An Air Cargo Perspective and Forecast

1
An Air Cargo Perspective and Forecast
Kai HeinickeRegional Director, Cargo
Marketing18 October 2006
2
Agenda

• Current State of the Air Cargo Industry
• World Air Cargo Market
• Forecast
• China Air Cargo Market
• World Freighter Fleet
• Forecast

3
Air Cargo
Express
Air Freight
Mail
4
Historic World Air Cargo Traffic Growth, 1970 -
2005
change in air cargo traffic
Actual world air cargo traffic, RTKs, billions
World Air Cargo Has Grown 7.0 Per Year
5
In Spite of Recent Tumultuous Times,Air Cargo
Growth Remains Resilient
Average Spot Jet Fuel Price
Monthly change
Monthly Percentage Change Over Prior Year
Average Spot Jet Fuel Price, U.S. Cents per Gallon
High Fuel Prices Have Tempered Growth
6
World Air Cargo Grew 3.1 for Jan June 2006
Billions of RTKs
2005
2004
2006
2003
2000
2002
2001
Sources U.S. Department of Commerce, AAPA, AEA,
ATA and the Boeing World Cargo Forecast.
7
30 Airlines Transport 75 of the Worlds Air
Freight
Systemwide scheduled C Passenger and freight
operator F All-freight operator I Integrated
services operator
( ) 2004 Ranking
Source IATA and direct reports
8
Busiest Air Freight Airports are concentrated in
Europe, Asia and North America
Asia
( ) World Ranking
North America
1. Hong Kong (2) 3,402,247 2.
Tokyo-Narita (4) 2,239,930 3. Seoul-Incheon
(5) 2,120,542 4. Shanghai (8)
1,842,474 5. Singapore (9) 1,833,721 6.
Taipei (13) 1,692,447 7. Dubai
(18) 1,281,050 8. Bangkok (19)
1,130,298 9. Osaka (22)
840,235 10. Beijing (23) 782,066 11.
Guangzhou (25) 726,356 12. Tokyo-Haneda (27)
672,464 13. Kuala Lumpur (30) 653,654
1. Memphis (1) 3,592,570 2.
Anchorage (3) 2,553,937 3. Los
Angeles (7) 1,858,277 4. Louisville (10)
1,813,859 5. Miami (12)
1,718,076 6. New York JFK (14) 1,585,253 7.
Chicago-OHare (16) 1,443,348 8. Indianapolis
(20) 979,042 9. Newark (21)
868,265 10. Atlanta (26)
725,446 11. Oakland (28) 667,806
Europe
1. Frankfurt (6) 1,864,398 2. Paris-CDG
(11) 1,767,260 3. Amsterdam (15) 1,449,855 4.
Heathrow (17) 1,305,976 5. Luxembourg (24)
742,342 6. Brussels (29) 654,316
Source Airports Council Int. 2005
9
Cargo Represents a Sizable Revenue Source for
Most Major Passenger Airlines
Percent of Traffic Revenue
Average 15.0
Source ACMG Nov 2005 and airline annual report
10
The Large Freighter "ACMI" Sector Has Grown
18.6 Since 1990
RTKs, billions
18.6 average annual growth
ACMI Providers Accounted for 6.2 of the Worlds
Total RTKS in 2005
11
International Express Now Comprises Over 11 of
Total International Air Cargo
RTKs, billions
12
World Maritime Dry Cargo Traffic Has Grown As
Fast As World Air Cargo Traffic
World Air Cargo Traffic, billions of RTKs
World Maritime Dry Cargo Traffic, billions of RTKs
Comparative Traffic Growth Rates
1985-2005 1995-2005 Air Cargo
6.4 5.1 Maritime 4.8 5.4
In 2005 the Maritime Industry Generated 53.4
Trillion RTKS
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Demand Pulls Air Cargo Traffic
U
Air/sea/land costs Exchange rates Relative pri
ces
(
(
(
(
Economic
(
(
(
(
Products
(
(
(
(
(
(
(
Activity
(
(
(
(
(
(
(
Importer
Exporter
14
Air Cargo Traffic Growth is Influenced by GDP
Growth
RTKs annual growth, percentage
GDP annual growth, percentage
Historically Air Cargo has Grown 2.3 Times Faster
then GDP
15
Forces and Constraints for Air Cargo Growth
Industry
relocation
Directional
Trade quotas
Imbalances
and restrictions
New
commodities
Widebody
Export
freighters,
promotion
and
lower decks
New trade
Airline
relationships
Currency
market research
revaluations
Airline market
World
and shipper
National
and regional
Surface
education
development
GDP
competition
programs
growth
Shipper
utilization
Open Skies new
air services agreements
Proliferation
Deregulation
of points
Airport
served
curfews
Express
market
"Just in time"
Lack of Airport Access
concepts
Terrorism/ Armed Conflict
Air and surface
Oil/fuel prices
labor stoppages
and availability
16
World Air Cargo Will Grow 6.1 Percent Per Year
Through 2025
RTKs, billions
History
Forecast
Average annual growth percentage 2005 to
2025 High 6.9 Base 6.1 Low 5.3
6.4 growth per year
World air cargo traffic will triple over the next
20 years Growing from 178.1 Billion RTKs to
582.8 Billion RTKs
17
Asian Cargo Markets Continue to Lead Industry
Growth
Growth, percentage
World Average, 6.1
18
The Share of World Air Trade Connected to Asias
Market will Increase from 51 to 63 by 2025
Share of world total market, RTKs percentage
19
Air Cargo Traffic Growth Will Outpace Passenger
Traffic Growth in Every Major World Market
World
Cargo
6.1
Passenger
4.9
5.0
3.4
3.8
Europe
3.6
Intra
6.9
Intra
North America
Europe-Asia
5.5
5.4
4.5
7.1
Europe -
5.3
5.9
North America
5.0
Asia - North America
8.6
Intra Asia
North America - Latin America
Europe Africa
6.4
5.6
4.9
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China is the Fastest Growing Cargo MarketIn the
Industry
World average, 6.1
Growth, percentage
2005-2025
21
The China Domestic Air Cargo MarketTotals Over
2.1 Million Tonnes in Annually
Tonnes of freight and mail, millions
19.6 Average Annual Growth
22
China Is The Fastest Growing Trans-Pacific Air
Cargo Market
North America Asia Air Cargo Market Has Grown
6.5 per Year Since 1995
17.8
1.5
Notes 1) CY 2005 from Boeing TRADE database
2) Both Directions 3) Air
mode from U.S.D.O.C. 4) 1995-2005
annual growth rate at top of bar
Metric Tonnes
2.8
3.8
7.5
0.8
1.0
2.8
6.0
2.1
5.4
2.6
Source TRADE
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Top 6 European Countries Account for Nearly 80
of Chinas Air Cargo Traffic to Europe
China Europe Air Cargo Market Has Grown 18.8
per Year Since 1995
21.3
16.0
Notes 1) CY 2005 from Boeing TRADE database and
Airport Data 2) Both Directions
3) 1995-2005 annual growth rate at top of
bar
21.9
18.8
Metric Tonnes
28.7
10.9
Source TRADE and Airport Data
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Chinese Cargo Operators Are Expanding and Foreign
Carriers Want More Access to China

• Jade Cargo
• Investors 51 Shenzhen Airlines, 25 Lufthansa
  Cargo, 24 DEG
• Based in Shenzhen
• Launched service on August 2006 with services
  to AMS and Seoul
• Fleet On order 6 747-400ERFs

• Great Wall Airlines
• Investors 51 Great Wall Ind, 25 SIA Cargo,
  24 Dahli Invest.
• Based in Shanghai
• Launched service on June 2006 with services to
  Amsterdam
• Future service to include Singapore, India, and
  S. Korea

• Shanghai Airlines Cargo Intl.
• Received its air operators certificate from the
  CAAC in June 2006
• Launched on July 2006 w/ Shanghai Airlines
  freighter fleet
• Service to Los Angeles on July 2006 w/ 747-200SF
  wet-leased
• Investors 55 Shanghai Airlines, 25 EVA, 20
  Evergreen subsidiaries

• Yangtze River Express Airlines
• Operates 6 737-300SF
• China Airlines purchased 25 stake in Jan 2006
• Launched three times weekly in June 2006 to Los
  Angeles using 747-200F ACMI wet-leased

• China Cargo Airlines
• Joint venture between China Cargo Airlines and
  Air China Cargo Airlines will be establish by
  2006 year-end
• Based in Shanghai

China Southern in cargo Joint Venture talks with
Korean Air
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The Freighter Fleet Is Grouped Into Three Payload
Size Categories
Freighter Fleet Is Grouped Into Size Categories
Standard-body (less than 45 tonnes)
Medium widebody (40 to 75 tonnes)
Large (more than 75 tonnes)
DC-10-30/40 MD-11 747 777 A340 A380
767 A300 A310 A330 L-1011 DC-10-10 A350 787
BAe-146 707-320C DC-9 DC-8 737 757-200 727
MD-80/-90 A320
Represents a series
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The World Jet Freighter Fleet Has More Than
doubled Every 10 Years
Number of airplanes
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World Freighter Fleet
Large (gt75 tonnes) Medium Widebody (40-75
tonnes) Standard-body (lt45 tonnes)
2025
2005
1,789 freighters
3,563 freighters
Widebody Freighters Dominate the Future Fleet
28
Freighter Conversions Comprise 75 of Fleet
Additions
Freighter aircraft, units
New freighters
Fleet additions, 2,983 units
Conversion market
Current/retained fleet
1209 Freighter Aircraft will be Retired
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Future Freighter Deliveries, New and Converted
2006-2025
Standard-body (lt50 tons) Medium Wide-body (40-80
tons) Large (gt80 tons)
Standard-body 1,140 total
522 new
Large 1,002 total
1,140 converted
480 converted
244 new
597 converted
Medium Wide-body 841 Total
Total 2983 Units (2,217 Converted, 766 New)
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Freighter Deliveries 2006-2025 Deliveries by
Region
Large (gt75 tonnes) Med Wide-body
(40-75 tonnes) Standard-body (lt45 tonnes)

While North America Predominates in Total
freighter Deliveries, Asia Will Receive the Most
Large Freighters
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Five new widebody freighters enter service within
4 yearsIncluding two new aircraft
777F
747-8F

Entry into service dates
747-400BCF (Passenger-to-Freighter)

767-300BCF
777F
747-8F
747-400BCF (Combi-to-Freighter)
797-PI-0438 8-11-5-CF
32
The 777 Freighter The worlds largest and most
capable twin-engine freighter
Payload / Range 109 metric tons / 4,965 nmi _at_
9.9 lb/ft3 density (747F density)
Launched 24 May 2005 Orders 23 Firm EIS
4Q2008
Includes tare weight

• Payload Cargo Arrangement
• 27 Main Deck Pallets
• (22) 96-in x 125-in x 10-ft contoured pallets
• (4) 96-in x 125-in x 111-in contoured pallets
• (1) 96-in x 125-in x 8-ft pallet
• 10 Lower Hold Pallets (96-in x 125-in x 64-in
  pallets)
• (6) Fwd Lower Hold
• (4) Aft Lower Hold

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The 747-8 FreighterTaking the best and making it
even better
Payload / Range 140 metric tons / 4,475 nmi _at_
9.9 lb/ft3 (158.6 kg/m3) density
Launched 15 November 2005 Orders 44
Firm EIS 3Q2009
Includes tare weight
Improved wing
Improved flight deck
Increased payload

• Payload Cargo Arrangement
• 34 Main Deck Pallets
• (27) 96-in x 125-in x 10-ft contoured pallets
• (7) 96-in x 125-in x 8-ft contoured pallets
• 12 Lower Hold Pallets
• (7) Fwd Lower Hold
• (5) Aft Lower Hold
• 2 Lower Hold Containers

New 787 engines nacelles
34
Comparison of Boeing World Air Cargo Forecasts
with Historic Annual World Air Cargo Traffic (in
RTKs)
Year of Publication
Actual World Air Cargo Traffic
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Summary

• World air cargo traffic levels will triple over
  the next two decades.
• Asian air cargo markets will lead the industry
  growth with China at the forefront.
• The world freighter fleet will double to 3,563
  aircraft by 2025, led primarily by widebody
  freighters.

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World Air Cargo Forecast 2006/2007
www.boeing.com/commercial/cargo