Lufthansa is adding to its freighter line-up. On May 7 the supervisory board of the European heavyweight airline gave the green light for the acquisition of two Boeing 777 cargo aircraft.
The planes are scheduled to join Lufthansa’s fleet in February and March of next year.
In its announcement management highlighted the superior performance of the 777 freighter versus the MD-11F, which still constitutes the bulk of Lufthansa’s freighter fleet. There were also references to fleet renewal, but the airline has not given any indication if and when it intends to retire MD-11Fs. As these aircraft are fully paid off, they have given the carrier the possibility to add capacity at relatively low cost. A serious escalation of fuel prices could undermine the case for the MD-11, but at this point there are good reasons for keeping the type in action.
Lufthansa is not the only carrier that is adding to its freighter fleet. Azerbaijan-based Silk Way West Airlines announced in mid-May that it is taking on two more 747-400 freighters to ramp up its footprint in the European market. With one of the cargo planes already delivered a week earlier and the second due in June, management is planning to add destinations to its growing network. In April, Silk Way launched twice-weekly flights to Liege and resumed service to Budapest after a two-year hiatus.
There have also been stirrings among Asian carriers. All Nippon Airways signed up for two 777-200Fs in March, which are scheduled for delivery next year. With the aircraft, which offer more payload and range than its 767 freighters, the Japanese carrier is looking to expand its reach in Asia – especially China – and North America.
North American carriers are stepping up their trans-Pacific operations. In April Southern Air, a subsidiary of Atlas Air, kicked off a weekly service from Miami via Anchorage to Hong Kong. The same month saw the start of scheduled freighter flights between Japan and the US by Polar Air Cargo. The joint venture airline between Atlas Air and DHL flies five times a week between Chubu airport in the Nagoya area and DHL’s main US hub in Cincinnati.
These moves indicate a revival in freighter activities around the globe, coming after years of decline. 2017 marked the third year in a row in which global capacity additions through freighters were down.
They also reflect a dearth of lift in many markets. “Is capacity tight? Hell, yes,” said one forwarder executive. He pointed to the major trade lanes but also to markets like Australia and Vietnam.
“Demand is currently exceeding supply, mainly due to the large economies performing strongly,” said Tim Scharwath, CEO of DHL Global Forwarding. “Our major trade lane volumes are high, but capacities are low – a trend that will continue.”
Statistics from the International Air Transport Association show a reversal of the trend of the past two years in March, when capacity rose faster than demand for the first time in 20 months. According to the airline interest group, this was due to the end of an inventory restocking cycle, plus a softening of global trade.
IATA continues to expect freight tonne-kilometres to rise this year though. “Looking ahead we remain optimistic that air cargo demand will grow by 4-5% this year,” said IATA director and CEO Alexandre de Juniac.
Airlines are encouraged by the strength in air cargo demand over the past two years, which has helped yields recover, but they have remained reluctant to invest in assets, especially all-cargo aircraft. The recent moves indicate that airline boards are finally becoming more inclined to loosen the purse strings.
They can take heart from the stance of major forwarders, who are moving to secure more dedicated maindeck capacity. DHL Global Forwarding announced in early May that it had decided to expand its dedicated round-the-world freighter operation that it had launched last year. It now fields a second weekly run with a 747-400F wet-leased from Atlas Air. The aircraft flies from Shanghai to Cincinnati and on to Incheon, continuing via Wuxi to Frankfurt-Hahn before returning to Shanghai.
“The gap between the well-performing world trade with a high demand for cargo space on the one hand and at the same time a difficult capacity situation on the other side has encouraged us in our decision to further deploy self-controlled capacity,” said Scharwath.
Flexport is shoring up dedicated lift. The forwarder struck an agreement with Western Global Airlines to operate a twice-weekly 747-400 freighter run between Hong Kong and Los Angeles that kicked off in April and is set to go up to three weekly frequencies in September.
For all the optimism about the market, there are notes of warning. “There are obviously some headwinds,” warned de Juniac. “Oil prices have risen strongly, and economic growth is patchy. The biggest damage could be political. The implementation of protectionist measures would be an own-goal for all involved – especially the US and China.”
By Ian Putzger
Air Freight Correspondent | Toronto
