Why the World’s Largest Shipping Companies Are Buying Cargo Planes

The world’s biggest shipping lines are buying their own fleets of cargo planes with cash and adding airlifts for large customers willing to pay extra to circumvent supply chain problems at sea resulting from the Covid-19 pandemic.

Air freight is the last and most expensive option for many manufacturers and retailers. Yet demand for air cargo surged last year amid port backlogs and high volumes of cargo trying to move around the world.

Ocean liners like Danish giant AP Moller-Maersk A/S and French CMA CGM SA, which together operate more than 1,000 ships, say they are not looking to directly compete with air cargo majors like FedEx Corp.

and United Parcel Service Inc.,

who deliver millions of parcels around the world.

Shipping executives say they plan to use the planes to supplement their core business of ocean freight, at a time when moving goods on time is paramount. They are also looking to expand beyond their boats to become end-to-end logistics providers.

The Covid pandemic has strained global supply chains, causing freight backlogs that have driven up costs. Today, some companies are looking for longer-term solutions to prepare for future supply chain crises, even though these strategies come at a high cost. Photo illustration: Jacob Reynolds

Dozens of ships continue to line up outside major ports like Los Angeles, Tianjin and Ningbo in China, Felixstowe in England and Antwerp in Belgium, often waiting weeks to load or unload thousands of containers.

“We are going to develop air cargo quickly because we need it,” said Ferwin Wieringa, air cargo manager at Maersk.

Air cargo accounts for less than 1% of global trade by volume but 35% by value, according to the International Air Transport Association, a trade group.

Shipping companies operate only a fraction of the number of aircraft operated by the leaders in the air cargo industry. FedEx, UPS and the DHL unit of Deutsche Post AG, for example, have around 1,000 aircraft and handle hundreds of flights each day. Before the pandemic, much international air cargo was handled by airlines in the bellies of passenger planes.

Unlike those companies, Maersk and its peers seek to ship pallets loaded with various goods, often for just one or a handful of customers, rather than smaller parcel batches.

FedEx’s global network was built over 50 years and is nearly impossible to replicate, a FedEx spokesperson said. “We will continue to build on the dynamic growth of e-commerce with the ability to adapt our networks in response to changing market conditions.”

Maersk agreed last year to buy German freight forwarder and air freight specialist Senator International for $644 million, with the takeover expected to double the company’s air freight volume when completed later this year. Star Air, a subsidiary of Maersk, operates 15 Boeing Co.

767 freighters and leases three others. She also ordered two 777 aircraft.

CMA CGM, which in 2019 bought logistics specialist CEVA Logistics for $1.67 billion, launched its own air cargo service in 2021 when much of the world’s commercial aircraft fleet was grounded in due to pandemic travel restrictions.

The company bought four

Airbus SE A330 freighters in 2021 and plans to add three Boeing 777s this spring. In January, it finalized an order for four Airbus A350s which will start arriving in 2025.

“It strengthens our relationship with our customers. They are delighted and want more,” said Olivier Casanova, General Manager of CMA CGM Air Cargo.

Cargo planes carry everything from auto parts to food, and during the pandemic have been used to transport hard-to-find semiconductors, Covid-19 vaccines and hospital equipment, as well as technology products and clothing for major clothing brands. Planes are also increasingly being used to transport lithium batteries for electric vehicles and other applications, executives said.

Air freight costs on average more than six times the cost of ocean freight, although rates vary depending on the route and other factors, according to Peter Sand, chief analyst at Xeneta, a market analysis platform transports.

Before the pandemic, air freight was up to 17 times the cost, Mr. Sand said. The price gap narrowed due to record sea freight rates in the past year.

Write to Costas Paris at [email protected]

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