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Kindly Sponsored by:Focus on Freighters Track
Last Night’s Gala Dinner Kindly Sponsored by:Thank you!
Tom CrabtreeRegional Director, Marketing Analysis
Boeing Commercial Airplanes
Welcome Address and Opening Remarks
Brian PearceChief Economist
IATA
Setting the Scene for the Freighter Outlook
Backdrop to the freighter marketBrian PearceChief Economist
14 March 2019
FTKs have not grown for more than 12 months
Source: IATA Economics using data from IATA Statistics
15
16
17
18
19
20
21
22
23
24
2015 2016 2017 2018 2019
Billio
ns p
er m
onth
Worldwide FTKs
Seasonallyadjusted
Actual
Recent weakness is widespread
Source: IATA Economics using data from IATA Statistics
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2015 2016 2017 2018
% c
hang
e ye
ar-o
n-ye
ar
Growth in FTKs by market segment
ME - Asia
NA - AsiaEurope - NA
Europe - AsiaWithin Asia
Export orders point to further decline in near term
Source: IATA Economics using data from Thompson Reuters Datastream, IATA Statistics
47
48
49
50
51
52
53
54
55
56
-8.0%
-4.0%
0.0%
4.0%
8.0%
12.0%
16.0%
2013 2014 2015 2016 2017 2018 2019
Expo
rt or
ders
PM
I, 50=
no
chan
ge
FTK
grow
th, %
chan
ge y
ear-
on-y
ear
Export orders and FTK growth
FTK growth Export orders index
The problem is weakening world trade, not GDP
Source: IATA Economics using data from Oxford Economics and the Netherlands CPB
0%
1%
2%
3%
4%
5%
2015 2016 2017 2018 2019
% c
hang
e ye
ar-o
n-ye
arGlobal GDP and world trade growth
World trade growth
Global GDP growth
Slower but continued GDP growth expected
Global GDP growth
Source: IATA Economics using data from Markit, IMF World Economic Outlook January 2019
35
40
45
50
55
60
-3.0-2.0-1.00.01.02.03.04.05.06.0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
PMI in
dex
% ch
ange
year
-on-
year
Business confidence
US-China tariffs depressed cargo at year-end
Source: IATA Economics using data from Thompson Reuters Datastream
-4%
-2%
0%
2%
4%
6%
8%
10%
2016 2017 2018 2019
% c
hang
e ye
ar-o
n-ye
ar
Export and import volumes growth
US imports
Emerging Asia exports
EU28 imports
China/US trade matters
0%
5%
10%
15%
20%
25%
30%
35%
1980 1985 1990 1995 2000 2005 2010 2015 2020
Share of world trade, %
China
US
Germany
Japan
India
Source: IATA Economics using data from Oxford Economics
Trade outlook forecast to improve
Source: IATA Economics using data from Oxford Economics
-2
0
2
4
6
8
10
12
Vietnam India Indonesia China Thailand S Korea Japan
% ch
ange
yea
r-on-
year
Forecast growth in export volumes2019 2019-2023
A pause in globalization constrains the outlook
Source: Netherlands CPB, UNCTAD Eora database, Datastream
23%
24%
25%
26%
27%
28%
29%
30%
31%
556065707580859095
100105
1990 1995 2000 2005 2010 2015
Index (2008 = 100)
Pre-GFC Post-GFC
Ratio of world trade to economic activity (left scale)
Foreign value added in exportsi.e. production ‘on-shoring’(right scale)
% of total exports
Reasons for optimism on share of world trade
Sources: IATA Economics using data from the IMF World Economic Outlook Database, IATA Statistics
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Ratio
Ratio of FTKs to world trade volume
Weak 2019 outlook but improving trend
Source: IATA Economics 5-year Air Freight Forecast, March 2019
-10%
-5%
0%
5%
10%
15%
20%19
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
2020
2120
2220
23
% year-on-year Industry-wide FTK growth
Optimistic
Baseline
Pessimistic
Thank youBrian Pearcepearceb@iata.orgwww.iata.org/economics
Frederic HorstManaging Director
Cargo Facts Consulting
The Future of Freighters
THE FUTURE OF FREIGHTERS
cargofactsconsulting.com+1 646.837.5945
IATA WCS, Focus on Freighters Track, 14 March 2019
Frederic Horst, Managing Directorfhorst@cargofacts.com
cargofactsconsulting.com 22
OUTLINE§ THE WORLD FREIGHTER FLEET: THEN, NOW AND THE FUTURE
§ WHAT’S DRIVING DEMAND AND SUPPLY IN EACH SEGMENT?
§ WHAT’S AVAILABLE TO OPERATORS?
§ DOES THIS MEET THEIR REQUIREMENTS?
cargofactsconsulting.com
Cargo Facts Consulting Freighter Forecast 2018-2037 covers both the outlook for jet freighters and turboprop and regional jets.
Includes interactive forecasting tool.
23
cargofactsconsulting.com
Currently, there are 1780 jet freighters in operation, plus another 240 turboprops and regional jets.
24
Narrowbody Medium Widebody Large Widebody
< 40 tonnes 40 - 80 tonnes > 80 tonnes
671 Total Units 544 Total Units 565 Total Units
7 BAe 146 9 A310-200/-300s 16 DC-10-30/-40s
21 DC-9, 6 MD-80 10 A300B4s 117 MD-11s
12 B737-200 171 A300-600s 152 B777s
43 B727-100/-200s 41 A330F & P2Fs 45 747-400SF/BCF
125 737-300, 135 737-400 56 B767-200s 152 B747-400F/ERF
3 B737-700s, 8 B737-800s 237 767-300s 83 B747-8s
4 TU-204C 20 DC-10-10s
307 757-200s
Source: Cargo Facts Consulting, March 2019
cargofactsconsulting.com
Overall, two thirds of the world’s fleet are flown by or for express or postal operators, and increasingly, e-commerce companies.
25
Source: Cargo Facts Consulting, March 2019
cargofactsconsulting.com
The world’s freighter fleet has been growing again since 2014. The world fleet grew by about 70 freighters in 2018.
26
Source: Cargo Facts Consulting, March 2019
cargofactsconsulting.com
Over 2400 freighters are needed for replacement and growth by 2037.
27
Source: Cargo Facts Consulting 2018-2037 Freighter Forecast
cargofactsconsulting.com
§ Large Widebodies – 50% fleet growth in 20 years§ Driven intercontinental trade and commerce§ Factory built freighters rule§ Declining freighter share of traffic
§ Medium widebodies and narrowbodies – 63% and 80% fleet growth in 20 years§ Driven by growth in regional express networks and e-commerce§ Conversions are king
SUPPLY AND DEMAND DRIVERS DIFFER IN EACH SEGMENT.
28
cargofactsconsulting.com
§ Traffic growth – 4% baseline
§ Freighter productivity growth – 1% baseline
§ Belly share – 50:50 now moving to 60:40
§ Cargo Facts Consulting Freighter Tool shows subscribers the impact of changes to assumptions.
WHAT HAPPENS IF KEY ASSUMPTIONS CHANGE?
29
cargofactsconsulting.com
Options for freighter operators now.
30
Narrowbodies Medium Widebodies Large Widebodies
Facing near-term extinction
DC-9, DC-8, 707, 727s, Bae 146, 737-
200
DC/MD10-10, A300B4s, A310s
747F Classic, DC-10-30F/40F
At peak use, or with little future growth
potentialMD-80 (niche player) 767-200, A300-600,
A330-200F (?)
747-400F/ERF, 747-400SF/BCF, MD-
11F
Expanding role going forward
737-300/400, 757-200
767-300F/SF/BCF, A330(P2F)
777F, 747-8F (?)
cargofactsconsulting.com
§ Narrowbodies: 737 NGs, A320/321s
§ Medium Widebodies: A330 conversions, 787s
§ Large widebodies: A350, 777 conversions, 777X
NEW OPTIONS FOR FREIGHTER OPERATORS IN THE FUTURE.
31
cargofactsconsulting.com
§ What will happen to outsize markets once the 747 disappears?
§ Will we ever see a factory built 747 freighter life extension program?
§ Will we ever see a 747 with two engines?
§ What happens if there is no factory built A350 or 777X Freighter?
§ What happens if densities change?
DO CURRENT AND FUTURE PLANES ON OFFER MEET MARKET AND OPERATOR REQUIREMENTS?
32
cargofactsconsulting.com
NEW FORECAST WILL BE PRESENTED IN APRIL AT CARGO FACTS ASIA
33
The Leading Air Cargo Consultancy Since 1978
cargofactsconsulting.com+1 646.837.5945
IATA WCS, Focus on Freighters Track, 14 March 2019
Tom CrabtreeRegional Director, Marketing Analysis
Boeing Commercial Airplanes
The Boeing Freighter Fleet Forecast Through 2037
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
The statements contained herein are based on good faith assumptions are to be used for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance.
Tom Crabtree | Boeing Commercial Airplanes, Market Analysis14 March 2019
CSM-TBC-14MAR19
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19Sources: IATA, ICAO, www.flightglobal.com, U.S. DOT F41, and airline reports.
Total world air transport revenue totaled $634 billion USD in year 2017.
84%
16%PassengerCargo
$534 billion
$100.2 billion
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Express Carrier43%
Combination Carrier36%
All Cargo9%
Passenger Belly Only
12%
ExpressCarriers $42.9B
CombinationCarriers $36.3B
PassengerBelly Only $11.9B
All Cargo $9.1B
Sources: www.flightglobal.com, U.S. DOT F41, airline reports, and Boeing estimates (2017 data)
Freighters are critical to compete in air cargo marketsAirlines operating freighters generate nearly 90% of industry revenues
$100.2BTOTAL
2017
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Air cargo demand slowing; yet holding up against difficult “comps”Year-over-year RTK (traffic) and AFTK (capacity) growth
Sources: IATA Monthly Statistics, Boeing Market Analysis
Traffic growth
-1.6% -1.1% -1.4%
0.9% 1.2%
4.1% 4.4%3.7%
4.9% 4.9%6.1%
3.3%
1.3% 0.9%
-1.3%
2.8%
5.4%
9.5% 9.4%
11.0% 11.2%
7.3%6.5%
4.4%
3.0%
0.8%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18
Capacity growth
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Air cargo demand slowing, yet holding up against difficult “comps”Air cargo slowing due to decelerating industrial production and geopolitical uncertainty
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
RTKs Industrial production World trade GDP
Leading indicators point to long-term trend air cargo growthSources: Oxford Economics, RTKs: IATA, Boeing Market Analysis
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
All-in air cargo rate, USD/kilogram (general freight only)Air cargo yields are up 22% since 2016
Source: IATA CargoIS
$1.58
$1.70
$1.92
$1.40
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19
Annual average Monthly average
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
0
50
100
150
200
250
300
1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
World air cargo traffic has grown 5.3% per year since 1980
RTKs = Revenue Tonne Kilometers
RTK
s bi
llions
Sources: IATA, ICAO, company reports, Boeing Market Analysis
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
0 20 40 60 80 100 120 140
East Asia–North America
East Asia-Europe
Intra-East Asia
North America
Europe–North America
Domestic China
Europe-Latin America
Latin America–North America
Africa-Europe
South Asia–Europe
Middle East–Europe
Russia and Central Asia
Intra-Europe
RTKs (billions)
2017 RTKs 2018-2037 RTKsAnnual
growth %
WorldAir Cargo
Growth:4.2%
4.7%4.7%
2.3%2.5%
6.3%4.0%
3.2%
4.1%3.7%
4.2%
2.3%3.0%
5.8%
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Sources: Cirium, Boeing as of year-end 2018
Single-aisle passenger jets,
74.9%
Widebody passenger jets,
17.5%
Freighters,7.6%
25,825 jet transports
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
1,929 2,923 2,820 2,609 2,597 2,540 2,693
8,714 9,570
11,415 14,136 14,982 15,706
16,646 1,568
1,483
1,583
2,056 2,241
2,478 2,655
1,428
1,553
1,673
1,863 1,810
1,857
0
4,000
8,000
12,000
16,000
20,000
24,000
2000 2005 2010 2015
Regional jet Single aisle Small twin aisle Medium/large twin aisle
Passenger fleet units
Sources: Cirium, Boeing CMO
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
1035807
602 641 664 697 735
555639
583 583 599 622 658
309 435517 547 551 555 581
0
400
800
1,200
1,600
2,000
2000 2005 2010 2015
Large Medium widebody Standard body
Freighter fleet units
Sources: Cirium, Boeing CMO
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2017freighters
2037freighters
Deliveries2,650
1,170
510
500
470
Fleet
Standard-body
conversions
Largeproduction
Medium WBproduction
Widebodyconversions1,870
3,260
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
0
10
20
30
40
50
60
70
80
90
100
2000 2002 2004 2006 2008 2010 2012 2014 2016 2037*
Percentage of world RTKs carried on freighters
Sources: IATA, ICAO, company reports, Boeing Market Analysis
* Forecast
Average world air cargo traffic growth of 4.3%
Average world air cargo traffic growth of 2.6%
World Air Cargo Forecast growth of 4.2%
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Total air cargo traffic carried by freighters (percentage)
Sources: US DOT T100, OAG, Boeing Market Analysis
~75%~75% ~40%
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Passenger lower-hold capacity, while plentiful, is not sufficient to meet air cargo traffic demand
Most passenger belly capacity does not serve key cargo trade routes
Twin-aisle passenger schedules often do not meet shipper timing needs
Freight forwarders prefer palletized capacity, which is not available on single-aisle aircraft
Passenger bellies cannot serve hazmat and project cargo
Payload-range considerations on passenger airplanes may limit cargo-carriage
!
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Large freighters Other Boeing
widebody freighters
Airbus
widebody freighters
Standard-body freighters Other freighters
Weekly freighter available tonne-kilometers (ATKs, billions)
SOURCES: Cirium, Boeing for year-end 2017 fleet
777F
767FMD-11F DC-10F
747-400series
freighter
747-8F
91%
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
In-service freighter aircraft
0
100
200
300
400
500
600
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
777FMD-11F
production & conversions
747-400F conversions
747-400F production
747-200F production
747-8F
747F Classics conversions
41%of largefreighters
Sources: Cirium, Boeing as of 31 December 2018
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
Boeing family of commercial freightersRevenue payload tonnes
747-8F
767-300F767-300BCF
777F
737-800BCF
Large freighters>80 tonnes of payload
Medium widebody freighters40-80 tonnes of payload
Standard-body freighters<45 tonnes of payload
0
50
150
100
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
World air cargo traffic slowed in 2018, expanding about 4% over 2017
World air cargo traffic forecast to grow 4.2% per year through 2037
Freighters carry - and will continue to carry – more than ½ of all cargo traffic
The world freighter fleet will expand to 3260 airplanes over the next 20 years
Commercial Sales & Marketing. Copyright © 2019 Boeing. All rights reserved. CSM-TBC-14MAR19
WORLD AIR CARGO FORECAST2018—2037
http://www.boeing.com/commercial/market/cargo-forecast/
10:30 to 11:15 in Roselle Simpor BallroomKindly Sponsored by:
Networking Break
Panel Chair: • Mr. David Hoppin, Senior Vice President, CiriumPanelists:• Dr. Anselm Eggert, VP Strategy, Portfolio & Cooperation, Lufthansa Cargo • Mr. Peter Penseel, SVP Cargo Sales and Network Planning, Qatar Airways Cargo• Mr. Michael Steen, Executive VP & Chief Commercial Officer, Atlas Air
Airline Expectations – Challenges and Opportunities in 2019
Tom CrabtreeRegional Director, Marketing Analysis
Boeing Commercial Airplanes
Closing Remarks
Kindly Sponsored by:Focus on Freighters Track
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