Although Boeing will likely make slight downward revision of world air cargo demand when it releases its next World Air Cargo Forecast in November, the airframe manufacturer remains upbeat about long term growth prospects of the air cargo business.
Boeing is projecting 5 per cent growth in worldwide air cargo traffic for 2008, slightly up from last year’s cargo traffic growth of 4.3 per cent but still the fourth straight year that growth fell short of the manufacturer’s long-term forecast of 6.1 per cent annual cargo traffic growth. In a media briefing at the Singapore Airshow, Boeing regional director for cargo marketing, Jim Edgar, said the revised annual cargo growth rate would likely be in the 5-6 per cent range.
A number of key factors are behind this he said, including the ongoing record high oil price, the steady slide of the US economy into recession and the resultant global ripple effects, as well as the potential impact of air cargo being diverted to the maritime trade.
“World maritime dry cargo traffic has grown as fast as air cargo traffic,” Edgar said. But long term he said Boeing forecasts point to a maritime growth rate 1-2 per cent lower than air cargo growth.
In part this is due to a number of constraining factors like capacity limits at key ports in the US and Europe. He also noted that with the trend towards larger and larger container ships, there are only a handful of ports worldwide that can handle super post-Panamax container vessels.
“But there are more than 600 airports worldwide that can handle wide-body freighters,” he added, on an upbeat note. But Edgar did acknowledge that Boeing customers have been expressing serious concern that a growing volume of air cargo is making its way onto ocean carriers.
“We haven’t been able to quantify, but it posses a significant competitive threat, especially as fuel costs continue to go up,” he said.
While fuel costs also impact the maritime world, the price differential between air and sea is obviously huge he said, noting that air cargo is as much as 3-6 times more expensive than moving cargo by sea.
In a bid to shave costs, particularly in light of the slowing global economy, shippers might be “driven to maritime,” he acknowledged.
But for the Asian region Edgar said the outlook was still quite rosy with the intra- Asia trade still experiencing the world’s highest growth rate, currently ringing in at nearly 11 per cent annual growth.
“As Asian countries become net consumers and not net exporters, this traffic will continue as well as drive demand for high end European consumer goods which will help drive a healthy Asia-Europe trade,“ he said.
But concern over the US economic slowdown, high fuel prices and a modal shift to sea freight clearly haven’t stopped carriers from continuing their fleet expansions. Boeing booked orders for some 258 freighters over the past three years – a number that Edgar said was “unprecedented” for a three-year period.
The orders represented 14 per cent of the total value of the manufacturer’s total commercial aircraft orders over the period. Currently Boeing has 158 production freighters on its order books.
Responding to Payload Asia queries regarding comments made by Airbus’ chief commercial officer for customers, John Leahy that Boeing’s 747-8 Freighter was merely “40-year-old technology gussied up to meet present day standards,” Edgar was unequivocal.
“We’ve never in our history, launched a plane based on a freighter only. The 747-8 has all new engines, an all new wing structure and new cockpit – this is clearly more than simply gusseying up!”