A.P. Moller-Maersk on Friday renamed its Star Air subsidiary Maersk Air Cargo as the Danish container shipping giant prioritizes integrated logistics offerings and selling air cargo services directly to customers under a single brand.
The company said Maersk Air Cargo will shift its airfreight hub from Copenhagen to Denmark’s second-largest airport, Billund, and enter a labor agreement with the Flight Personnel Union to support the expansion of air operations.
The reorganization is the latest step by Maersk to expand its air cargo business. In November, it agreed to acquire German freight forwarder Senator International for $644 million. Senator’s core business is managing airfreight transportation for cargo owners. The purchase, which is expected to close in the first half, will double Maersk’s air cargo volume. Maersk also ordered two large 777 freighters from Boeing and purchased long-term transport service with three 767 freighters from Air Transport Services Group (NASDAQ: ATSG) in the U.S.
Executives have set a goal of carrying about one-third of the company’s annual air tonnage within its own controlled freight network through a combination of owned and leased aircraft. The remaining capacity will be provided by commercial carriers and charter flight operators.
Maersk Air Cargo operates 15 Boeing 767 medium widebody freighters, most of them converted passenger aircraft, for customers such as UPS (NYSE: UPS) and Royal Mail in the U.K. On Thursday, it indicated that the five new aircraft will be reserved for in-house business with freight forwarders out of Europe. The three 767-300 freighters from ATSG will enter service in the second half of this year and operate on popular U.S.-China routes. The two factory-built 777s are scheduled for delivery in 2024.
“Air freight is a crucial enabler of flexibility and agility in global supply chains as it allows our customers to tackle time-critical supply chain challenges and provides transport mode options for high value cargo. … Therefore, it is key for Maersk to also increase our presence in the global air cargo industry by introducing Maersk Air Cargo to cater even better for the needs of our customers,” said Aymeric Chandavoine, Maersk’s global head of logistics and services, in a news release.
Maersk offers standard air freight, air charter and sea-air services. The revamped airline is expected to be fully operational by the second half of the year after Senator is in the fold.
Controlling Capacity and Logistics
Air cargo fits with Maersk’s transformation from a pure ocean carrier to an end-to-end logistics company able to provide a suite of services and keep more of key customers’ transportation spending for itself. Depending on budget, distance, time requirements and supply chain disruptions, Maersk, the second-largest container vessel operator in the world by capacity, can move goods by ocean, air, truck and rail, and provide warehousing and customs clearance. It is also investing in e-commerce delivery, including last month’s $1.8 billion deal for Pilot Freight Services.
Ocean carrier interest in air cargo is a mini-trend. Large French shipping company CMA CGM last year launched an all-cargo airline and now has five Airbus A330 widebody jets. In November it placed an order with Airbus for four large A350 freighters. CMA CGM also owns Ceva Logistics, one of the 15 largest logistics companies in the world by gross revenue. In January, Mediterranean Shipping Co. and German airline Lufthansa made an offer for Italy’s ITA Airways.
Other ocean carriers with long-standing air cargo operations are Taiwan-based Evergreen, which owns EVA Air, and Tokyo-based NYK Line, the parent company of Nippon Cargo Airlines.
Senator International has organized a significant air charter network with about 20 weekly all-cargo flights operated by contract carriers, such as Magma Aviation. Last year it leased an airside warehouse at Chicago Rockford International Airport to handle freight on its dedicated flights. It also operates a cargo facility at Greenville-Spartanburg International Airport in South Carolina, which is gaining popularity as a cargo alternative to Atlanta Hartsfield-Jackson International Airport.
“Maersk Air Cargo is an important step of the Maersk air freight strategy, as it will allow us to offer customers a truly unique combination of air freight integrated with other transport modes. We see an increased and continued demand for air cargo both today and going forward as well as a growing demand for end-to-end logistics, which is why it is important for us to strengthen our own-controlled capacity,” said Torben Bengtsson, global head of air and less-than-container load.