Farewell to the Queen of the Skies

Farewell to the Queen of the Skies

Lawrence Gross

The Queen of the Skies is fading away. The Boeing 747, the original widebody jet that has, according to Air and Space Smithsonian Magazine, “transported the equivalent of 80 percent of the human race” over the years, is being taken out of service far faster than industry observers had expected.

On March 31, 2014, the last Japanese 747 landed at Tokyo’s Narita International Airport and was retired, ending a long love affair between that nation and the four-engine airliner. The 747 is being supplanted by smaller but highly fuel-efficient twin-engine aircraft such as the 787 and the new Airbus A350 XWB (Extra Wide Body).

This quick changeover wasn’t expected. Boeing poured a reported $4 billion into the 747-8, the last version of the 747, which incorporated the latest avionics and jet engine technology used on the 787. But, as of October, it had sold a disappointing 119 of the jets, 51 passenger planes and the balance freighters.

But any disappointment for Boeing has been more than offset by the stunning success of its new flagship, the twin-engine 787 Dreamliner.  Despite well-publicized teething problems, the commercial reception for the design has been excellent — more 1,000 planes have been ordered as airlines have gravitated toward its recipe of moderate capacity, high efficiency and long range, enabling them to provide more point-to-point, nonstop services.

The situation is also difficult for the 747-8’s even larger competitor, the A380. Launched with great fanfare seven years ago, only 318 of the behemoths have been ordered, and only 138 delivered — far short of expectations and not nearly enough to pay off the $25 billion in development costs. It appears Airbus made the wrong bet when it decided to pursue raw size and capacity, and now it’s rushing to catch up with its A350 XWB competitor to the 787.

Is there a message in all this for other freight sectors? Is bigger, in fact, always better?

I’ll be the first to acknowledge that freight isn’t the same as passengers, and airliners aren’t the same as ships. But the super-jumbo airplanes were born of the same impulse driving the growth in ship size: lower per-seat-mile (i.e., slot-mile) cost. Over time, however, the economic benefits of size — the ability to fly twice as many people with one crew, for example — began to be offset by the disadvantages associated with size, including facility requirements, peaking problems and less frequent service.

Meanwhile, the technology kept advancing, and efficiency that was initially size-related, such as low fuel consumption per seat-mile produced, became available in smaller aircraft as well.

Could this history be repeated on the water? Every effort by carriers today is focused on reducing slot cost, and bigger ships are seen as the key. Everything else is subordinated to this lodestar. Previously unthinkable practices, such as aligning with your erstwhile competitor in joint service, are being installed under the relentless pressure of needing to fill the vast capacity of these monsters. Meanwhile, all other parts of the supply chain suffer from the knock-on effects.

If the current situation persists and service settles at whatever lowest- common-denominator level proves sustainable, I wonder if there will be room for a new kind of competitor. This would be a carrier that employs smaller ships that still are equipped with the latest technology: high-efficiency engines, optimized hull shape and the like. Such a competitor would eschew alliances because it wouldn’t need such affiliations to generate sufficient volume to fill the smaller ships. Service would be as frequent as the big alliances but probably more reliable.

What would the slot economics of that competitor be? And would shippers be willing to pay a few more bucks per container to get a highly reliable, low-touch service from door-to-door?

Before you say it’s impossible, think again. What’s impossible is a continuation of the current level of dysfunction.

Lawrence Gross is president of Gross Transportation Consulting in Mahwah, New Jersey, and a partner at FTR Transportation Intelligence. A veteran with 34 years in the transportation business, he covers freight transportation, concentrating on the intermodal and trucking sectors from a transportation and equipment perspective. He is a frequent speaker at industry events. Contact him at ljgross@optonline.net and follow him on Twitter: @intermodalist.



In the case of the airlines, the 4 engine 747 is less efficient than the twin engine 787; just the opposite with vessels so far, larger, newer sophisticated vessels are far more efficient. When looking at volumes moving, let's say 160,000 teus a week in a lane; you can use 10 x 16,000 vessels, or 16 x 10,000 vessels or 20 x 8,000. Savings from fuel, crews, all for the same volume. What part of this is hard to understand? Simple fact, ports and terminals have seen these vessels for nearly 9 years, yet few of them have made accommodations for them - why? or, why not? are global volumes going to be static or fall over time? NO, so while the ocean carriers, or some of them, have started to gear themselves for the growth, the ports, terminals and infrastructure haven't.