News / Cargojet digs deep and finds extra capacity to give busy DHL a lift

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At a time when capacity constraints at FedEx and UPS leave retailers desperate for ways to move their goods, DHL has secured additional lift from Cargojet.

The Canadian all-cargo airline, which makes most of its money from linehauling express traffic, has mounted additional flights for the integrator from its Hamilton hub to Mexico, the US and the UK.

Fielding three B767-300 freighters, Cargojet flies to DHL’s US hub in Cincinnati, Monterrey and to the UK. Some of these routes were started in April on a temporary basis as DHL needed transatlantic lift to make up for the collapse of bellyhold capacity between Europe and North America in the wake of the first Covid-19 lockdowns.

Jamie Porteous, executive VP and chief commercial officer of Cargojet, said the new agreement had been borne out of a combination of DHL’s “soaring e-commerce volumes” and the lack of international bellyhold capacity.

He explained that the initial contract was supposed to be short-term, but the realisation that it would take a long time for international belly capacity to reach pre-Covid levels prompted the integrator to seek a longer-term engagement.

With the expansion of the collaboration, Cargojet now fields nine aircraft for DHL.

For the most part, operators have struggled to find sufficient capacity to meet demand. Few have the elbow room to take on additional business. Tim Strauss, CEO of Amerijet, reported that the US cargo airline was “squeezing everything we can at the moment”, with “no spare milage to utilise”.

What available lift the carrier had was absorbed earlier in the year by agreements with the US Postal Service and DHL, said Mr Strauss, adding: “We are not doing charter work currently as all aircraft and our own, plus outside lift, are tied up.”.

Like other carriers moving e-commerce traffic, Cargojet has seen strong growth.

“We’ve been really busy,” Mr Porteous reported. “We’ve had significant double-digit growth.”

According to Statistics Canada, e-commerce sales between March and September in Canada grew 68%, year on year, to C$36.2bn (US$28.44bn). Mr Porteous noted that traffic accelerated further when B2B traffic rebounded from its slump in April. Cargojet revenue in Q3 reached C$162.3m, up from C$117.4m a year earlier.

The company added two B767 freighters to its fleet this year, the second arriving in November. One was originally purchased for its engines and spare parts, but has been put into service to help with the increased volumes. These additions boosted the fleet to 25: 17 B767s and eight B757s.

In a flanking move, Cargojet also recruited more pilots, mechanics and ground handling personnel. As a result of the layoffs at passenger airlines, the pilot shortage that used to plague the industry has turned into an abundance of pilots looking for work, Mr Porteous said.

And Cargojet also boosted available capacity by rejigging its domestic flight operations and deferring some scheduled heavy maintenance, which freed four planes for additional operations, he added.

It helps that e-commerce does not have to fly overnight, when Cargojet performs most of its domestic linehaul to move express traffic on behalf of the large operators, including Canada Post and Amazon. Adding flights during the day and at weekends has been a major factor in the reshuffle to free capacity.

Mr Porteous expects e-commerce traffic to remain strong well into the coming year, but the company aims to focus  on its other business as well.

“There is no doubt that Cargojets’s domestic overnight network continues to benefit from the elevated levels of e-commerce, but we are equally focused on ensuring we are building strong long-term growth in our ACMI and charter businesses,” said president & CEO Ajay Virmani.

The carrier also stands to move some vaccine shipments on behalf of its integrator customers, but Mr Porteous is not expecting massive volumes there.

The fleet is set to grow further, with no aircraft retirements on the horizon and more to join. Cargojet has booked conversion slots for four aircraft over the next two years. One is due to be ready next October, with the rest to follow in 2022.