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Jan.9, 2017

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108 THE JOURNAL OF COMMERCE www.joc.com JANUARY 9.2017 AIR CARGO 2017 ANNUAL REVIEW & OUTLOOK & OUTLOOK & AIR CARGO'S BELLYACHE A i r f reig ht d iv ision s at A sia n airlines are trapped in an impos- sible situation: Strong passenger demand continues to inject more aircraft into service, ramping up belly cargo capacity that is diffi cult to fi ll. Large populations with rising house- hold incomes in China, India, and many Southeast Asian countries are the driv- ing force behind rapid passenger traffi c growth and the delivery of increasing num- bers of the latest generation of Airbus and Boeing airliners. Many of these aircraft are double-aisle B777s or A330s, and, although superbly effi cient and economical people carriers, also have signifi cant cargo capacity in their bellies. Boeing expects 9,100 widebody air- planes to join global fl eets between now and 2035, with a large wave of potential replacement demand between 2012 and 2028. "Despite recent events that have impacted the fi nancial markets, the avia- tion sector will continue to see long-term growth with the commercial fl eet doubling in size," said Randy Tinseth, vice president of marketing for Boeing Commercial Air- planes. "We expect to see passenger traffi c grow 4.8 percent a year over the next two decades." The problem is that a Boeing 777 pas- senger plane can hold 7,120 cubic feet of freight, 25 percent more than a Boeing 747-8 jumbo can carry in its belly. If the Boeing forecast is accurate, the delivered aircraft will add more than 64 million cubic feet of cargo space to the market in the next 20 years. The additional capacity is keeping heavy pressure on freight rates and drag- ging down all-important cargo yields, even with surging peak-season freight volumes out of Asia. Major hub airports such as Hong Kong and Shanghai have reported solid increases in volumes as China's import and export demand pushes up their transshipment fi gures. "The demand for high-value consumer goods has picked up again," said Lutz Grze- gorz, vice president of Shanghai Pudong International Airport Cargo Terminal Co. The Sino-German terminal operating company last fall was on track to exceed the nearly 1.8 million tons of air freight it handled in 2015. China's carriers — Air China, China Freight volumes are growing, but surging passenger demand is creating more bellyhold capacity than carriers can fill BY GREG KNOWLER

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