Maersk Air Cargo idles new freighters as demand subsides

Date: Tuesday, March 7, 2023
Source: FreightWaves

Maersk Air Cargo has parked several leased cargo jets and dialed back flight activity in response to deteriorating demand in the airfreight market. And a planned route between China and the U.S. is on hold, possibly because adding new capacity doesn’t make economic sense.

CMA CGM, another ocean carrier that now has an all-cargo airline, recently resumed service between Europe and the U.S. that had been temporarily suspended late last year, demonstrating that carriers respond differently to different regional conditions and corporate priorities.

Only one of the three 767-300 freighters Maersk Air Cargo purchased directly from Boeing last year and outsourced to Miami-based Amerijet to operate between Asia and the U.S. was deployed in revenue service for a period of several weeks, according to flight tracking sites. Maersk acquired the factory-built planes as part of its strategic shift to directly serve importers with a fully integrated supply chain experience rather than simply providing commoditized port-to-port service.

Amerijet launched service twice a week between Seoul, South Korea, and Greenville-Spartanburg International Airport in South Carolina at the end of October.

The other two aircraft on Amerijet’s air operator certificate were idle at Incheon airport in Seoul, according to data from Flightradar24. One plane arrived from the U.S. on Jan. 4 and has not flown since. The other was inactive for more than two weeks starting Feb. 10, but departed Seoul on March 2 and arrived at GSP on Monday via Anchorage.

Maersk officials last fall expressed eagerness about quickly utilizing all the aircraft and expanding their air cargo network in North America, including service between their hub at Chicago-Rockford International Airport and Korea, to create more routing options and flexibility for customers. That route has yet to be turned on and neither has a third weekly frequency to South Carolina.

A Maersk spokesman declined to provide an update on the company’s air cargo plans, saying no announcements are forthcoming for the time being.

Just a few months ago, Maersk was eager to launch air operations in the U.S. for the first time came despite a recessionary environment. The recent delay could reflect worsening market conditions. Idling equipment is something Maersk is used to doing on the ocean side, including now when container shipping demand has plummeted because of high retail inventory levels and consumer caution due to inflation.

Air cargo demand has sunk for 11 consecutive months. The International Air Transport Association predicts air shipment demand will drop 5.6% this year, on the heels of an 8% decline in 2022. Other market reporting groups say demand through January is down 10% to 20% year over year, while cargo capacity has increased more than 12% as passenger airlines resume more service after the pandemic. Global air cargo rates are 37% below last year’s level, according to the TAC Index.

Logisticians say there was no typical bump in airfreight this year to compensate for factory closings in China for the Lunar New Year. Rates could sink further as airlines add flights for the busy summer schedule while demand sags. Freight executives are closely watching retail inventory levels to come down in hopes of a second-half rebound in international orders.

Maersk’s plan to add a connection in China — the largest export market in the world — has also been postponed. Amerijet obtained rights from Chinese authorities to operate in China, CEO Tim Strauss told FreightWaves last month, but he stressed that it was up to Maersk Air Cargo to determine the route schedule. A separate source not affiliated with Amerijet said the plan is to serve the airport in Shenyang, the capital of Liaoning province, via Seoul.  And a flight that arrived at GSP on Saturday made a stop in Shenyang, according to FlightRadar24 data.

Maersk, armed with a massive war chest accumulated from three years of outsize ocean profits, also signed an agreement to lease four Boeing 767-300 converted medium freighters from Air Transport Services Group (NASDAQ: ATSG) and ordered two large 777 freighters from Boeing.

An ATSG executive said on the company’s earnings call last week that Maersk has taken possession of three of the four freighters, all of them former Delta Air Lines passenger aircraft averaging about 31 years of age and converted by Israel Aircraft Industries. The fourth is expected to be delivered soon.

Maersk officials have not indicated how the planes are being used, but Flightradar24 and AirNav Radar Box show one of the planes on the ground at Cologne/Bonn airport in Germany since Jan. 24 after arriving from Shannon, Ireland, where plane spotters said it was painted.

There is no data on the other two 767s, although one is known to still be at ATSG’s headquarters in Wilmington, Ohio, and should depart soon.

Maersk’s fleet now stands at 22 aircraft — a dozen 767-200s and 10 767-300s. Most of them are flying intra-European routes for UPS and Royal Mail (UK). Maersk folded Star Air, which has served many years as a charter operator for express delivery companies in Europe, into Maersk Air Cargo as part of its transformation into a full-service cargo airline. Executives have set a goal of carrying about one-third of the company’s annual air tonnage within its own controlled freight network.

Maersk completed the $644 million acquisition of airfreight forwarder Senator International last June and said earlier this month it will begin phasing out the Senator brand. The merger allows Maersk to offer an integrated air capability, either managing airfreight shipments for customers through various carriers or directly providing transportation on its freighters.

Strauss said in an interview last November that Amerijet will be “an option” to fly the 777s, which are scheduled for delivery in 2024. The planes potentially could be used on Asia-U.S., trans-Atlantic or even South American routes.

“This is just step one of multiple steps going forward. I seriously doubt they’re going to stop at two 777s,” he said at the time. “I think there’s a much larger fleet coming behind that.”

CMA CGM Air Cargo

Meanwhile, CMA CGM Air Cargo has resumed service out of Chicago O’Hare and introduced flights out of Miami, to Paris Charles de Gaulle airport, the company confirmed. The startup carrier abruptly stopped flying Airbus A330 cargo jets for its own customers in late fall so it could rent them out to other carriers that needed more airlift. The company says the temporary change in tactics was related to repatriating its fleet from partner Air Belgium and placing them on its own air operating certificate in France. The repatriation, however, didn’t apply to the carrier’s Boeing 777 freighters, which were never flown by Air Belgium.

CMA CGM said it is flying to the U.S. destinations three times per week. Two A330s are making the following circuit, according to Flightradar24: Chicago-Paris-Miami-Paris-Almaty, Kazakhstan-Shanghai, China and then in reverse order going back. A 777 is shuttling back-and-forth between Paris and Chicago several times per week. The flight tracking site doesn’t show recent activity for the other two A330s.

“Those regular services resumed in January and will remain key destinations of our network. Due to its central place in the global economy, the United States is paramount for CMA CGM AIR CARGO’s development: strengthening our business presence in the country is one of our priorities,” the carrier said in a statement to FreightWaves.

CMA CGM substituted Atlanta with Miami as its second destination.

Paris is CMA CGM Air Cargo’s home base. The airline owns four A330s and two 777 freighters. One of the 777s services the Paris-Hong Kong route.


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