ACMG Narrowbody Freighters Webinar Presentation .pdf
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Narrowbody Freighters: How
Long Will the Boom Last?
Air Cargo Management Group
27 February 2014
11:30 (UTC -‐5)
Alan Hedge
Research Director
+1 (206) 801-‐8472
ahedge@acmg.aero
www.acmg.aero
The Current Boom
• A remarkable resurgence in the narrowbody freighter conversion market
• Despite weakness in global air freight demand
• Despite no demand for widebody freighter conversions
• The number of narrowbody freighters is on the rise while the quanSty of widebody
freighters is declining
• 56 narrowbody freighter conversions were delivered in 2013
• 30 737-‐300s/-‐400s
• 19 757s
• 7 Other (MD-‐80F and 737-‐400, 757-‐200 combis)
• Demand is widespread
• A healthy backlog is building
Where and Why?
• Overall freight traffic growing slowly since mid-‐2013
• But nine consecuSve months of y-‐o-‐y gains
• Asia trade lanes growing fastest – especially Express
• China express package volume grew by nearly 70% in 2013
a^er growing 50% in 2012
• Much of this was ground
• China’s express carriers operate about 60 NB freighters
(10% of global fleet)
• Air China Cargo, China Postal, Donghai, SF Express, Yangtze River
Express, Zhejiang Loong
• WaiSng in the wings: STO, YTO, and others
Domes?c China
Air Cargo Demand
• DomesSc China air freight demand
has experienced nearly 11%
compound annual growth since
2000
Photo: Maarten Visser
• Traffic is sSll less than 3% of world
• Less than 1/3 of US domesSc market
• If China air freight market grows at
8% per year it will be as large as
today’s US domesSc market in 16
years
Photo: Shimin Gu
Photo: Alec Wilson
Narrowbody
Freighters by
AircraB Type
• Two models dominate
• 737 Classic (-‐300/-‐400)
• 757
• One-‐third are older
types headed for
reSrement
MD-‐80
0.2%
[CATEGORY
NAME]
757-‐200s
39%
737-‐400s
8%
Older Types
32%
737-‐300s
21%
600 Aircra^
Regional Distribu?on and Type of Carrier – Express Dominates
North America and Europe
Dominate Now
LaPn America
7.1%
FedEx and UPS More Than One-‐Quarter –
Express and ACMI (mostly Express)
Over Two-‐Thirds
Middle East
1.7%
Africa
7.8%
Other Asia
Pacific
10%
North America
42%
China
10%
Europe
21%
120 airlines = 600 aircra`
Concentrated at the top:
Top four (US & European
Express) = 1/3 fleet
Next three are Chinese
Express operators = 8%
Remaining 113 airlines = 58%
CombinaPon
8.1%
FedEx
14%
All Cargo &
Other
24%
UPS
13%
Other Express
and ACMI
41%
737-‐300
• Over 1,000 produced 1984-‐1999
• Price $5-‐6 million
• Feedstock
million
• Conversion
$2.5-‐3.5
$2.5 million
• Payload
• 8 pallets (88” x 125”)
• 20 tonnes
• STCs
• AeronauScal Engineers, Inc. (AEI)
• Israel Aerospace Industries –
Bedek (IAI)
• PEMCO
• 8 redelivered in 2013
737-‐400
• Almost 500 produced 1988-‐2000
• Price $6-‐8 million
• Feedstock
million
• Conversion
$3.5-‐5.0
$2.75 million
• Payload
• 10+ pallets
• 22 tonnes
• STCs
• AEI
• IAI
• PEMCO
• 22 (+4 combi) redelivered
in 2013
757-‐200
• Over 900 produced 1982-‐2005
• Price $10-‐15 million
• Feedstock
million
• Conversion
$5-‐10
$4.5-‐5.0 million
• Payload
• 14/15 pallets
• 35 tonnes
• STCs
• Precision Conversions
• ST Aerospace
• 19 (+1 combi) redelivered
in 2013
Photo: i4lcocl2/Shuperstock
MD-‐80
• Over 1,200 produced 1982-‐2000
(MD-‐80/90)
• 55% of fleet younger than 25 years
• Price $3-‐4 million
• Feedstock
million
• Conversion
$0.75-‐1.5
$2.35 million
• Payload
• 12 pallets (88” x 108”)
• 21 tonnes
• STCs
• AEI
• 2 redelivered in 2013
• 6+ scheduled for 2014
Photo: AEI/Lans Stout
How long will popular feedstock last?
Max Avail 757-‐200 Units Aged 15-‐20 Years
Max Avail 737-‐400 Units Aged 15-‐20 Years
250
140
120
200
80
Aircra^
Aircra^
100
60
150
100
40
50
20
0
0
2014
2015
2016
2017
2018
2019
2014
2015
2016
2017
2018
2019
What’s Next?
• Not all about China
• Great air freight potenSal in the intra-‐Asia market
• Brazil and India offer longer-‐term opportuniSes
• Growing economies, expanding middle classes, geographically large
• Current narrowbody demand is global
• Korea and SE Asia, North America, LaSn America, Europe and Africa
• New conversion opSons will follow the 737 Classic, 757-‐200, and MD-‐80
• Interest is building among converters and airlines for 737NG and/or
A320 freighters
Boeing 737NG
737-‐700F
737-‐800F
• Over 1,100 produced since 1997 • Over 3,100
produced
• 88 units now aged 15-‐20 years
since 1998
• Feedstock price $11-‐12 million
• 65 units now
aged 15-‐20 years
• Payload
• Feedstock price $15-‐17 million
• 8 pallets
• 19 tonnes
• Payload
• 11 pallets
• Market analysis phase by Boeing
• 23 tonnes
and others
• Market analysis phase by Boeing
and others
Airbus A320 Family
A320-‐200 P2F
• Over 3,500 produced since 1988
• 176 units now aged 15-‐20 years
(HGW 1996-‐ )
• Feedstock price $12-‐15 million
• Payload
• 10 pallets
• 23 tonnes
• STCs
• Airbus Freighter Conversion (program
suspended during engineering phase)
• Non-‐OEM?
A321-‐200 P2F
• Nearly 800 produced
since 1996
• 36 units now aged
15-‐20 years
• Feedstock price
$13.5-‐17 million
• Payload
• 13 pallets
• 28 tonnes
• STCs
• Airbus Freighter Conversion (program
suspended during engineering phase)
• Non-‐OEM?
Conclusions
• Narrowbody freighter demand is strong globally, driven today by China express
market growth
• 737 Classic and 757 dominate now
• At current conversion rates, availability will taper in next five years
• MD-‐80 program has found a successful niche role
• Launch of a 737NG program by Boeing or one of the conversion houses
increasingly likely
• Will an A320/321 follow?
• Will Airbus resume its AFC project? If not, who will step in?
• How will demand respond when the on-‐ramp converted freighter price doubles?
• Will the China express market follow the US example?
• How fast and how strong will other markets develop a^er China?
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