Formalised entry – the ecommerce conundrum facing the US
Formalising ecommerce shipments into the US is “not if, but when”, as current cross-border traffic ...
FDX: DOWNGRADEZIM: BEST PERFORMER WTC: INVESTOR DAY AAPL: LEGAL RISKTSLA: UPGRADEXOM: DIVESTMENT TALKAMZN: HOT PROPERTYGM: ASSET SALEHLAG: PROTECTING PROFITSVW: STRIKINGPLD: FAIR VALUE RISKSTLA: CEO OUTDHL: BOLT-ON DEALMAERSK: NEW ORDERGXO: POLISH DEAL EXTENSIONDSV: TRIMMING
FDX: DOWNGRADEZIM: BEST PERFORMER WTC: INVESTOR DAY AAPL: LEGAL RISKTSLA: UPGRADEXOM: DIVESTMENT TALKAMZN: HOT PROPERTYGM: ASSET SALEHLAG: PROTECTING PROFITSVW: STRIKINGPLD: FAIR VALUE RISKSTLA: CEO OUTDHL: BOLT-ON DEALMAERSK: NEW ORDERGXO: POLISH DEAL EXTENSIONDSV: TRIMMING
Air Transport Services Group (ATSG) has made a further deal to operate freighters for Amazon in a bid to capitalise on the ecommerce boom. But airlines unable to cash in on the sector seem to be struggling.
Yesterday, ATSG announced an agreement to operate 10 Boeing 767-300 freighters for the Amazon Air network from the end of this year until 2029. The deal also includes the potential to add up to 10 more aircraft and another five years.
Chairman and CEO of ATSG Joe Hete said the deal would leverage ATSG’s “capabilities for expanded operating revenues” – the company posted a year-on-year revenue decline of 3% for Q1 24.
Indeed, ecommerce is set to be air cargo’s biggest source of volume and a major source of revenue this year – but not for everyone.
US cargo airline Amerijet is reportedly struggling since losing its contract with the US Postal Service last year. The Loadstar reported that the carrier had been forced to park six idle freighters in December and, according to FreightWaves, was now looking to furlough a number of its pilots.
Meanwhile, Icelandic cargo carrier Bluebird Nordic announced last week it had ceased operations, following rapid expansion mid-to-post-Covid, just before the market saw a dramatic downturn.
Bluebird, which along with Chapman Freeborn and Magma Aviation is owned by Avia Solutions Group, confirmed to The Loadstar: “Bluebird Nordic has voluntarily surrendered its air operator’s certificate to the Icelandic Civil Aviation Administration. All aircraft operated by the company are being returned to their respective lessors.
“Bluebird Nordic has exclusively operated cargo flights, providing services to clients on both charter and ACMI (aircraft, crew, maintenance, and insurance) basis.”
The group did not cite the reasons behind the decision, but one source said that it was now eyeing a Slovakian AOC instead.
After rapidly increasing its fleet size just as the market turned south, Bluebird CEO Audrone Keinyte told The Loadstar in 2022 she wasn’t worried, and cited a predicted rise in ecommerce demand as the reason.
She said: “We’ve seen a drop in demand, but it should be short term. Ecommerce is growing. Demand is about how capable you are at providing it. The opportunities are there, you just have to work out how much risk to take.”
And while Ms Keinyte was right about the ecommerce-driven volume demand, the market failed to show signs of a post-Covid recovery until the end of last year.
Indeed, despite the ecommerce phenomenon promising a successful year for air cargo stakeholders, its consumer-driven peaks and nadirs make demand hard to predict. Analytics platform Xeneta warned last week that more airlines would face an ecommerce-driven “balancing act” heading into Q4, as forwarders look to buy longer-term capacity.
Xeneta’s head of airfreight, Niall van de Wouw, explained: “Q4 is just around the corner in planning terms, and freight forwarders are already looking beyond the summer to secure market share, because they are concerned about what ecommerce is going to do out of southern China and Hong Kong later in the year.
“If airlines think Q4 is going to be busy again, they’re not going to sell all their capacity now. They must decide how much they want to commit now, knowing they can possibly get up to 50% more revenue for that same capacity on the short-term market in Q4.”
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