Big cargo carrier reduces fleet, a bad omen for Boeing 747's future
Steve Wilhelm photo
Three green Boeing 747-8 freighters, and just one fully painted, sit on the tarmac at Paine Field in early August.
- Steve Wilhelm
- Staff Writer-Puget Sound Business Journal
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One of Europe’s largest air freight companies on Friday announced plans to dump most of its freighter planes in favor of putting more cargo in the bellies of passenger jets.
Back in Everett, that’s bad news for Boeing’sbeleaguered 747-8F, which is virtually unwanted, with just 18 orders.The “F” stands for freighter, and this is the model that Boeing executives keep pointing to when they contend that the humpbacked, four-engine 747 still has years of production ahead.Recent developments undermine that contention.
Air France-KLM-Martinair Cargo said it would cut its freighter capacity in half by phasing out five older MD-11 freighters, leaving just three 747s, operating out of Amsterdam.Counting both passenger and freighter versions, Boeing has just 46 unfilled orders for the venerable 747.
In an interview with British logistics publicationLoadstar, a top executive of the KLM freight group said that part of the reason for the cuts is that it’s getting so many new fuel-efficient, long-range widebody passenger aircraft, with lots of cargo-carrying capacity below the passenger deck, that it doesn’t need so many dedicated freighters.“Airlines have been too emotional about freighters, and it is time to be more rational,” Erik Varwijk, managing director cargo for KLM group, told Loadstar. “Customers simply want their shipments to arrive on time – they don’t care if it’s in a belly or main deck. About 90 percent of our business fits in bellies – and bellies are more reliable and more frequent. But we still have freighters for the business that needs them.”
The slack market for Boeing’s 747 could be seen just weeks ago on the Paine Field tarmac: Three parked 747-Fs without paint on the fuselages or rudder, surrounding a lone Silkway freighter painted in company colors.(Aircraft without painted rudders are often called “white tails.” The significance is that rudders are usually painted with airline colors early in the manufacturing process, to make sure the weight of the paint is accounted for when the rudders are balanced. So an unpainted rudder often means that an aircraft has no owner, and is something of an orphan.)
A Boeing spokesman declined to confirm the ownership status of the three green 747s, saying this is customers’ business, but G2 Solutions principal Michel Merluzeau said it at least suggests how weak the market is for dedicated 747 freighters.“Demand is overall fairly soft,” he said. “The 747-8F is an expensive (list price $468 million) cargo aircraft. It’s a niche product, very compelling in terms of performance, but it is an aircraft marketed in a very soft market.”
The market for air freight is soft partly due to the Great Recession, which spawned a cost-cutting era during which cargo movers, and customers, found cost-competitive alternatives to air freight, such as more sophisticated trucking systems.“There is a great deal of pressure on the air freight industry because of mode shift,” said Bob Dahl, managing director for Air Cargo Management Group in Seattle. “Certainly air freight has always had a disadvantage in terms of being much more expensive than other modes.”
While air freight historically grew at double the rate of passenger travel, that has now reversed and freight growth is slower than passengers, Dahl said. Many analysts think air freight will grow at about 5 percent annually, he said. Boeing’s own 2014 forecas t, the most recent, predicts 4.7 percent annual growth in air cargo over the next 20 years, compared to 5 percent for passengers.. Added to the 747’s problems is that even with this slow growth, it’s becoming less desirable among freight operators, at least in terms of fuel efficiencyWith four engines, it’s inherently less efficient than the twin-engine Boeing 777, the next-largest wide body aircraft, which is also produced in a freighter version. When the 777X replaces the current 777 model, the fuel efficiency gap with the 747 will become even wider.
Both Dahl and Merluzeau say they believe there will be enough of a niche market to keep orders trickling in for 747-8Fs.“It’s a slow market, demand is soft, but all indications are it eventually will turn around,” Merluzeau said.But whether that will turnaround will be strong enough to cover Boeing’s costs, in terms of the huge space the model takes up in the Everett factory, is another question.
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