News / Flexport pins hopes on Asia backhaul traffic to put freighters in the black

Flexport has admitted that it needs a strong US export market to make its three freighter aircraft profitable.

Operated by Atlas Air, Flexport has capacity on 747-400Fs, one of which is in the Flexport livery. But in an interview with WSJ, CEO Ryan Petersen explained: “The only way for those planes to return to profitability is to build up our export business.

“We’re starting to win some major accounts on the backhaul, on the return to Asia. And so I expect within the next quarter the planes to be profitable again.”

Indeed, US exports, after something of a lull, seem to be rebounding. According to the US Census Bureau, August exports were $256bn, up $4.1bn on July. And carriers have reported longer-term contracts are back on trend, after the recent heavy reliance on the spot market, which could benefit Flexport.

Adriaan Den Heijer, EVP Cargo at Air France-KLM Martinair, said last week the carrier was seeing more requests for long-term contracts. he said: “The question is whether this is because of the winter period and seasonal effects, or does it point to more stability in the marketplace and a bit better balance between spot rates and long-term contracts?”

But he added that more long-term contracts were usually an indicator of stability.

Backhaul rates tend to be low, however, so Mr Petersen’s optimism that the aircraft will be profitable within the next quarter may be unfounded; the increase in US exports does not appear to have made much impact on the spot market, at least.

Freightos FAX shows rates from North America to South-east Asia have fallen slightly in the past fortnight, while the TAC Index shows a 23% fall, to $0.89, between 9 and 16 October And TAC’s Chicago outbound index shows a fall in the past week of 11.3%.

As any carrier will tell you, aircraft are cash-intensive, and Flexport is slashing costs. It said it had cut annual operating expenses by 25% in the past five weeks, primarily by axing some 600 jobs. Mr Petersen said he hoped eventually to turn Flexport into a “profitable public company that throws off lots of cash and that can be a darling of Wall Street”.

But for that to happen: “We’ve designed our plan to get us profitable towards the end of next year, and into 2025 for the full year. That’s what we’re working backwards from, and there’s no miracles required, just good execution.”

But it may well take a miracle to make those freighters profitable “within the next quarter”.