Last week, Boeing presented its new ‘Air Cargo Forecast 2024-2043’. The key findings in a nutshell: Boeing expects global air freight to grow by 3.4% annually, express will outgrow standard freight, supply chains continue to be diversified, geographically benefitting countries in the Southeast Asia, Latin America, and Eastern Europe. These markets will step up from the third to the second or even first league in air freight traffic.
India takes first place in domestic cargo
According to Boeing’s analysis, India will secure pole position for aviation growth over the next two decades, due to the strong increase in domestic Indian air traffic. Its drivers are fast increasing industrial activities that positively stimulate supply chains, the enormous domestic consumer market, and rising incomes. The Boeing experts speak of a “fourfold increase in domestic Indian air cargo over the next 20 years,” with e-commerce as the main driver. The cargo growth avenue that India has embarked on will support the political goal of achieving developed country status by 2047 – its centenary of independence. The cargo upswing is strongly supported by the Delhi government, which is heavily investing in aviation and cargo ground infrastructure.
Globally, it’s China-USA
Further to this, Boeing analysts predict that China and the USA will remain the dominant markets for intercontinental freight transportation during the next two decades. However, the imbalance in shipment flows remains, with nearly twice as much cargo flying eastbound to North America, compared to westbound. Air trade on this flow is heavily concentrated. Yet, they add that this forecast will only hold true if supply chains do not collapse, for example because of an invasion of Taiwan by China, or other massive geopolitical disruptions. The United States accounts for nearly 90% of North American trade with East Asia, while China is the largest East Asian air trade partner of North America with a 55% share of North American air imports and 37% share of exports. However, China’s share is slowly decreasing in percentage terms, not in absolute terms. This is because the risks posed by geopolitical tensions are increasingly prompting industries to diversify their activities by building production plants outside China, preferably in Vietnam, Thailand, Malaysia, and Indonesia, but also in Mexico or Eastern Europe.
Export and import volumes between Asia and Europe have converged
Boeing also considers the East Asia – Europe sector, the world’s second-largest cargo market. Unlike the transpacific flows, volumes on this trade lane are fairly balanced. The East Asia-to-Europe direction is dominated by consumer goods, whereas Europe-to-East Asia is driven by manufacturing and industrial items. However, European exports of consumer goods, luxury items, and perishables have increased in recent years as East Asia’s middle class and consumer base continue to grow. Sixth-Freedom carriers centrally located on this trade lane have risen to prominence in recent years. Clear examples are Azerbaijan-based SilkWay West Airlines, and ME carriers such as Qatar Airways Cargo and Turkish Cargo. Their ability to link the two regions and beyond by efficiently transshipping cargo through their hubs in Baku, Doha, Dubai or Istanbul, has allowed them to capture market share and lead industry growth, particularly given the Russia overflight restrictions faced by European and some Asian carriers. Strong economic foundations and expanding e-commerce markets on both sides of this trade lane will drive air cargo growth at around 4.0% per year over the next 20 years, predict the Boeing experts. Capacity remains elevated because of supply chain disruptions related to the Red Sea crisis and the closure of the Siberian airspace following Russia’s war on Ukraine. Overall, the risks for air freight on these routes are comparable to the hazards that transport chains between China and the USA are facing.
Latin America and Africa are the future hotspots in air cargo
As far as the trade lanes between Latin and North America are concerned, the authors of the market study forecast accelerated growth of intra-American air trade over the next 20 years. Cargo will be further stimulated by expanding consumer economies, rising e-commerce, and U.S. efforts to nearshore manufacturing from China to Latin American countries.
The Africa-East Asia air cargo market is also set for leaps in growth. It will triple in volume and surpass Europe as Africa’s largest air cargo market. Africa’s population is expected to double to 2.5 billion people by 2050, by which time one-quarter of the world’s population will live on the continent. Industrialization and economic development will raise incomes and boost consumption with positive effects on air freight and the entire transportation sector.
1,560 new freighters by 2043
Regarding the global freighter fleet, Boeing projects a growth of approximately 66% from 2,340 cargo aircraft in 2023, to 3,900 jetliners in 2043. Of the newbuilds, roughly 45% will replace retired airplanes. Freighter deliveries will total 2,845, with approximately two-thirds being converted jetliners. Around 70% of the P2F-conversions will be standard body freighters such as the Boeing 737MAX or the A320 family of Airbus. Of the factory-built freighters, 34% will be delivered to carriers based in Asia-Pacific, followed by North America (34%), Eurasia (18%), Middle East and Africa (9%) and Latin America (6%).
Boeing’s misery limits available cargo capacity
Overall, the study also states that the demand for cargo aircraft surpasses supply, which will probably last longer. Both manufacturers, Airbus and Boeing, are struggling with production delays mainly caused by supply chain interruptions. But the worst hit is Boeing, which has suffered severe setbacks due to its many B737 MAX dramas, multiple technical deficits affecting different variants, and serious production delays. Due to faults in the engine suspension system, the frame maker recently had to completely stop its test flight program for the B777X aircraft. This further extends the delivery waiting time for Emirates, Lufthansa, and others. The B777X was originally due to enter service in 2020. With production figures and deliveries of factory-built aircraft lagging far behind schedule, the U.S. frame maker has unintentionally but actively contributed to the gap between capacity demand and supply. This applies to both passenger and freight traffic, because around 50% of all cargo shipments are transported in the lower decks of passenger aircraft.
