Two of the world’s largest ocean shipping lines have made important advances this month in their effort to also become significant cargo airlines and air logistics providers.
CMA CGM, the No. 3 carrier by capacity, last week said CMA CGM Air Cargo is now a French airline after receiving its air carrier certificate from the French Civil Aviation Authority. The establishment of a new operating authority under its own name in France took place following delivery of the airline’s first Boeing 777 freighter, according to the company’s first quarter earnings report.
CMA CGM’s air cargo division is transferring its base of operations from Liège Airport in Belgium to Paris-Charles de Gaulle International Airport (CDG). The Marseilles-based company launched the airline in early 2021 with four owned Airbus A330-200 freighters but outsourced the flying to small passenger carrier Air Belgium. Now the operation is coming in-house and in-country.
On Tuesday, CMA CGM said it also received its second 777 from Boeing during a ceremony in Everett, Washington. The large widebody freighters will be the first based at CDG and directly operated under the company’s own air operator certificate.
The airline has made Liège, Belgium its home base since launching early last year and hired Air Belgium to fly the A330 cargo jets. The current fleet will be gradually relocated to Paris.
With a payload of 107 tons, the 777s are a step up in size for CMA CGM’s airline.
The ocean shipping giant is investing even more to double the fleet to 12 aircraft by mid-decade, which will enable it to increase the number of international destinations available to customers. An additional two 777s are on order and scheduled for delivery in 2024. The news was previously shared within a news release on another topic last month, but without fanfare. CMA CGM has also committed to buy four of Airbus’ new A350 large freighters, which are tentatively expected to join the fleet between 2025 and 2026.
The airline also seeking a license from the Department of Transportation to conduct scheduled commercial operations in the U.S. According to its application, it plans to operate service to Chicago O’Hare International Airport, New York JFK and Atlanta. The new air operator certificate from France is a prerequisite for the foreign air carrier permit. CMA CGM has requested a two-year exemption to begin operating while waiting for the lengthy approval process to conclude.
CMA CGM’s record profits the past three years are fueling its ability to grow a startup airline as well as broader ambitions to be an end-to-end logistics provider for major customers. On Friday, CMA CGM reported first-quarter net income of $7.2 billion, 3.5 times net income in Q1 2021, topping its previous record quarterly results in last year’s fourth quarter ($6.7 billion).
Last month, CMG CGM formed a cargo alliance with Air France-KLM to share each other’s aircraft for shipments booked through any of the three airlines and collectively become more competitive by being able to offer more services. The ocean carrier also agreed to acquire 9% of Air France-KLM Group’s shares, becoming the group’s largest private shareholder. On Friday, CMA CGM disclosed that the stock purchase is priced at about 400 million euros ($428.5 million). Air France-KLM shareholders also recently approved the appointment of CMA CGM CEO Rodolphe Saadé to the board of directors.
CMA CGM benefits by having access to Air France-KLM’s six all-cargo aircraft plus the lower-deck capacity of its large passenger network, as well as the expertise of an established cargo airline. The deal gives Air France and KLM, which also have four A350 freighters on order, more cargo capacity without having to invest more while they repair balance sheets after the COVID crisis.
In the past seven months, CMA CGM has acquired the e-commerce and return logistics business of technology distribution company Ingram Micro for $3 billion as well as a majority stake in Colis Privé, a last-mile logistics provider specializing in home parcel delivery and pickup locations in France, Belgium, Luxembourg and Morocco. CMA CGM is waiting to close on a deal for Gefco, a contract logistics provider specializing in the automotive sector. The pieces will be integrated with Ceva Logistics, a global third-party logistics provider that CMA CGM acquired in 2019.
Maersk Air Cargo
CMA CGM is following a playbook perfected by A.P. Moller-Maersk, the second-largest container line, which has also grown its contract logistics, freight forwarding and e-commerce capabilities through a series of recent acquisitions. Maersk operated a niche logistics business and an airline for many years but is now investing to make them global, full-service providers of freight transportation and logistics.
By controlling all aspects of the transportation journey, as well as the inventory and distribution management, the ocean carriers can offer customers integrated services as well as the flexibility to speed up or slow down cargo delivery depending on changing supply chain needs. An airline gives CMA CGM and Maersk the ability to leapfrog port congestion and other supply chain disruptions.
Maersk last week finalized its $644 million acquisition of Senator International, a freight forwarder based in Hamburg, Germany, that specializes in managing airfreight shipments for businesses. Senator has long-standing arrangements with airlines and also hires airlines to operate a dedicated freighter network on its behalf. The company also provides ocean freight, warehousing, packaging and distribution services worldwide.
Maersk says it aims to carry about one-third of its annual air volumes within its own controlled freight network, which includes the Maersk freighters and the fully leased freighter services from other cargo airlines.
Maersk previously called its cargo airline Star Air but changed the name in April to Maersk Air Cargo as part of the integration with Senator to market a consolidated airfreight service.
The Danish shipping giant earned a record $24 billion in 2021. Officials have said they could top that figure this year.