Canada Post Group signs $1bn air cargo deal with Cargojet
Canada Post and its parcel shipping subsidiary Purolator have awarded a major domestic air cargo contract to Cargojet. The deal initially lasts seven years, but has three three-year options for renewal.
The contract is expected to be worth about $1bn ($906m USD) over the course of the initial seven years based on projected volumes.
Cargojet will provide comprehensive air cargo services for the Canada Post Group of Companies spanning the whole of Canada, including Purolator’s national air cargo network. It will see the company setting up a dedicated Air Cargo Network for Canada Post Group.
The cargo airline said it would expand its domestic overnight network, enhancing it “significantly” to handle the additional volumes.
Jacques Côté, the Canada Post president of the Physical Delivery Network, said the deal with Cargojet aimed to trim costs while helping the company’s “major transformation” as customer demand shifts from mail to parcel delivery thanks to online shopping.
He said: “This move will drive operational efficiencies, lower our transportation costs and help ensure our parcel delivery remains competitive from a cost and reliability perspective.”
Purolator president and CEO Patrick Nangle said together with his company’s existing ground network, the “extensive” air network of Cargojet would allow his company to expand its service offerings, while assuring its market competitiveness.
“At the heart of all our decisions at Purolator is delivering on our promises to our customers,” he said. “We are confident that this new partnership will be instrumental in helping us meet this commitment as we continue to evolve and grow.”
“Flexible”
Mississauga-based Cargojet is a time-sensitive overnight air cargo specialist that currently carries more than 500,000 pounds of cargo (226 tonnes) each business night across North America.
The firm made $169m in revenue in the year up to the end of December 2012, with net income of $3.6bn, flying each night between 13 Canadian cities along with international flights to Newark, New Jersey, and Hamilton, Bermuda.
The company has been discussing a possible partnership with Air Canada, the country’s largest airline, regarding cargo operations.
Ajay Virmani, president and CEO of Cargojet, said his company would provide a “world class” flexible air cargo service for Canada Post in a changing business environment.
He said: “Cargojet is extremely pleased to have been successfully chosen as the exclusive primary domestic air cargo service provider to the Canada Post Group of Companies. Cargojet operates an extensive overnight air cargo model, which will provide the most cost-effective and scalable solution to the Canada Post Group of Companies.”
