The world’s largest cargo airline FedEx is preparing for a shopping spree on the back of a massive rise in e-commerce during the global pandemic. With new freighter offerings now available from the two leading manufacturers, competition for the vast FedEx order is likely to be fierce.
Shopping expedition
FedEx is going shopping. With a massive rise in demand following COVID-19 stoked by online shopping, disruptions to conventional supply chains, and a decrease in overall cargo capacity due to the reduction in passenger flights over the pandemic, demand for air freight space is now higher than ever.
On the back of this enormous surge in demand, FedEx is looking to capitalize on the opportunity. And with the recent launches of dedicated freighter variants, both the Airbus A350F and the Boeing 777X freighters, battle lines will once again be drawn in the competition to land the order from the US-based cargo mega-carrier.
A loyal Boeing customer
Historically, Memphis, Tennessee-based FedEx has been a loyal Boeing customer. According to planespotters.net, almost 70% of its mainline jet fleet comprises Boeing products, specifically the 757, 767, and 777. It also continues to operate a fleet of McDonnell Douglas DC-10 freighters. Notably, however, the company’s fleet is not purely made up of US-built aircraft. It also still has 65 Airbus flying A300-600Fs operating on its behalf.
Given the current make-up of the fleet, Boeing might consider itself as the front-runner in this latest competition for sales. However, Airbus may be willing to negotiate hard with a clear focus on gaining a more significant foothold in the freighter market. It has recently launched a freighter variant of its A350, and its aspirations to take a more substantial chunk of the dedicated freighter market are clear.
Interestingly, FedEx was widely expected to become a launch customer for the Boeing 777X freighter, joining Qatar Airways at the signing ceremony just two weeks ago. However, it has stepped away from an imminent announcement. According to industry sources, a labor relations issue with its pilots’ workforce continues to plague the carrier.
Labor-relations issues
The airline has recently become embroiled in negotiations with its pilots’ unions, who claim that the organization’s recent record profits would not have been possible but for its members’ hard work and dedication. It is suspected that the potential for a new large widebody aircraft order could be causing additional strain on those negotiations.
A spokesperson for the Air Line Pilots Association recently told Reuters that it wants an agreement that recognizes the contribution of the pilot workforce and that significant bargaining remains.
However, FedEx is keen to play down the ongoing discussion with its unions, preferring instead to talk about its big plans for the future. A spokesperson for the company said,
“Aircraft acquisitions are strategic business decisions, and we have deferred any new commitments as we evaluate and prioritize potential capital investments.”
Meanwhile, with its A350F, the European manufacturer has a lead over its 777X freighter rival. Airbus certainly has an advantage by utilizing fewer revolutionary changes (the A350F uses the same wing and same engines as its passenger-carrying sister with no need for folding wingtips) and having the type already certified and flying. This may make the A350F a more attractive proposition to FedEx.
The stakes are high
For the manufacturers themselves, the stakes are high. While winning freighter orders may have once been of secondary importance to winning orders for passenger aircraft, the pandemic, and its resulting long-haul passenger slump, along with the seismic shifts in the matter of e-commerce, have skewed the market for new aircraft orders.
With a drop in orders for twin-aisle, long-haul passenger aircraft over the past two years, both manufacturers are keen to fill open slots on their respective production lines with orders for freighters to keep production rates up.
Boeing’s appetite for this was seen recently when it agreed to convert an order from Qatar Airways for 60 777X passenger planes to include 20 dedicated 777X freighters instead, adding to the 14 it already had on order. The first of these aircraft will be delivered to the carrier in 2027.
Boeing also has to protect its position in the future. Due to emissions rules, the soon-to-be-discontinued 747-8F along with the 777F and 767F cannot be produced after 2027. Thus, Boeing is keen to expedite the certification process for the 777X freighter to meet that date.
Meanwhile, Airbus is rumored to be sacrificing A350 passenger jet production slots to attract further orders of its freighter equivalent version to gain a more significant foothold in the booming dedicated cargo market.
A short or long-term effect?
While freight-only operators such as FedEx are bullish about the future, some industry skeptics take a more cautious approach. The global economy is recovering with growing numbers of people flying again. Consequently, increasing numbers of long-haul passenger aircraft are being re-introduced into service, including the A380.
Lastly, with the fragile global political situation (particularly concerning Ukraine) and the unresolved tensions between the US and China over international trade, there are clear signposts that the future may not all be plain sailing and guaranteed exponential growth.
There is an argument that it is far cheaper and more economical to convert former passenger aircraft to freighters than to buy one of the shelves, particularly given that lead times for the new aircraft are extending. If the current air cargo boom turns out to be relatively short-lived, then there could be a massive surplus in new freighter aircraft in the coming years, all with reduced residual values as a consequence.
It will be interesting to see whether FedEx chooses to stick with what it knows with Boeing and its 777X freighter. Conversely, will it switch allegiances to Airbus and its A350F – an aircraft type already certified and in service? A final decision is expected towards the middle of 2022.
Journalist – Working for several airlines & Airbus, Luke gained a comprehensive knowledge of the commercial aviation industry, before retraining as a lawyer specializing in aviation. A qualified private pilot, Luke also helps to keep one of the world’s last WWII Catalina flying boats airworthy. Based in Cambridge, UK.
This content was originally published here.