Amazon & CargoJet – a new alliance?

It’s no secret that online retailer Amazon is always looking for new opportunities to grow and further streamline their product offering. In the past few years this has extended to
optimizing road transport deliveries as well as nailing down individual airlines to operate exclusively on their behalf.

Canada it seems is now also no exception.

A Canadian success story
The Hamilton, Ontario-based Canadian all cargo operator, Cargojet Airways, has been gradually expanding its fleet and route map for the past couple of years. Founded originally as Canada 3000
Cargo in 2002 by today’s President and CEO, Ajay Virmani, the name was changed to Cargojet the same year. In 2007 Mr Virmani also acquired local freight carrier Georgian Express and integrated
the small airline into Cargojet.
In the meantime, Cargojet has grown into an important inner-Canadian cargo carrier, serving between thirteen and sixteen cities with almost daily cargo flights. Many of these are operated
overnight with Cargojet’s fleet of eight B757-200Fs and twelve B767-300Fs. There are also scheduled operations with the B767F to Cologne, Germany and Lima, Peru. The carrier also has two
Challenger 601 passenger jets on its books. These are used for ad-hoc passenger charter work. Cargojet recently made a deal with Canadian rapper Drake to operate a B767-200 passenger aircraft on
his behalf.
Now the next move is with Amazon.

Cargojet operates twelve B767-300Fs  -  company courtesy
Cargojet operates twelve B767-300Fs – company courtesy

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Cargojet high on Amazon’s list
Amazon has for some time already been using Cargojet’s services to fly packages within Canada. This has allowed both companies to get nearer to each other and the result is now that Amazon is
aiming at eventually having almost a 15% share in Cargojet.
The formula for the investment is that Cargojet issues warrants which allow Amazon to gain a 9.9% share at a rate of C$91,78 per share. There will be an option for gaining a further 5% holding
sometime after the first investment has been completed. The first 9.9% share will be spread over a six-year period and with vesting tied to Amazon delivering up to C$400 million in new business.
The same formula will apply for the second share of 5% – this time with a further C$200 million in Amazon revenues.
The majority of the expected new business is tied into Canadian domestic flights. However, it remains to be seen whether Amazon may want to use Cargojet services into international destinations
such as Cologne or Lima.

New cargo terminal to be built at Winnipeg
In other news last week, a major federal investment was announced by the Canadian government to boost cargo handling capacity at Winnipeg James Armstrong Richardson International Airport. The
government has ok’d a sum of C$30,4 million which will be used to construct a new 13,000 sq. m. cargo logistics facility at the airport. There will be perishable and cold storage sheds included
as well as a facility for the handling of live animals. The government expects that well over 600 new jobs will result from the cargo extension.


John Mc Donagh

Source: Cargoforwarder

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