Boeing unveils 737-800 "Next Generation" Converted Freighter (BCF)

(Boeing)

Boeing introduced its new 737-800 Next Generation Converted Freighter on Tuesday at the company's Shanghai facility.

There is good reason why a Chicago-based airplane maker launched its latest offering in China.

Many of the new freighters will go towards satisfying Chinese consumers' voracious appetite for online shopping.

 

Boeing predicts the global market for 737-sized freighters to be more than 1,000 planes over the next 20 years with roughly one-third of the demand coming from China.

 

While the global economy and larger industrials are facing some challenges in China, the country's mega online retailers such as Alibaba are thriving and the smaller consumer goods sold by these sites require a modern express-shipping system get from seller to buyer.

That's where the new 737-800 BCF (Boeing Converted Freighter) comes into play. 

"Demand in the express freight market is driven in large part due to e-commerce," Boeing's vice president of airplane conversions Kurt Kraft told Business Insider in an interview.

(Boeing)

"Since 2013, China has surpassed North America in e-commerce — thus driving demand for overnight deliveries."

According to Boeing, the domestic express cargo business in China grew an average of 50% per year from 2009 to 2014 while revenues surged 30% in that same time. 

But, with China's recent slowdown in economic growth and increased volatility in its stock markets, there are certainly many who are concerned about the country's continued growth in consumption.

That may be, but "much of China's e-commerce growth will be to set up the country's express shipping network which doesn't really exist right now," Kraft said.

Boeing's converted freighter program takes older airliners that are a bit long in the tooth for passenger service – more than 15 years old typically – and modifies them for freighter service. This conversion helps airlines maximize the value of their asset by extending the life of the plane by another 10 to 20 years. 

The conversions include such modifications as cutting a large cargo door on the side of the plane, reinforcing the cargo deck, and adding a rigid barrier between the flight deck and the cargo area.

 

The 737-800 BCFs are coming at the right time for both the manufacturer and airlines. As airlines continue to phase out older 737-800 aircraft from passenger service, freighter conversions will create a market for many airplanes that would otherwise be sold for scrap.

Currently, Boeing has orders for 30 737-800 BCFs with commitments for another 25 aircraft. Customers include China Postal Airlines and General Electric Capital Aviation Services.

 

Many of the newly modified 737 BCFs will go towards growth in the express shipping market while others will be used to replace decades old 737 freighters. 

However, not all of Boeing's converted freighters are as hot a commodity with customers right now. The company spent years modifying ex-passenger ferrying Boeing 747 jumbo jets to haul heavy cargo from continent to continent. But that market has dried up for now.

"We currently have no 747-400 conversions on order,"Kraft said. "We haven't sold one in two to three years."

With that said, it should be noted that Boeing is still building and has orders for its new 747-8 freighters.

Boeing will begin deliveries of the 737-800 BCF in the fourth quarter of 2017 with conversions expected to be performed at several of the company's facilities around the world.

(Benjamin Zhang - Business Insider)