Air freight market becomes a bright spot for Boeing in China

YTO International Express and Supply Chain Technology

27/05/2021 04:47

* 'Explosive demand' for dedicated freighters during
pandemic
    * Boeing dominates global production of freighters
    * China Cargo last year broke 3-year Boeing order deadlock

    By Stella Qiu and Jamie Freed
    BEIJING/SYDNEY, May 27 (Reuters) - Boeing Co  BA.N ,
struggling in China with sales of passenger planes due to trade
tensions and the grounding of its 737 MAX, is upbeat about the
outlook for freighter plane sales there as e-commerce demand
booms.
    A three-year deadlock on Boeing plane orders was broken last
May when China Cargo Airlines, owned by China Eastern Airlines
Corp Ltd  600115.SS , placed an order for two 777 widebody
freighters. Boeing's website shows 24 of the type have been
delivered to China.
    "We've seen this really explosive demand for dedicated
freighter airplanes in the last year," said Richard Wynne,
managing director of China marketing at Boeing Commercial
Airplanes.
    Though political friction between China and the United
States has meant no Chinese orders for new Boeing passenger
planes since 2017, Boeing's dominance of the freighter market
makes it harder to bypass.
    Around 90% of the world's freighters are Boeing planes.
Sources have said, however, that rival Airbus SE  AIR.PA  is
canvassing interest in a freighter version of its A350 passenger
jet.  urn:newsml:reuters.com:*:nL8N2LA3WH
    Boeing's products include new-build freighters like the 747,
777 and 767 as well as conversions of older 737 and 767
passenger planes.
    It forecasts China, including Hong Kong, will need 750 more
freighters over the next 20 years, including 350 widebodies.
    Much of the current demand is being driven by a
pandemic-induced expansion of online shopping. Alibaba Group
Holding  9988.HK  and major e-commerce rivals JD.Com  JD.O  and
Pinduoduo  PDD.O  have all reported forecast-beating revenue
growth recently.
    YTO Cargo Airlines, owned by Alibaba-backed YTO Express
 6123.HK , is introducing converted 767 planes to its fleet.
    Boeing has eight 737 passenger-to-freighter production lines
in China that allow for one conversion at a time.
    China's air freight market is less than half of the size of
the United States by tonnage but growing at a faster rate, said
Wynne. 
    Chinese airlines also fly relatively less of the air freight
that goes in and out of the country than carriers in other parts
of Asia, leaving room for market share growth, he added.
    Air freight rates have skyrocketed as demand has returned to
pre-pandemic levels while overall capacity is much reduced due
to the drop-off in passenger flights that carry cargo in the
planes' bellies.  urn:newsml:reuters.com:*:nL8N2MY5AY
    Wynne said rates were forecast to stay strong for the
foreseeable future while international travel remained weak. 
    "You would imagine a more gradual trend down (for freight
rates) as more widebody planes come back online, but they should
stay robust for quite some time," he said.

 (Reporting by Stella Qiu in Beijing and Jamie Freed in Sydney;
Editing by Edwina Gibbs)
 ((Jamie.Freed@thomsonreuters.com;))