Expert Column Air Cargo Market, how it will it change in 2043? Centering Around Boeing

- Changes followed by the Growth of the Aviation Market

The growth of the air cargo market has been particularly notable recently. According to the International Air Transport Association (IATA), the global air cargo market in 2024 is showing a growth rate of 11.3% [1] compared to the previous year, marking its best performance since 2021. This increase in air cargo transportation is not a temporary phenomenon but rather a fundamental shift in logistics market trends, driven by changes in the logistics supply chain and the emergence of new markets that require the characteristics of air cargo transportation. The stakeholders that make up the cargo transportation market include various elements, among which aircraft manufacturers, who produce and supply cargo aircraft, can be considered one of the key stakeholders.

Accurate future predictions of the air cargo market are crucial for aircraft manufacturers above all others. To produce and supply the right aircraft to meet market demands in a timely manner, significant investment in capital, facilities, and manpower is required in advance. Therefore, mid to long-term future predictions of the air cargo market are essential.

The future forecast of the air cargo market is of utmost important reference for aircraft manufacturers to establish their management strategies, as it must be as accurate as possible. In particular, the future air cargo market outlook reports issued by aircraft manufacturers serve as an excellent benchmark for assessing the current and future state of the air cargo market, making it essential to examine them in detail.

In this column, we will examine the growth prospects of the global air cargo market over the next 20 years based on the "World Air Cargo Forecast 2024-2043" released by Boeing, the American leading player in the global cargo aircraft market, in December 2024.

Currently, approximately 99% of global logistics volume is transported by ocean, primarily involving low-cost bulk goods such as crude oil, iron ore, and grains, which are examples of items with low price-to-volume ratios. However, the main cargo transported by air freight is generally perishable goods that require rapid delivery or high-value items, benefiting from the fast transportation, high reliability, and safety of air transportation compared to maritime transportation. Although the volume of air freight accounts for only about 1% of the total, the value of the goods transported represents 35% of the total cargo value, underscoring the significant importance of air freight transportation.

The air cargo transportation market is mainly divided into two types of business models: general cargo carriers and express carriers. Air cargo transportation is mostly general cargo transportation, primarily operated by airlines. General cargo carriers operate from airport to airport. They sell the cargo loading space of freight aircraft to cargo agents in advance and operate accordingly. Express carriers, on the other hand, link air transportation with inland transportation, handling the entire process from receiving goods from the shipper to delivering them to the consignee. This business model accounts for approximately 18% of the total air cargo transportation market.

(Source: Boeing-World Air Cargo Forecast 2024-2043)

In the airline industry, cargo transportation is classified into four main types: belly-only operators, all-cargo carriers, combination carriers, and express carriers.

“Belly-only operators” refer to a low-cost carrier (LCC) that does not operate dedicated cargo aircraft but engages in cargo transportation by utilizing the belly space of passenger aircraft while maintaining existing routes and aircraft.

"All-cargo carriers" are cargo-only airlines that do not engage in passenger transportation and operate exclusively with cargo aircraft to provide freight services.

"Combination carriers" are the form in which most major airlines operate, performing both of the above business models.

Lastly, “Express carriers” are specialized in the transportation of goods that have to be transported rapidly and include all activities from the beginning of transportation to the recipient’s doorstep. This type has also been significantly influenced by the rapid growth of the international e-commerce market in recent years.

1) Continued Growth for the Air Cargo Market Expected from 2024 to 2043

Aircraft manufacturer Boeing publishes reports on the air cargo market forecast for the next 20 years every two years. This allows for the prediction of demand for freighter aircraft in the air cargo transportation market, enabling the establishment of appropriate freighter supply strategies. This can be considered a forecast report that takes into account the time required for ordering, manufacturing, and supplying the necessary aircraft as an aircraft manufacturing and supply company.

According to a report released by Boeing in December 2024, the air cargo market (Air Trade) grew by approximately 2.6% over the past 20 years (2003–2023). However, it is predicted that the market will continue to grow at an average annual rate of around 4.0% over the next 20 years (2024–2043), which is higher than the growth rate of the past period. [3]

(Source: Boeing WACF 2024-2043)

This is a result of the continuously increasing volume of e-commerce, which is expected to grow in the future, the increase in new volumes due to diversification attempts in global supply chains, and the growth rate of GDP (Gross Domestic Product) in each country. In particular, efforts to reduce costs by minimizing inventory, represented by Just-in-time (JIT), are increasingly leading to difficulties in normal business management due to various geopolitical or unexpected situations such as pandemics. As a result, there is a growing trend of securing and maintaining a certain amount of inventory in advance through the Just-in-cases (JIC) approach. These changes are contributing to an increase in air cargo volume.

In other words, the air cargo market over the next 20 years (2024–2043) is expected to grow primarily due to the growth of global GDP, Asia and Africa, diversification efforts in global supply chains, and the rapid advancement of the digital economy and the surge in e-commerce. Notably, the express transportation model is projected to grow considerably, increasing its market share from 18% to 25%. [3]

2) Steady Increase in Demand for Cargo Aircraft Expected
- Passenger-to-Freighter (P2F) and Freighters

During the COVID-19 pandemic, travel restrictions imposed by countries made international travel extremely difficult, and passenger flights were almost completely halted. However, the demand for air cargo increased, and during the pandemic, air cargo revenue provided significant support to airlines. In some cases, passenger seats were even removed from aircraft cabins to make space for cargo, enabling cargo transportation (Preighters, a combination of passenger and freighters).

The volume of belly cargo, which is transported by loading goods onto the lower decks of passenger aircraft previously, has also surpassed pre-pandemic levels. This type of cargo was primarily carried on wide-body aircraft, loaded beneath their passenger cabins. However, this method of cargo transport was limited to smaller items that could fit in the aircraft's lower space, while larger goods were typically transported using freighters.

For example, when considering the transportation of large aircraft engines detached from operational aircraft for overseas maintenance, the transportation of live animals such as racehorses or bears, or the transportation of F1 racing cars, we can clearly understand the limitations of belly cargo and the necessity of large freighters.

(Source: Transport of the rare Chinese animal “Panda” – Chungcheong Newspaper, 2016)

According to a Boeing report released at the end of 2024, cargo aircraft in 2023, particularly large freighters, accounted for approximately 54% of the total air cargo transport volume (Cargo Tonne-Kilometers, CTKs). Notably, in 2023, it was reported that around 90% of the total air cargo transport revenue was generated from airlines operating freighters.[3] This outcome can be attributed to factors such as limited passenger aircrafts’ cargo capacity, stringent safety regulations, the international cargo hub airport networks, the distinct operating schedules of freighters compared to passenger aircraft, and the scalability of cargo that can be transported.

(Source: Boeing World Air Cargo Forecast 2024-2043)

As shown in the graph above, all airlines except Passenger Belly Only operate cargo aircraft.

Therefore, the demand for freighters is expected to increase steadily over the next 20 years. Freighters are generally categorized into three types based on their payload. Standard Body and Narrow Body with a single aisle with a payload capacity of less than 40 tons are primarily converted from passenger aircraft. Medium Wide Body with a payload capacity of 40 to 80 tons are known to be composed of approximately 50% converted passenger aircraft and 50% originally produced as cargo aircraft.

Lastly, Large Wide Body aircraft can carry more than 80 tons and are mainly Boeing 747 models, which include those converted from passenger planes to freighters and those specifically produced as dedicated freighters. The B747 aircraft is equipped with four engines and is gradually being replaced by aircraft with two engines, such as the B777.

(Source: Boeing World Air Cargo Forecast 2024-2043)

Even in the future, the conversion of passenger aircraft into freighters will continue, but from an airline's perspective, there is an expectation of increased demand for new cargo aircraft that can leverage the latest technology and efficient operations.

As a result, it is estimated that the share of large cargo aircraft in the total Available Cargo-Tonne Kilometers (ACTKs) on the supply side will account for approximately 75%, while medium and small cargo aircraft will be responsible for about 25% of cargo transportation.

As of 2023, the total number of cargo aircraft in operation worldwide is 2,340, and it is predicted that by 2043, the number will go up by approximately 66% to 3,900 cargo aircraft. Of the current 2,340 cargo aircraft, 1,285 are likely to be replaced by new aircraft due to aging, and 1,560 are pure increases in cargo aircraft resulting from a growth in cargo volume.

Therefore, as an aircraft manufacturer, it will supply a total of 2,845 cargo aircraft (1,285 + 1,560). This includes 1,840 conversions from existing passenger aircraft to cargo aircraft, with the transition expected to focus primarily on smaller cargo aircraft.

Small cargo aircraft are specialized for short-haul routes rather than long-haul routes, and they can increase flights (Flight Cycle, takeoff and landing counts) per flight hour (time from takeoff to landing), which allows more frequent flight schedules. This enables the rapid transportation of goods as per customer demand. For long-haul routes, large cargo aircraft such as the B777F can be deployed to provide optimized express cargo transportation services.

Air cargo logistics transportation is primarily concentrated in the East Asia-North America (21%), East Asia-Europe (18%), and Europe-North America (11%) routes, and it is expected that the concentration of air cargo logistics in these regions will remain in the future.

How does Airbus, a competitor of Boeing, envision the future of the aviation cargo industry?

According to the "Airbus Global Market Forecast 2024" released by Airbus, the global air cargo industry is expected to grow at 3.1% until 2043.[2] This is slightly lower than Boeing's projection of 4%. This is likely due to Airbus's relatively simpler line-up of large freighters compared to Boeing, as well as its conservative outlook influenced by strict European eco-friendly policies, etc. However, the express cargo is projected to hold a market share of 25% by 2043, aligning with Boeing's forecast.

[Comparison Summary (2024 - 2043)]

(Source: Boeing WACF 2024, Airbus Global Market Forecast 2024)

During the COVID-19 pandemic, many airlines faced severe operational difficulties. Air routes were blocked, and countless passenger aircrafts that were supposed to transport passengers had to remain on the ground. However, even during that time when human movement was restricted, air cargo transportation was carried out busily and made profits for airlines. As cargo aircrafts lack their capability to carry cargo, passenger planes had to remove their seats to transport cargo. The exponential growth of e-commerce drove demand for air cargo transportation, and what was initially thought to be a temporary phenomenon has now become a massive trend in air cargo demand. This is now an important factor in predicting future markets. In particular, the enormous demand for online commerce centering around China and India has a significant impact on the air cargo industry. Airplane manufacturers have to plan medium- and long-term strategies for the air cargo industry, like a couple of decades ahead, and invest based on their forecast.

The future of the air cargo transportation industry is bright and is undergoing a transformation. The annual growth rate is expected to range from a minimum of 3.1% to a maximum of 4% by 2043. In response to the surge in e-commerce, express cargo transportation will increasingly gain attention. Large freighters, such as the B747 (four engines), which have been heavily used for cargo transportation, will be replaced by eco-friendly aircrafts with two engines. Aircraft manufacturers will provide state-of-the-art and green aircrafts incorporating advanced digital technology. In particular, the emergence of aircraft using sustainable aviation fuel (SAF) is not far off.

[1] International Air Transport Association (IATA) Press Release No 4 (29 Jan. 2025): Global Air Cargo Demand Achieves Record Growth in 2024
[2] Airbus (2024), Global Market Forecast 2024-2043: Global Market Forecast 2024-2043
[3] The Boeing company (2024), World Air Cargo Forecast 2024-2043: Boeing World Air Cargo Forecast 2024