DHL rivals in the USA show no appetite for owning aircraft

DHL added another airline to its line-up this spring with the acquisition of a stake in Astar Air Cargo, but the other mega-forwarders have no interest in owning cargo aircraft, despite a penchant for dedicated freighter-cargo flights.

DHL's appetite for cargo airlines suffered a setback in July when ABX Air, the erstwhile freighter division of Airborne Express spun off after the integrator's acquisition by DHL, rebuffed a takeover offer from Astar Air Cargo, the former DHL Airways. A marriage between the two would have combined the two US cargo carriers that make most of their business moving traffic for DHL. The integrator had acquired a 49 percent stake in Astar in early June along with a 24.9 percent voting interest, the maximum position in US airlines allowed to non-US entities.

DHL's express business in the US has suffered in the wake of the integration of its air network into a single hub and is not expected to produce black figures before 2009. Nevertheless, the buy into Astar did not surprise industry observers.

The Astar buy-in followed DHL's acquisition of a 49 percent stake in Polar Air Cargo last year, which included a 20-year block space agreement giving the integrator guaranteed lift on Polar's transpacific flights. For intra-Asia traffic, DHL has permanent lift through its stake in Air Hong Kong and the carrier's A300F operations in the region.

These deals are fuelled by the logistics giant's express business, but they also drop fixed capacity into the lap of DHL Global Forwarding.

The other global mega-forwarders like Schenker, Kuehne + Nagel or Panalpina, have ruled out the possibility of owning freighter aircraft, notwithstanding a need for dedicated cargo flights.

Schenker recently struck an agreement with Emirates for a weekly B747-400F run from Dubai via Hahn in Germany to Toledo, which commenced in July. The forwarder has an undisclosed fixed allocation on the freighter, leaving the remainder to Emirates to market. For Schenker the plane moves sea-air traffic originating in Asia from Dubai to Europe and then links its German hub with the domestic air hub of its US arm BAX Global.

Thomas Lieb, member of the board of Schenker with responsibility for global air and ocean freight operations, described dedicated freighter activities as one prong of a "two-pillar strategy" to secure air freight capacity.

The majority of the forwarder's air cargo moves on planes of preferred carriers, commercial airlines with which the company has been working for years, often with fixed capacity arrangements. About 75 percent of the air freight that Schenker moves is in that category; with dedicated freighter lift accounting for the remainder.

Having dedicated cargo flights gives the forwarder better control over the supply chain and allows it to create an integrated product, Lieb said, adding that Schenker's gateway strategy enables it to generate enough traffic to fill 747 freighters on the major trunk routes.

This year, Schenker will use about 900 dedicated freighter flights, between 150 and 200 across the Pacific, the rest mostly between Europe and Asia.

Schenker's contracts for dedicated flying typically run 12-15 months. "There is no fixed planning that we have to fly certain sectors. If market conditions change or we face different customer needs, we can change the set-up. It is very flexible," Lieb said.

Panalpina, another heavy user of dedicated freighters, also draws the line at airline ownership. "We decided not to buy assets. We can offer better service because we do not have to market capacity," said Panalpina chief executive officer Monika Ribar.

Last year the Swiss forwarder shipped some 874,000 tones by air, of which about 20 percent went on its own controlled capacity, while the other 80 percent flew on commercial airlines. Panalpina uses dedicated freighters for 10 weekly flights from Europe to Huntsville in the US and elsewhere mostly for service to Africa and Russia.

Kuehne +Nagel has no desire to own freighters either. The forwarder has a strategy to use dedicated lift if it makes commercial sense or there is a strategic need to do so, declared Roland Bischoff, senior vice-president for global air freight.