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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 [email protected]/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 [email protected]

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


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


Overall, two thirds of the world’s fleet are flown by or for express or postal operators, and increasingly, e-commerce companies.

25



The world’s freighter fleet has been growing again since 2014. The world fleet grew by about 70 freighters in 2018.

26



Over 2400 freighters are needed for replacement and growth by 2037.

27

Source: Cargo Facts Consulting 2018-2037 Freighter Forecast


§ 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


§ 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


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 (?)


§ 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


§ 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


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



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


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


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


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


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


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


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%


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


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


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


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


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%


Total air cargo traffic carried by freighters (percentage)

Sources: US DOT T100, OAG, Boeing Market Analysis

~75%~75% ~40%


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

!


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%


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


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


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


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



Closing Remarks

Kindly Sponsored by:Focus on Freighters Track

kindly sponsored by - iata · regional director, marketing analysis boeing commercial airplanes...

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