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On the global economy, FedEx 777F deferral and expansion illuminates

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fedex777f_sm.jpgEarlier this week, FedEx exercised options on an 15 additional 777 freighters just three weeks after a regulatory filing stated that the cargo company was deferring delivery of its first 777F until FY2010. Though this simultaneous deferral and expansion of the order provides an illuminating glimpse into the thinking of the cargo giant. International air cargo traffic fell 13.5% in the month of November last year. Giovanni Bisignani, IATA's general director called the drop, "Shocking."

Air cargo, it appears, is a canary in a coal mine, setting off alarm bells for the rest of the global economy. Put simply, if people aren't buying, good aren't moving. This, of course, prompts a larger discussion as to whether or not air cargo traffic is a leading or trailing indicator of global economic health. Either way, it's dropping...fast.

Though if we assume that air cargo is an indicator of the health of the global economy, then the FedEx order might just shed some light on where the world's economic future lies. The initial deferral of FedEx's first four 777Fs in FY2009 is an unsurprising move, but adding 15 more for delivery between FY2011 and FY2019 is a clue to what the company sees as a decade of robust global air cargo growth. Whether this happens or not is just reading tea leaves, but FedEx has put its money where its mouth is. Maybe we should listen.

FedEx 777F Delivery Calendar FY2009-FY2019


20092010201120122013201420152016201720182019Total
Original 15410115
Deferred410115
Deferred+15443333333130
*Source - Seattle Post-Intelligencer & Flightglobal.com

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