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CMA CGM completes $1.4bn FedEx Supply Chain takeover

CMA CGM announced today that it has completed its $1.4bn takeover of FedEx's contract logistics business, FedEx Supply Chain, which is set to be folded into the shipping line's contract logistics arm Ceva. The deal will see Ceva's North American footprint almost treble in size, according to CMA CGM, with the addition of around 34m sqft of warehouse space offering combined operations across 150 warehouses in region and employing around 20,000 staff. "The completion of this acquisition marks an important step in the development of CMA CGM and CEVA Logistics in North America," Rodolphe Saadé, chairman and chief executive of the CMA CGM group, said. "By significantly expanding our contract logistics capabilities, we are strengthening our ability to offer customers integrated, end-to-end supply chain solutions across ocean, air, land and logistics. "It also reinforces CMA CGM's long-term commitment to investing in the United States, a strategic growth market for the group, and supporting the resilience and efficiency of its supply chain," he added. The deal is central to Mr Saadé's strategy of expanding CMA CGM's less-cyclical logistics activities. Earlier this month, he said the group would continue to grow "organically in container shipping, while focusing acquisitions on logistics". An additional clause in the deal also sees FedEx "enter into multi-year commercial agreements" with CMA CGM's ocean freight operations and CMA CGM Air Cargo. "CMA CGM will become a preferred ocean carrier for FedEx, offering transport and carrier services under a non-exclusive agreement," a CMA CGM statement said. "The two companies also plan to collaborate on an air cargo capacity agreement on key strategic routes, including Asia-Europe. "This will strengthen their respective global networks, improving aircraft utilisation and providing greater flexibility on long-haul routes," it added. Under the proposed air cargo agreements, Ceva Logistics could gain access to FedEx's wider capacity network, potentially including space bought from third-party airlines alongside its own freighters. While neither company has yet to clarify the arrangements, such access could help CMA CGM expand its air freight offering without acquiring scarce freighter aircraft. The potential cooperation highlights how control of capacity and customer relationships can create competitive advantage, allowing integrators and forwarders to buy airline space cheaply and sell it as part of a higher-value, end-to-end service.

Airfreight rates edge up in September

Airfreight rates edged up in September as the air cargo market headed towards its fourth-quarter peak season. Figures from data provider TAC Index show that rates on two key trade lanes - Hong Kong-North America and Hong Kong-Europe - both increased during the month. Average rates - combined spot and contract prices - paid by forwarders from Hong Kong to North America increased slightly to $7.02 per kg during the month compared with $6.98 per kg in August. From Hong Kong to Europe, there was an increase from $4.58 per kg to $4.80 per kg. The increases reflect the start of a gradual increase in demand at this time of year as companies start to add to their inventories ahead of the fourth-quarter peak season. Compared with last year, rates from Hong Kong to North America were up 31% while from Hong Kong to Europe they were up 8.8%. The higher rates than a year ago reflect higher jet fuel prices as a result of the Middle East conflict. Rates to North America grew ahead of those to Europe as AI-related infrastructure demand has boomed to the US this year. Meanwhile, volumes from Asia to Europe have come under pressure due to the European Union's introduction of a charge of €3 per package for shipments valued at less than €150, targeting e-commerce. Early data for the first few days of October appears to show that the rate increase accelerated as the fourth quarter got underway and ahead of the Golden Week celebration in China that runs from 1 to 7 October. The global Baltic Air Freight Index calculated by TAC jumped by 5% over seven days to October 5, leaving it up 25.5% from 12 months earlier. Rates are higher than a year-ago due to the US-Iran conflict and the impact on jet fuel prices, as well as buoyant demand on certain trade routes fuelled by data centre-related volumes. "That sort of jump was not unexpected after rates had been edging up slightly throughout September, but far from keeping pace yet with surging jet fuel prices," TAC said, pointing out that jet fuel prices are up more than 100% year on year. The index of outbound routes from Hong Kong last week rose 3% week on week to leave it ahead by 22.3% year on year, TAC said in its weekly market update. Outbound Shanghai gained 2.2% week on week to leave it at 18.3% year on year. "Rates elsewhere out of East Asia were more mixed, with gains week on week out of Japan and Seoul - but falls on lanes from Taiwan," TAC said. "Likewise out of Southeast Asia, with gains from Vietnam - though not on lanes from Hanoi to Europe - and falls on lanes from Bangkok. BAI Spot from India was also falling back slightly over the week - though overall rates from India were a little higher again."

GSSAs set for closer airline integration

GSSAs will evolve to increasingly integrate with airlines while offering a menu of services and target new market entrants, according to speakers at the Aviation Connect event. During a panel discussion at the Athens event, speakers were asked how they felt GSSAs would develop in the future. Kales Group chief executive Sebastiaan Scholte said that new entrants to the airline industry could become future customers of GSSAs. He explained that over recent years shippers, shipping companies, e-commerce platforms, freight forwarders and ACMI providers have all emerged as aircraft operators. "All of them have certain lanes that are not full and they also have directional imbalances, so what I see as a future role for GSSAs is to become a broker of capacity. Who better can commercialise this space?" he said. Elsewhere, Scholte said GSSAs would increase their use of AI tools to help improve aircraft utilisation while they would also increasingly sell back-office services to airlines. The industry will also increasingly act as a "virtual airline", he said. "Many airlines want a Total Cargo Management (TCM) solution where you are the de facto cargo department of the airline. The advantage of a GSSA is that, if you do it right, you will take the best of all the airlines you represent and you become the best so-called virtual airline." His view was echoed by Vitaly Smilianets of Awery Aviation Software, whose product is utilised by many GSSAs. "I think that GSSAs will offer more and more TCM solutions, and I think it is happening more and more in the last two to three years," Smilianets said. "The next succession for the GSSAs is that they can take over and do everything for the airline. "Airlines will get to a point where they not only outsource their sales capabilities for a specific country but outsource the whole story and even do it globally." Smilianets also felt that airlines would increasingly use GSSAs for financial services, such as payment collection. Emma Oliver, managing director of TCM provider Northwind Global Logistics, said that GSSAs of the future would have an important role to play in creating a single source of data across the industry. "I think that where GSSAs can use the technology to become a better extension of the airline is where they will be able to differentiate themselves. "Whether that is using the platform of an airline or using their own technology to ensure seamless messaging so we have this one source of truth, one source of data, across the industry." The integration of systems was also where 4RCargo commercial manager Pawel Kazmierczak felt that GSSAs would develop in the future. "Being connected to the airlines, being connected to the freight forwarders, is where we are going to be in the future," he said. He added that this development could happen at the expense of third-party booking portals as airlines look to achieve more bookings directly on their own platforms.