Dive Brief:

• DHL ordered nine converted freighters from Boeing to expand its long-haul intercontinental fleet and meet heightened demand for its air cargo services, the companies announced last week.
• It is DHL's largest single order to date for 767-300 Boeing Converted Freighters. According to Planespotters, DHL has 28 total 767-300s in its current fleet of 194 aircraft.
• Beyond added capacity, the additional freighters will allow DHL "to fly eco-friendlier and more cost-efficiently," Geoff Kehr, DHL Express senior vice president of global air fleet management, said in a statement. Emissions have been a growing concern for airlines and shippers alike, and Boeing says the 767-300BCF can replace aging aircraft and meet stringent airport emissions standards.

Dive Insight:

DHL's order comes amid increased interest for dedicated freighters since the COVID-19 pandemic grounded passenger aircraft and left air cargo shippers with fewer options to move their goods.

Air transport has become a more appealing option for some companies to avoid port congestion or mitigate the effects of production delays. Air cargo demand is up 3% from pre-pandemic 2019 levels, according to Clive Data Services.

But until more freighters begin flying or passenger demand rebounds, shippers face limited capacity and elevated rates. Available capacity on dedicated freighters in September was 25% above pre-COVID-19 levels, while belly capacity in passenger aircraft was down more than 34%, according to the International Air Transport Association.

This has led to a favorable environment for air cargo carriers like DHL. Volume growth for DHL Express' Time Definite International shipments was 1% YoY in Q3 after larger gains in Q1 (26%) and Q2 (20%).

"With limited belly cargo capacity on passenger airlines, more dedicated freighters are being utilized to transport cargo," said Boeing CEO David Calhoun on the company's Q3 earnings call. "This is resulting in healthy demand for our freighter offerings with 24 additional freighter airplanes ordered in the quarter and strong demand for Boeing converted freighters."

Lower capacity in passenger aircraft has more carriers including DHL looking into dedicated freighters. Orders for new and converted Boeing freighters through the first nine months of this year surpassed the company's highest annual freighter order tally in its history, Calhoun said.

The company projects the 2040 global freighter fleet will be 70% larger than the pre-pandemic fleet, and it is responding to the increased demand by adding production capacity. It's opening two new conversion lines for the 767-300BCF in China and three conversion lines for the 737-800BCF in Canada and the United Kingdom.

Rival Airbus is also benefiting from growing freighter demand, announcing Friday that CMA CGM Group placed an order for four A350F aircraft.