In a clapback to the falling air cargo demand worldwide, logistics giant Maersk has grounded many of its leased freighters, dialed back flight activity and has put on hold the planned route connecting US to China. Reportedly, the decision has been made because adding new capacity may not make economic sense.
Maersk Air Cargo purchased three 767-300 freighters directly from Boeing last year and outsourced them to operate between Asia and the US, however, only one was deployed in revenue service for a period of several weeks. Maersk acquired the factory-built planes as part of its strategic shift to directly serve importers with a fully integrated supply chain experience rather than simply providing commoditized port-to-port service.
Out of these, one freighter operated between Seoul (South Korea) and Greenville-Spartanburg International Airport (South Carolina), one arrived from the US in early January and has not flown since, and the third was inactive for more than two weeks in February, but departed Seoul on March 2nd and arrived at GSP on Monday via Anchorage.
Maersk’s plan to add a connection in China – the largest export market in the world – has also been postponed. Amerijet obtained rights from Chinese authorities to operate in China but according to CEO Tim Strauss, it was up to Maersk Air Cargo to determine the route schedule. A separate source not affiliated with Amerijet said the plan was to serve the airport in Shenyang, the capital of Liaoning province, via Seoul.
Just a few months ago, Maersk was eager to launch air operations in the US for the first time came despite a recessionary environment. The recent delay could reflect worsening market conditions. Idling equipment is something Maersk is used to doing on the ocean side, including now when container shipping demand has plummeted because of high retail inventory levels and consumer caution due to inflation.
According to IATA, the air cargo demand has sunk for 11 consecutive months, and is expected to drop further by 5.6% this year. Other market reporting groups say demand in January was down 10-20% year over year, while cargo capacity has increased more than 12% as passenger airlines resumed service after the pandemic. Global air cargo rates are 37% below last year’s level, according to the TAC Index.
It should be noted that the holiday season that just went by was also in an almost slump and failed to revive air cargo demand is it has done historically. Due to this, the air cargo freight rates have also gone down substantially, and it is not going to get better as demand sags in the summer.
Maersk also signed an agreement to lease four Boeing 767-300 converted medium freighters from Air Transport Services Group and ordered two large 777 freighters from Boeing. The order was funded by the company’s oversized profits from its shipping operations.
Maersk’s fleet now stands at 22 aircraft — a dozen 767-200s and 10 767-300s. Most of them are flying intra-European routes for UPS and Royal Mail (UK). Executives have set a goal of carrying about one-third of the company’s annual air tonnage within its own controlled freight network.