Air cargo stretched beyond capacity after years of contraction

The great air freight boom came crashing down in stages.

Between 1998 and 2008, air cargo and the number of air cargo companies shot up in numbers of aircraft and tonnage moved. Everyone was in on the act.

That lead to a lot of low quality airlines and over capacity, aircraft rarely full if ever. Then in 2008-9 the financial crisis which hit the US and Europe especially hard, caused the mass extinction of the worst of these cargo airlines. They died off faster than than the dinosaurs as customers vanished, literally over night.

The better run companies, especially those in SE Asia, Australia and South China, fared better as did the well run US and European cargo lines, although all contracted.

World Airways hit the buffers in 2013

In 2010-11 the cargo market, reflecting the general trend, picked up again and many airlines looked at quick expansion able to pick up the mothballed aircraft from their former competitors and their own reserves. Things were doing so well even airlines like BA took in new 748F’s to meet demand.

It was short lived. In 2012 the recession hit the Far East and China changed policies as its own housing driven bubble burst. Imports to China collapsed, exports from China fell, Europe and the US were still crawling.

It was the end of the line for many of the first wave survivors. Dozens of medium to small operators went bankrupt around the world.

Airlines ditched their cargo arms completely in some cases, BA and Thai for example, others like AF-KLM went into massive contraction. Only the very strong established cargo lines or those with powerful airline parents that were willing to see it through carried on.

Then the ground shifted again. For 2013 through to mid 2016, despite a small upturn in 2015 that lasted barely three months, cargo contracted, consolidation was rife, disposals of old aircraft the name of the game. Cargo volume was falling 11% a month.

By 2016 A380’s and 787’s started to impact the belly cargo market like never before. They absorbed much of the underlying growth. By early 2017 demand had passed the point that even belly cargo could absorb, and every cargo airline on the planet was looking at full order books.

By September the lack of cargo aircraft was hitting home, Lufthansa looked at restoring stored MD-11F’s to use, having mothballed them just months before. Express airlines like UPS and FedEx were choke full, by Mid November 2017 airlines are reporting they are turning customers away.

Recent reports from cargo forwarders say that some cargo carriers are deciding what they want to carry, and that a once on-demand business is now so busy it can take 7-10 days to get a slot, when it once took about 5 minutes.

Cargo is booming, e-commerce takes much of the credit, new aircraft are hard to come by on long lead orders. Conversions can take up to a year. Old aircraft in storage are suddenly in demand, but cargo operators would rather pick and choose, because they’ve been burnt before.

Long term forecasts are the bubble is already showing signs of deflating, nobody will commit to long term expansion because nobody thinks it will last. Once the end of year peak season ends, nobody really knows what’s next.

Either way the market place has changed, there is at last, a feeling the bad days have gone and many of the carriers are feeling they’ve turned a corner.

Some though still struggle because they’ve taken on diversified portfolios based on low cost operating they can’t now deliver. Airlines like Atlas Air are tettering on the brink of destroying themselves by mistreating the pilots they need to fly aircraft for third parties.

Other airlines are booming because deliberate action by others has forced a massive air cargo operation. Qatar Cargo and Turkish Cargo as well as several others from the US like Kalitta Air are supplying massive quantities of freight every day to keep the country running. That and the big demand for imports in a country with no real local access to food or road freight, has absorbed a big slice of the cargo space available around the world.

These are though, at best, medium term operations and cargo airlines seem to have learnt their lesson.