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Air France-KLM forms cargo alliance with French shipping giant CMA CGM

Aircraft-sharing agreement enables airlines to offer more capacity, logistics services

CMA CGM Air Cargo is entering an exclusive partnership with Air France-KLM to expand its capacity. Pictured is an A330-200 freighter. (Photo: Flickr/Luc Verkuringen CC BY 2.0)

Air France-KLM Group and ocean shipping giant CMA CGM announced Wednesday the formation of a 10-year alliance between their air cargo divisions under which the companies will jointly market capacity in their respective cargo networks to increase scale and competitiveness. 

The long-term, aircraft-sharing agreement will enable CMA CGM Air Cargo to access Air France, KLM and Martinair freighters as well as the belly space of passenger aircraft, including more than 160 large long-haul jets. CMA CGM will reciprocate by allowing Air France and KLM to book cargo on its fleet of freighters. The ability to share aircraft gives customers of each company access to more cargo capacity at a time when transport supply is very tight without having to separately book shipments.  

Marseille, France-based CMA CGM will reinforce its commitment to the strategic partnership by taking up to 9% of Air France-KLM’s stock. The integrated logistics giant and third-largest container shipping line will become one of the company’s largest shareholders and receive a seat on the board once its investment is completed. The investment could be made as part of the anticipated capital increase Air France-KLM announced on Feb. 17. 

The deal, which could be extended beyond the initial term, highlights the aggressive path CMA CGM is taking to become a major player in the air cargo market barely more than one year after launching its in-house cargo airline. It also is the latest step in the company’s strategic shift to become a vertically integrated supply chain provider able to provide closed-loop freight transportation and inventory management for large multinational customers. 

CMA CGM owns Ceva Logistics, a major third-party logistics provider, and in the past six months struck a deal to take a controlling stake in French last-mile delivery company Colis Privé Group and acquired the e-commerce division of technology distribution giant Ingram Micro. In April, it completed the acquisition of French automotive logistics specialist Gefco, which will be integrated in Ceva. 

The cargo alliance gives CMA CGM the opportunity to bundle air, ocean and truck transportation service for Air France-KLM customers. The company has rapidly expanded its air cargo arm to give clients a faster delivery option for urgent goods or when surface transport modes experience delays. Ceva Logistics last year managed the distribution of 400,000 tons of air freight across multiple carriers, including CMA CGM Air Cargo.

CMA CGM is not the only ocean container line flush with cash from record profits expanding in air cargo. 

Maersk, the number two carrier in the world by volume, is also buying more large cargo aircraft to expand into intercontinental service, entering a partnership with a major cargo airline (Air Transport Services Group), relocating to a new airport hub and integrating airline operations with enhanced air freight forwarding services secured with the pending acquisition of Senator International. Mediterranean Shipping Co. is bidding with Lufthansa to acquire Italian passenger airline ITA Airways. And Asian ocean carriers Evergreen and NYK Line have long-standing air cargo subsidiaries.

Maersk, and to a lesser degree MSC, is also building an end-to-end logistics system to include last-mile e-commerce delivery.

By controlling all the logistics steps from end-to-end, companies like CMA CGM provide cargo owners better, more reliable service and “in doing so you increase the likelihood of attracting the highest value cargo that requires specialized handling, is very time sensitive and offers the highest revenue potential to the airlines,” Mark Diamond, vice president at Strategic Aviation Solutions International, explained

Air France-KLM and CMA CGM said in a joint news release that the cargo alliance will optimize revenue opportunities by jointly determining freighter routes and schedules, as well as enhanced products and service offerings. 

“This strategic partnership leverages the complementary skills, expertise and activities of Air France-KLM and CMA CGM. It is a landmark step which will significantly strengthen and expand the Group’s position in the air cargo industry,” AFKLM CEO Benjamin Smith said. “I am also extremely pleased that this commercial partnership with CMA CGM has resulted in their decision to invest directly in the Air France-KLM Group, demonstrating a strong testimony of their belief in the future success of our Group.”

Diamond said the exclusive partnership is very beneficial to both parties.  “CMA CGM accesses a lot more lift, a massive global network than they had previously. They can coordinate service offerings and offer new products.”

Air France and KLM operate under distinct brands under the holding company formed by their 2004 merger. The company is registered in France with headquarters at Paris-Charles de Gaulle Airport (CDG). It also owns Dutch cargo airline Martinair, which operates one aircraft but doesn’t directly sell service to shippers.

Fleet synergies

The Air France-KLM and CMA CGM partners will operate a combined fleet of 10 pure freighters, with a dozen additional aircraft on order.

CMA CGM owns four Airbus A330-200 medium widebody cargo jets and outsources the flying to a certified airline. In December, it finalized a purchase agreement with Airbus for the large A350 freighter, an all-new version of the popular passenger aircraft that won’t be produced until at least 2025. It also has four 777 freighters on order from Boeing, two of which are expected to be delivered by the summer. The companies said that Air France-KLM may operate two of the eight aircraft scheduled to join CMA CGM’s fleet.

The Air France-KLM Group operates six all-cargo aircraft (KLM’s three Boeing 747-400 production freighters, Martinair’s one 747-400 converted freighter and Air France’s two 777-200s) based at CDG and Amsterdam Schiphol and also has ordered four A350 freighters from Airbus. 

The Boeing 777s will be the first CMA CGM Air Cargo aircraft to be based at CDG and directly operated under its own air operator certificate, a spokesperson said. Since its launch early last year, the airline has made its home base in Liège, Belgium, and hired Air Belgium to fly the A330 cargo jets. The current fleet will be gradually relocated to Charles de Gaulle Airport as the aircraft get added to the carrier’s operating authority in the second half of the year.

CMA CGM will manage the flights and ground operations, the latter of which will be carried out by an airport services provider.

“Operating out of CDG is a natural choice for a French cargo airline and will enable us to take advantage of the connectivity between our flights to Asia and our flights to the U.S. and leverage the strong presence of a large customer base,” the spokesperson said in an email.

CMA CGM Air Cargo currently operates scheduled service to Chicago and Atlanta, with Hong Kong coming online this summer. Seoul, South Korea, Shanghai and Bangkok will be added to the network for the peak season late this year, according to the company’s website.

Air France-KLM shareholders will consider a resolution to appoint a CMA CGM representative to the board at the next shareholders’ meeting on May 24. 

More FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals from the American Society of Business Publication Editors for government coverage and news analysis, and was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]