Atlas Air executive warns that supply-side constraints from minimal freighter additions and ageing aircraft retirements may limit industry growth capacity
The slow addition of new freighter aircraft to the market and the need to retire older models could hit air cargo’s ability to grow in the coming years.
Speaking at the Caspian Air Cargo Summit, Martin Drew, chief strategy and transformation officer of Atlas Air Worldwide, highlighted expectations of ongoing demand growth in the coming years despite the current geopolitical challenges.
He said that air cargo and supply chains in general can now quickly adapt to unexpected events.
Drew said that e-commerce players like Temu and Shein had altered their strategies to counteract the US ending the de minimis exemption, which had allowed e-commerce packages to enter the country duty free and with minimal customs scrutiny.
He added that Shein had adapted to the new customs requirements and was also targeting an older demographic in the US to open up new demand streams. Temu, meanwhile, was targeting new markets.
Wider supply chains were also changing in light of the raft of tariffs announced by the US, with production moving to Southeast Asia, while China was focusing on markets such as Europe, Mexico and South America, he said.
Overall, Drew said that demand was projected to grow by around 4% per year between now and 2030 as a base case, fuelled by e-commerce demand growth of around 10% per year, followed by international express at 3% per year and general cargo at 2.7%.
However, the air cargo market faces a challenge on the supply side.
Drew highlighted that the global widebody freighter fleet is projected to grow at less than 1% per year up to 2030.
He pointed to figures showing that 43 widebody freighters are due to be added this year, 36 in 2026, 35 in 2028, 34 in 2029 and 36 in 2030.
However, many of these additions will be counteracted by freighter retirements. Drew said that there are around 130 widebody freighter aircraft due to leave the market by 2030, led by ageing MD-11Fs.
In total, the number of widebody freighters is only expected to increase from 655 aircraft at the end of this year to 685 aircraft by the end of 2030, in percentage terms, a 4.4% increase over the coming five years.
Meanwhile, he said aircraft production continued to face supply chain challenges – the current backlog of 17,000 aircraft is a record – and new freighter models were taking their time to enter the market.
While IAI recently received approval for its Boeing 777 conversion programme, feedstock could prove hard to acquire due to the model’s ongoing popularity in the passenger market.
And on the bellyhold front, aircraft such as the A321X are being utilised on sectors of up to eight hours. While this model offers efficient passenger operations, it has limited cargo capacity.
“All this compounds an already tight supply environment,” said Drew. “Limited newbuilds, constrained conversion slots and the retirement of aircraft continue to widen that gap between supply and demand.”
He added: “The supply side could become a constraining factor in terms of growth for the industry because we continue to see this imbalance in terms of supply versus demand.”
Source: Air Cargo News
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