Boeing Lowers Growth Forecast for Global Air-Cargo Market

Boeing Co. (BA) lowered its long-term forecast for global air-cargo market expansion, adding to evidence of a slowdown in the industry.

Growth will run at a 5.2 percent annual rate over the next 20 years, Boeing said yesterday in a statement. That’s down from the 5.9 percent rate it forecast in 2010, the last time the Chicago-based planemaker issued its annual projection.

“Air-cargo traffic will grow over the long term despite current near-term market weakness and worldwide economic uncertainty,” Boeing said in the statement. “The industry languished following the 2010 recovery posting slight declines in traffic in 2011 and thus far in 2012.”

Boeing, the world’s largest maker of jet freighters, issued its forecast a day after the International Air Transport Association said global air-cargo traffic in 2012 would fall 0.4 percent from 2011 levels. That marked a reversal from the trade group’s June projection for growth of 0.3 percent.

The world freighter fleet will increase to 3,198 planes by 2031 from 1,738 now, while large freighters will represent 36 percent of the fleet compared with the current 31 percent, Boeing estimated.

The forecast reflects global trends in the industry that have changed from two years ago, said Howard Rubel, an analyst with Jefferies & Co. in New York.

“The world’s slowing down,” Rubel said in an interview yesterday. “Global economies are not growing as fast. It’s another benchmark that confirms what everybody else has seen or experienced.”

Boeing said markets connecting the Asia-Pacific region will continue to lead growth in the air-cargo industry, though it lowered the growth rates for domestic China and intra-Asia traffic to 8 percent and 6.9 percent, respectively, from 9.2 percent and 7.9 percent in 2010.

Fuel Costs

The company said it doesn’t expect fuel costs to move significantly higher than current levels. More efficient planes and infrastructure improvements will also lower the cost of air cargo, the company said.

Freight carriers FedEx Corp. (FDX) and United Parcel Service (UPS) Inc. have struggled with sales growth that has slowed from more than 10 percent in mid-2010 to less than 5 percent in the most recent quarter, and both companies have trimmed full-year profit forecasts.

Boeing in July said growth in industry plane deliveries will slow in the next two decades as demand for jumbo jets and freighters declines. The global fleet will expand at less than a fifth of the rate predicted in 2011, Boeing said.

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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