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The global exports of aerospace products and parts
amounted to USD 145.4 billion in 2005 and rose to USD 351.6 billion
in 2019
The CAGR over the period 2005-19 for the value of
global exports was equal to + 6.5%
Already 2019 proved to be a sluggish year with global
exports of the aerospace industry growing by 4.5% year-on-year in
comparison to 6.3% in 2018
The top five aerospace industry exporters in 2019
included France, Germany, the UK, the US, and
Singapore
COVID-19 brough a dramatic decrease in demand and
production and global value of exports
The value of industrial production of the aerospace
products and parts in the US estimated by the FSB went downto 89.3%
in Q1 2020 and plummeted to 56.5% in Q2 2020 in comparison to the
benchmark year 2012; FSB predicts the production to take a decade
to recover to pre-COVID-19 levels
In Q1 2020 the value of global exports of aerospace
products and parts fell to USD 75,854 billion which represents a
fall of 8.0% year-on-year and a fall of 22.3% in comparison to the
preceding quarter
Knowing the shape of the pandemic curve from the
beginning of the year and the actions taken globally and by
individual states, we can expect a further deterioration in global
exports in the Q2 of 2020. A gradual improvement is likely to
appear, but it could take several years for the trade levels to
reach levels preceding the COVID-19 pandemic
Pre-COVID-19 era
The aerospace industry is highly dependent on the state of the
global economy and the global business cycle. It is also very
susceptible to non-business-related shocks such as acts of
terrorism, military conflicts, environmental disasters for instance
volcano eruptions or spread of infectious disease.
Trade within the industry was steadily growing over the long
run. Global exports amounted to USD 145.4 billion in 2005 and rose
to USD 351.6 billion in 2019. The CAGR over the period 2005-19 for
the value of global exports was equal to 6.5%. Global exports
contracted twice over the period: in 2009 due to the global
financial crisis (by -7.6% year-on-year) and in 2015 - the
commodity prices crisis (-0.6% year-on-year). The disruption
related to the global financial crisis had a classic V shape,
however, the growth rates have never reached the pre-crisis levels.
Nonetheless, export growth rates showed an accelerating trade over
the period 2015-18. Already 2019 proved to be a sluggish year with
global exports of the aerospace industry growing by 4.5%
year-on-year in comparison to 6.3% in 2018. A major improvement was
expected in 2020 but the prospects for it have been destroyed by
the COVID-19 pandemics.
In 2019 global aerospace exports were dominated by turbojets and
turbo propellers and their parts (USD 113.2 billion) and other
aircraft engines responsible for the next USD 5.5 billion. New
aircraft generated USD 101.9 billion in value (most of the exports
of aircraft with weights exceeding 15 tons), followed by
helicopters (USD 5.8 billion) and spacecraft (USD 2.4 billion). A
quarter of exports were related to aircraft parts other than
engines with the remainder due to navigational instruments and
appliances, radars, and simulators.
The top five exporters in 2019 included France, Germany, the UK,
the US, and Singapore (a major re-export hub). Interestingly
exports from Hong Kong SAR were greater than exports by China
mainland. The top ten also include Canada, Japan, and Spain.
The Q1 2020 financial results reported by IATA show an
industry-wide deterioration in profitability following the outbreak
of the pandemic. The adverse impact on traffic was widespread
across all regions even though some markets were locked down by
national authorities relatively later in the first quarter.
Overall, in April 2020, air passenger demand posted its largest
decline on record (-91%) due to the widespread lockdowns and border
closures. Air cargo demand proved to be more resilient but recorded
a drop in volumes of 27.7% year-on-year. The passenger load factor
declined by 41 ppts year-on-year, while the cargo load factor rose
by 11.2 ppts year-on-year as a result of the decline in available
capacity due to the grounding of the passenger fleet.
ICAO anticipates 1.2 billion fewer travelers globally by the end
of Q3 and revenue fall in the range from USD 160 to 253
billion.
With the easing of lockdown measures, the situation in the
industry is likely to improve due to gradually rising demand but
still, the year will be the worst on record in terms of volume,
traffic, and profitability. The prospects for other waves of the
pandemic make the situation even more unpredictable. Boeing expects
passenger traffic to recover to pre-COVID-19 levels only in two to
three years. This implies decreased demand for new aircraft as idle
aircraft is available. The demand for parts could be also lowered.
At the same time, resumption of production to pre-COVID-19 levels
could take much longer considering the typical aerospace production
cycle.
The major aircraft producers worldwide decreased significantly
their production capacities e.g. Airbus (in Germany, France, Spain,
and the UK), Boeing in the US, Bombardier in plants in Canada, and
Northern Ireland, Embraer in Brazil. This also adversely affected
engine manufactures such as General Electric in the US or
Rolls-Royce in the UK, or helicopters manufacturers such as Textron
Inc.
To show the gravity of the current situation we can show the
evolution of the industrial production of aerospace products and
parts for the United States estimated by the FSB. The value of
industrial production in comparison to 2012 went down to 89.3% in
Q1 2020 and plummeted to 56.5% in Q2 2020. It is forecasted to
reach the value for Q4 2019 only in Q3 2029. Thus a recovery for
the US aerospace industry could take a decade.
The global exports of the aerospace industry in Q1 2020
and prospects for the future
We have furthermore performed the analysis for Q1 2020. To put
it into a context we compare the three months of 2020 to the
situation in 2019.
The global value of exports was equal to USD 82,408 million in
Q1 2019. It went up to USD 97,603 million in Q4 2019. In Q1 2020 it
fell to USD 75,854 billion in Q1 2020 which represents a fall of
8.0% year-on-year and a fall of 22.3% in comparison to the
preceding quarter. The year-on-year changes by month were equal to
-8.9% in January, + 8.5% in February, and -21.0% in March. Knowing
the shape of the pandemic curve from the beginning of the year and
the actions taken globally and by individual states, we can expect
a further deterioration in global exports in Q2 of 2020. A gradual
improvement is likely to appear but it could take several years for
trade levels to reach levels preceding the COVID-19 pandemic. The
aerospace industry has entered the most challenging and
unfortunately the most unpredictable phase of its development so
far.
The background
Aerospace manufacturing is considered to be a high-technology
industry characterized by a large share of R&D expenses in
total sales and extensive global value chains that produces
aircraft, guided missiles, various space vehicles, aircraft engines
and propulsion units, and related parts both for civilian and
military use.
As air transport, both of passengers and cargo has been one of
the most adversely affected sectors of global economic activity by
the COVID-19 pandemic and taking its significance to the global
economy as one of the principal modes of transport it is
interesting to analyze the most recent data on global exports of
the aerospace industry.
To conduct the analysis, we first mapped aerospace industry
products to HS product codes at the 6-digit level of disaggregation
which is common to all the states worldwide and then retrieved all
the necessary data from the IHS Markit Global Trade
Atlas.
