SIMIC

AGEING freighters are being grounded as a result of ongoing reduced demand and increased capacity, according to Sander Schuringa, manager market intelligence, Seabury Cargo.

He said that as a result of falling demand and increased capacity, yields and freighter utilization have dropped, reports London's Air Cargo News.



Older freighters tend to be more expensive to operate and are therefore taken out of operation first when margins are squeezed by lower market rates.



"What we see now, is that older freighters are being grounded in relatively greater numbers than younger aircraft," he said during the opening plenary 'Air cargo market dynamics' session of IATA World Cargo Symposium (WCS) 2023.



Comparing the first quarter of 2022 to the first quarter of 2023, Seabury's data shows that in terms of widebody international air cargo capacity utilization, the B777-200LRF is up 6 per cent year on year, while the B747-8F is up by 5 per cent.



This is compared with a capacity utilization drop for older aircraft of 43 per cent for the MD1-11F and 18 per cent for the Boeing 747-400F.



Looking at the trajectory of freighters, Mr Schuringa said: "In the years prior to the pandemic the output of the aircraft manufacturers has always been relatively stable. Obviously during the pandemic these numbers drastically reduced by a third due to production stops at the factories.



"What we expect to happen in the next few years is that recovery will happen. However, when looking at longer term we do expect that where passenger capacity is roughly at 51 per cent, we do expect that number to increase to over 60 per cent in the next 10 years."



Having analyzed the market in general, Seabury Cargo said air cargo demand has significantly declined for more than a year, while cargo capacity continues to recover.



"As a result of falling ocean cargo yields, we not only see that certain products are shifting towards ocean, but we also see that air cargo yields are further being eroded," said Schuringa.



In the first quarter of last year there was moderate air cargo growth of almost 5 per cent. But the first signs of decline were visible and this continued throughout the year, with Asia suffering in particular.



"If we compare the data from January this year, it's fair to say that the changes have been quite dramatic in terms of accountability for the decline.



"All trade lanes that are either starting or ending in Asia have all seen quite a dramatic decline at the start of this year compared to the start of last year." This also applied to intra-Asia, he said.



"Recovery in the Asia Pacific region has been quite modest while the rest of the world's recovery has been progressive," said Mr Schuringa.



Adding to an already mixed outlook for air cargo, he warned the decline in demand is not a correction to pre-pandemic levels.



"If you look at the -13% decline (in demand) from the record month of January 2022, unfortunately our data shows that January this year has fallen back to pre-pandemic 2017 levels.



Lower ocean cargo rates have caused "mode shift sensitive products" to transfer to sea.



"At the moment we are still in the white zone where there is a relative balance," but he added this could change.