Chinese domestic express market set to boost air freight sector

Boeing and Airbus appear to agree on the long-term growth in the air freight market, with Airbus’ just published ‘Cargo Global Market Forecast’ suggesting an average growth rate over the next twenty years of 4.8% – just behind the Boeing forecast of 5%.

Of course, Airbus is focused on how many and what type of aeroplanes will be utilised. However, as part of this, the aeroplane manufacturer has to assess how these planes will be used and overall it appears that Airbus is quite- some might say – surprisingly optimistic.

Airbus is of the opinion that there has been “no clear trend indicating a modal shift” away from air freight in recent years with the proportion of global freight movements by air steady at 1% of volume. In terms of potential, Airbus is optimistic about air express in particular, observing that it has been more resistant to recent economic volatility than conventional air freight; enjoying continuing growth in contrast to falling markets for conventional air freight.

Interestingly, it is China that Airbus believes will be the largest driver of the air express sector and primarily this will be through increasing demand for domestic air express rather than just inter-continental volumes. Airbus states that the growth of Chinese domestic air express is already “rapidly taking a large share of the growth in the market. This trend is also visible in the carriers themselves, with foreign integrators investing in the region and a corresponding increase in investment by Chinese carriers”.

Less surprisingly, it is cargo markets in emerging economies that Airbus expects to grow most quickly over next 20 years.  However, again, it will be ‘domestic’ intra-continental routes which will come to dominate air freight. Alongside Chinese and American domestic traffic and the traffic between European economies, geographically large regions such as India will have substantial potential for internal growth.

As far as growth on international routes is concerned, although traffic between emerging economies will expand at the fastest rate of 6.2%, those between developed and emerging that will expand at a highly respectable 5.2-5.3%.

Whilst it is hard estimate how accurate Airbus’ forecast for growth will be over the next 20 years, its observations about the nature of that growth – and particularly the potential of the Chinese domestic market- are interesting and a reminder of the importance of internal traffic to the sector.