News / Cargojet soars while rival carriers cut back on freighter operations

Photo: Cargojet

Canada’s largest freighter airline, Cargojet, is flying high on e-commerce.

The carrier has expanded its work with Great Vision HK Express, which provides logistics services for Chinese e-commerce merchants and, last week, added a fourth weekly transpacific flight between Hangzhou and Vancouver, having started scheduled charter flights for Great Vision in May.

At a time when other carriers are parking freighters or getting rid of them, Cargojet is expanding its fleet – a remarkable transformation of its fortunes, which saw management putting four B757Fs up for sale last year.

Today its 41-strong fleet is fully utilised, and three more B767s are set to join, after completion of their conversion into all-cargo configuration.

In contrast, WestJet last week announced the end of its freighter venture with B737-800Fs, days after Air Canada revealed it had sidelined two of its B767Fs in April and was operating a fleet of six 767 freighters.

In May the flag-carrier had scrapped orders for two B767 conversions, eight months after it had converted an order for two B777 cargo aircraft into passenger widebody planes.

The Canadian passenger airlines are not alone in curbing freighter ventures; FedEx is slashing its aircraft fleet and UPS would likely be doing the same but for its contract to carry air mail for the US Postal Service. The integrators have seen a pronounced shift from expedited air service to deferred ground options in their domestic networks.

Cargojet, which focuses primarily on the Canadian market (plus some cross-border routes on ACMI business), continues to enjoy strong demand from clients that handle e-commerce. DHL added two aircraft to the number Cargojet operates on its behalf in the 2023 peak season and has kept using them. Amazon has reserved several additional Cargojet units for a sales event in October – last year it had hired 757 freighters, but this year has asked for 767s.

Cargojet co-CEO Jamie Porteous said the traffic it hauled for Amazon and Great Vision targeted the Canadian market, which had shown strength this year after a rather tepid 2023. According to Amazon, this market holds more promise for e-commerce as online sales penetration lags that seen in the US so far.

Cargojet’s results for the second quarter have been strong, with revenues climbing from C$207.9m (US152.53m) a year ago to C$230.8m. Core transport revenue was up 11.5%.

The airline’s charter business climbed to a record C$20.3m. A network and fleet restructure last year freed freighters for charter work beyond weekends, which created opportunities to move freight for a broad array of industries, said Mr Porteous.

The one setback in the operation was the termination of the scheduled weekend freighter to Cologne last year, as the B767 used on the sector was needed for ACMI business. Mr Porteous said it was not an easy decision to axe a service that had been running for years, but added that the massive influx of bellyhold capacity in the transatlantic market had depressed yields.

However, Cargojet’s fleet is set to grow: two B767-300s are due to join when they have been converted into freighters. One will replace a leased 767-200 which is nearing the end of its contract. There are also two 767-200 conversion candidates: one has been cannibalised for maintenance, but the other will be turned into a freighter, said Mr Porteous.

He acknowledged that the B767-300 was not the ideal freighter for transpacific operations – the stage length requires larger aircraft to achieve profitability – but added that the rise of e-commerce had shifted the equation, as this cargo was less dense. Moreover, the Hangzhou-Vancouver freighter is routed over Tokyo, which reduced the stage length across the Pacific, he added.

Still, the transpacific operation raises questions about Cargojet’s plans with B777 aircraft. The airline held eight slots for conversion and acquired four planes, but decided to sell them as the cargo market slowed down last year. In January, it dropped its remaining 777 order, but is still holding four conversions slots.

“We’ve done 90% of the paperwork with Transport Canada, we did not stop that,” said Mr Porteous. The 777 is an attractive option for transpacific flying, but at this point it would be premature to make a decision, he added.

“We wouldn’t go for two 777s. It would have to be substantially more,” he said.