Ocean freight carriers are ripe to compete in the air
This type of long-term thinking and experience in dealing with tough markets — and there’s no doubt maritime shipping has been brutal historically — will serve both A.P. Moller-Maersk A/S and CMA CGM SA well as the two shipping giants seek to expand into air freight. Both companies took delivery this summer of new Boeing 777 freighters and have lined up deliveries of more Boeing Co. and Airbus SE aircraft as they build out capacity.
These new aircraft represent the action behind the pledges to diversify their businesses during the height of the pandemic when customers were desperate for sea and air transportation. Both Maersk and CMA CGM have invested in the trucking side of the logistics business and are now accumulating their first new aircraft to tackle the air-freight market. Shipping rates soared during the Covid-19 lockdowns, and the influx of cash from this once-in-a-generation cycle gave marine operators the cash to diversify. Maersk earned $31 billion of operating profit in 2022 alone.
Now comes the hard part. Maersk and CMA CGM need to claw out positions in a market that will be defended ferociously. Truck transportation is in its second year of recession, and the much-discussed recovery is still a mirage shimmering in the distance. Air freight, on the other hand, is rebounding nicely from last year’s drop. Volume rose 14% in July from a year earlier, the eighth month of double-digit growth. There’s a good chance there will be a nice bump during the end-of-year peak season.
From 2015 to 2019, air cargo
