“No New Aircraft” Tests Planning Skills

By Luke King

Amid rising geopolitical tensions, sluggish economies and the ongoing lack of heavy-haul aircraft capacity in the market, project professionals from deugro, Air Charter Service and Chapman Freeborn give us their predictions for the airfreight market in 2024. 

From Issue 1, 2024 of Breakbulk Magazine.


Falling yields in the general air cargo market are not causing undue alarm to those engaged in the shipment of oversize and project cargoes by air, however global conflicts threaten an otherwise positive outlook.

“For our niche sector, the general air freight market doesn’t massively affect project work, unless there's more of a general downturn or recession globally,” said Dan Morgan-Evans, global cargo director at Air Charter Service, or ACS, which arranges over 25,000 charter flights per year and employs more than 500 staff around the world.

“Softening of the rates was about overcapacity of aircraft, so I’m not so worried that there’s going to be a dip in projects, unless the world situation suddenly deteriorates. The impact of the crisis in the Middle East will be felt unless it can be contained.”

Morgan-Evans told Breakbulk the inevitable uptick in humanitarian flights necessitated by conflicts such as that between Israel and Hamas, which began last October, would do little to mitigate the wider implications of any sustained warfare.

“As much as that does generate business, and there is increased business into the region carrying whatever is required, it’s a drop in the ocean compared to the damage that conflict can do to economies around the world. Uncertainty causes a slowdown in world economies, so we’ll see how that plays out. That aside, the general charter market is in fairly good condition at the moment – normal business has resumed for us, and at a higher level than it was pre-Covid. Projects slowed down and stopped during that period, so we are seeing more than we did in the last three years.”

ACS has emerged from the pandemic as a larger organization, following ongoing expansion and the opening of new offices in Washington D.C., Boston, New Delhi and Mexico City last year. The oil and gas, automotive, dangerous goods and entertainment sectors were all said to be performing well. “We’ve seen a big rise because people are out touring again – all those markets are all really buoyant,” Morgan-Evans said.


“Zero” Chance of New Aircraft

Heavy-lift aircraft availability remained difficult, and Morgan-Evans assessed there was “zero” chance of new aircraft entering the market any time soon. “There is no economical way of developing or re-opening a production line for a pure heavy-lift aircraft,” he said. “There is just not enough business for the amount of money it would take to get something like that off the ground. It just doesn’t work.”

As a pure charter operating aircraft, it’s too uncertain, he added – the cargo charter market would always remain an up-and-down market. “We follow trends, and for that reason it would be difficult to make money from a new heavy-lift aircraft. That said, there are still Antonovs around. Oddly enough, 2023 was probably our busiest year with Antonovs for a long time. They are still there if you need to get something moved. You may not be able to do it the next day but with enough time, you can plan the operation and get it done.”

Reflecting on business prospects for 2024, Morgan-Evans said: “Barring any escalation in the hot spots of the world, the signs are that economies are starting to get inflation under control. Consumer confidence has not been massively knocked, certainly in the U.S. At the moment, there are no panic buttons being pressed.”

There was a similarly upbeat outlook from Pavel Kuznetsov, head of air chartering at deugro, and a regular panelist at Breakbulk conferences. “In our experience the demand for project air cargo does not always directly depend on the same factors that drive general air cargo,” the Hanau, Germany-based executive said.

“The need for project airfreight is project-driven, usually has an unplanned nature and normally kicks in towards the end phase of the projects. Based on the project portfolio our clients have for next year, we anticipate continuously strong demand for airfreight solutions in 2024.” Kuznetsov said the conventional freighter service market – scheduled and charter – has stabilized, and would likely sustain a “gradual recovery which will probably last until at least the second half of 2024.”

“While the geography of the projects we are dealing with is extremely diverse, I would probably highlight the Middle East and North America where the project activity is really booming. We see a lot of activity not only in the traditional oil and gas and major LNG projects, but also new interesting developments such as massive green hydrogen projects which will play a significant role in decarbonizing energy systems.”


Limited Availability

The possible future introduction of new heavy-lift aircraft is a perennial topic at Breakbulk events and, like Morgan- Evans at Air Charter Service, Kuznetsov is not optimistic about the prospect.

“Availability of heavy-lift ramp aircraft (AN-124 and IL-76) will remain very limited, and prices will remain extremely high as they are now. I don’t think there will be any changes to the current situation next year and we will unlikely see any new aircraft entering this niche, apart from Airbus Beluga which, however, suits more for volumetric cargo and less for heavy machinery.”

The ongoing shortage of heavy ramp aircraft always prompts interest in seeking ways to use conventional cargo aircraft for project shipments. “The main problem with this, of course, is the smaller cargo hold of conventional cargo aircraft compared to heavy ramp aircraft, as well as the greater dependence on ground handling equipment, which is not always available at remote locations,” Kuznetsov said.

The load planning process for oversized cargo is by nature a complex operation which requires extensive preparation, specialized skillset and equipment, as well as cooperation from air carriers, airports and ground handling agents. To meet these challenges, deugro engages its own engineering staff, via sister company dteq Transport Engineering Solutions, tasked with identifying “creative solutions” to overcome any limitations.

“For example, fixing the cargo on a transport skid at a certain angle, dismantling certain elements of the cargo to fit the contour in the cargo hold or modifying the footprint to allow proper weight distribution. This often becomes a game-changer for safe and cost-efficient air transportation.”


Positive Trends

Reto Hunziker, regional CEO – Europe at Chapman Freeborn, agreed that the niche project cargo sector was not particularly vulnerable “since it does not depend on consumer behavior and spending.”

Chapman Freeborn is seeing strong growth in the automotive sector in Europe and North Africa, while the oil and gas and energy sectors are also showing “positive trends.” Turning to Europe, the company says it is pursuing new opportunities in France, Benelux, and Italy in 2024.

Hunziker cited high pricing and a lack of outsized aircraft as the biggest issues related to project shipments. “The traditional freighter market is buoyant and presently very flexible in terms of pricing and availability. However, due to a lack of niche transport capabilities, these aircraft are not always of help.

“Niche aircraft availability will remain a challenge, especially in the outsized market. This will not change as there are only a limited number of aircraft available. Some of these aircraft are operating long-term military or humanitarian missions, which further restrict their availability. We don’t believe that there will be any new or additional aircraft types entering the market in the near future. I believe the earliest that we will see new aircraft will be in 2027 and beyond, and these will be predominantly to replace the AN12s.”

Hunziker added that sourcing the right personnel was almost as difficult as sourcing the aircraft. “With our ongoing expansion, we have various vacancies and are constantly looking for experienced industry colleagues with market insight and knowledge, as well as newcomers to the industry.”

Chapman Freeborn is moving to diversify its business to offer clients more than third-party aircraft for charters. “We now offer a much wider range of value-add services and niche products such as our global onboard courier business, the animal transport specialists Intradco Global, the intra-European automotive aircraft operator Arcus Air, and Magma Aviation, our in-house B747F operator with five aircraft flying exclusively for our group clients worldwide,” Hunziker said.

The company also deploys dedicated loadmasters to investigate whether shipments can be loaded into commercial freighters. “We are involved from the beginning and consult our customers on site to make sure we find the most economical way of packaging to enable us to use commercial lift. A great example of this is our recent move of six Bell Helicopters on a single B747-8 freighter.”

Providing his own outlook for the year ahead, Hunziker said: “The most common concern is the unpredictability of the market. Conditions seem to change very quickly, with new challenges almost every day. In addition, people are concerned about the increasing number of active and potential geopolitical conflicts. This all makes it very difficult to plan activities and find the best approach for various markets. Volatility as always rules our business.”


How companies should respond to multiple market challenges will be the focus of a main stage panel session at Breakbulk Middle East 2024. “The Balancing Act: Demand, Supply and the Economy”, moderated by Susan Oatway, research analyst for breakbulk and project cargo at the Journal of Commerce, will take place on Monday 12 February from 11:30-12:15.

TOP PHOTO CREDIT: deugro