By Jorn Madslien
Business reporter, BBC News, Newcastle International Airport
A forklift truck lifts pallet of boxes off a lorry and places it inside Servisair Cargo’s low steel-and-yellow-brick warehouse.
But there is not a single dedicated freight aircraft in sight.
About a dozen air freight operators, including Emirates Cargo, Cathay Pacific Cargo and Brussels Cargo cargo, are also operating out of the Airport Freight Village in Newcastle.
Yet, with only one dedicated freight plane arriving each day - a FedEx flight from Glasgow - the cargo companies either load shipments into the spare luggage space on board passenger planes, or they use lorries to take container loads to airports in Manchester or London.
New cargo planes
Newcastle’s small air freight terminal may be operating on the margins of an already unglamorous cargo industry. But the freight market is not itself a marginal sector.
Both of the world’s leading aircraft makers see their cargo planes as vital tools in their hunt for profits.
Many airlines have been cancelling or deferring orders for new aircraft - both passenger and cargo planes - in recent months, yet both Boeing and Airbus are currently rolling out new cargo planes:
- Boeing customers are hoping to take delivery of the enormous 747-8F this year. The stretched jumbo jet will be the US aerospace giant’s biggest plane - not much smaller than the Airbus A380 - and a very modern and efficient one at that even though it is based on a 41-year-old aircraft
- The huge 747-8F compliments Boeing’s 777F, which was first handed over to customers in 2009
- Airbus, meanwhile, is aiming for deliveries of its long-haul A330-200F freight plane this summer. The mid-sized freighter will be shown to the public for the first time at next week’s air show in Singapore.
Bad timing
Never before have three major freighters entered the market at the same time.
And what a time it is. The planes are readying for take-off just as the market is reeling from a global recession that has caused a sharp fall in international trade volumes.
“In any economic downturn, the first thing that drops off is air freight,” points out Saj Ahmad, aerospace analyst at FBE Aerospace.
Increasingly, many of those still sending goods are doing what the Newcastle cargo firms do. They use lorries and trains as they are cheaper, albeit also slower, than air freight - or for longer distances, they use ships whenever they can.
“There are now signs of increased demand for both bulk commodity and containerised ocean transport,” observes the International Air Transport Association (IATA).
Consequently, the global air freight market shrank some 10% in 2009 when compared with 2008, which was itself a disastrous year.
“The exceptional scale of the freight downturn,” IATA insists, has contributed to “the largest post-war decline for the international airline industry”.
Revenues fell even faster as cargo prices plunged last year. During the first half of 2009, cargo revenues fell 40%.
“Several years of growth has been lost in this extraordinary downturn,” IATA says.
Recovery soon
But there are signs that the worst is over and that demand is picking up, IATA continues.
http://newsimg.bbc.co.uk/media/images/47194000/jpg/_47194099_-8.jpg
“The low point for freight markets was in December 2008,” it says.
Since then, the freight market has recovered somewhat, bouncing back 24.4%, IATA observes - though it also points out that it is still 9% below where it was two years ago.
Besides, Boeing and Airbus point out, these are not short-term markets.
As the aircraft makers are eager to point out, cargo firms know that in order to remain competitive in the long run, they have to invest in modern, fuel-efficient aircraft today.
“We are at the eve of a market recovery, and now is the time for airlines to prepare for future freight growth,” says John Leahy, Airbus chief operating officer.
“The efficient A330-200F is very well adapted to today’s market dynamics of rising fuel prices and increased pressure on yields.”
Boeing agrees, predicting that aircraft makers will make some $170bn (£105bn) from the sales of some 710 freighter aircraft across the world over the next two decades.
The bulk of the sales would be accounted for by very large cargo planes, Boeing predicts, so it now hopes to sell 341 of its 747-8F and its 777F planes during the next two decades.
Being competitive
But a crucial question remains unanswered: will either of the two giant aircraft manufacturers be able to make a profit from their cargo planes
After all, the aircraft will be competing against masses of former passenger planes, many of them really rather cheap, that are being converted into freight carriers.
At the Airport Freight Village a DHL van heads off towards Newcastle.
Near the main airport terminal, the van passes the Premier Inn, which is advertising rooms from £29 a night.
A timely reminder, perhaps, that in business, it is all about competitive pricing.