The signs are there, falling rates, reduced shipments from China, lower demand for longer term slots on cargo aircraft.
Profitability is not high. Those that have made profits in the past year don’t expect a repeat this year.
A general consensus has developed that if you operate less than 7 booked up freighters you’re doomed. Even that is considered the absolute baseline for a break even successful operation.
The trade dispute between the Trump administration and China is seeing a reduction in trade both ways. Only the fast express airlines and parcel movers are seeing few inroads in shipping levels. Major commercial freight is sagging. forecasts are showing a collapse in the order of 15-20% in crucial trans-Pacific freight volumes.
Just in 2017 air cargo bounced back with a vengeance, having seen nothing like it in terms of demand. Cargo fleets, drastically shrunk by recession, then a slight recovery, then another full-blown cargo collapse in 2012-13 that weeded out what was left, could barely cope.
2018 wasn’t a repeat, it was OK, but it wasn’t the golden year of 2017. 2019 looks set to be a return to the 2013-16 period, as cargo operators barely break even.
Lufthansa has just announced that its cutting the second half of the year capacity wise, and now expects to see the end of its MD-11F fleet by 2021-22 at the latest and more likely earlier if it can be achieved. That’s a 12 aircraft reduction.
It’s not entirely clear just yet how bad things are as nobody wants to give up data in such a competitive market, but if Lufthansa are cutting back, others will feel the need.
Consolidating fleets is another way forward. DHL announced an order for 14 777F’s only last July, which is pretty much the only off the shelf viable large air freighter even available. The 777F’s will link the Cincinnati, Hong Kong and Leipzig hubs. There is nothing more fuel-efficient available and there’s nothing else on the cards in the forseeable future. The first one was delivered on the 10th May to Southern Air (part of Atlas) to operate for DHL.