporting just a 2 percent year-over-year rise in the latest October 2018 air cargo figures. Several European airports, including Frankfurt International and Amsterdam Schiphol, have reported declining volumes off and on throughout 2018, while PACTL, the largest cargo handler at Shanghai’s Pudong Airport, has reported year-over-year declines in September, October and November.

Then there are the lingering potential effects from political and economic policies around the world. The tariffs and counter-tariffs imposed by the United States and China have had a chilling effect on seafreight, but have yet to make much of a dent in the airfreight business, as most of the tariffed goods are not often carried by air. Meanwhile, the coming Brexit deadline in March is still no closer to a negotiated deal, which has caused much hand-wringing among economists and supply chain experts.

And let’s not forget the harrowing plunge in the U.S. stock market, stemming from investors’ uncertainty over the current federal government shutdown over a budget impasse. The Dow Jones Industrial Average just suffered its worst Christmas Eve drop in history and endured its worst December since the early years of the Great Depression. A series of Wall Street losses, totaling about 20 percent since the previous high in September, means that the U.S. is officially in a “bear market.”

Yet, the major express cargo networks in China and the U.S. are clearly seeing hope for 2019, as they ramp up their fleets. While economic indicators continually point to a slowdown in airfreight demand, both SF and Amazon Air have shown confidence in the future of e-commerce through the metal in which they are now investing.

So, to the air cargo industry, Air Cargo World wishes everyone a happy, prosperous, peaceful holiday, and a well-earned rest during a busy – and ongoing – peak season. We’re apparently going to need such a rest in the days and month to come.