Canadian for-hire carrier Cargojet Inc. (TSX: CJT) has increased its workload for DHL Express, servicing three additional international routes with Boeing 767-300 freighters to meet demand for e-commerce deliveries, the company announced Tuesday.
Toronto-based Cargojet will fly packages between Cargojet’s hub in Hamilton, Canada, and the DHL Express hub in Cincinnati, continuing to Monterrey, Mexico, and DHL’s East Midlands hub in the United Kingdom.
The all-cargo carrier initially launched the routes on a temporary basis in April and October as global demand for air cargo transport accelerated with the mass grounding of passenger flights that removed belly capacity for goods. With the new long-term arrangement, Cargojet now operates nine dedicated aircraft for DHL Express.
Cargojet has financed the acquisition of two Boeing 767-200 and one 767-300 this year, it said in its third-quarter earnings statement. It has a fleet of 27 aircraft, including Boeing 757s.
DHL Express (CXE: DPW) said in late October it expects e-commerce shipments to grow more than 50% from last year’s peak leading up to the holidays.
DHL has actively expanded the number of outsourced aircraft in its North American air network this year, including new deals with Mesa Airlines (NASDQ: MESA), 21 Air and MasAir Cargo. The express delivery giant has also added international capacity on several routes.
Two weeks ago, Cargojet announced extensive plans to handle record volumes during the peak season that typically runs from Black Friday into early January, including the addition of pilots, ground handling staff and maintenance teams to ensure on-time performance.
Airfreight volumes for the entire industry exceeded peak season levels by midyear because of the extra shift to online shopping from people physically distancing at home and spending money on goods rather than services. Retailers have also been busy rebuilding inventories that were depleted when manufacturing and shipping slowed to a trickle during the early stages of the pandemic.
Cargojet said it expects volumes to spike to unprecedented heights as holiday shopping orders combine with the extra popularity of e-commerce this year.
According to Statistics Canada, e-commerce retail sales for March to September grew 68% to CA$36.2 billion (US$28.3 billion) compared to the same period in 2019. A recent survey by a national package delivery service showed that nearly half of Canadians plan on spending mostly or exclusively online this holiday season, motivated in part by regional lockdowns that have forced small businesses to shift to online sales channels. U.S. e-commerce sales during the second and third quarters grew about 40%, year-over-year, according to the Commerce Department.
Other steps taken by Cargojet to meet demand include the introduction of additional flights each Friday, Saturday and Sunday and during the daytime, creating about 20% additional capacity and improving aircraft utilization. Customer service specialists at Cargojet’s operations center are also monitoring customer volumes on an hourly and daily basis.
Cargojet reported generated a 38.5% increase in revenue and a 49% jump in gross margin during the third quarter compared to the same 2019 period.