Long-term agreement will combine significant parts of the groups’ expertise and assets, including their respective freighter networks and sales teams, as CMA CGM further extends its logistics reach

By Will Waters

CMA CGM Group and Air France-KLM Group have signed a long-term strategic partnership in the air cargo market that will combine significant parts of the groups’ expertise and assets, including their respective freighter networks and global sales teams.

The two France-headquartered transport groups said they “share a strong ambition to invest and grow sustainably in the air freight business”, noting that the “exclusive partnership will see both parties combine their complementary cargo networks, full freighter capacity and dedicated services in order to build an even more competitive offer thanks to the unrivalled know-how and global footprint of Air France-KLM and CMA CGM”.

10-year commercial partnership

 

Under the agreement, which will have an initial duration of 10 years, Air France-KLM and CMA CGM “will join and exclusively operate the full-freighter aircraft capacity of the respective airlines consisting initially of a fleet of 10 full-freighter aircraft, and an additional combined 12 aircraft on order”.

That includes the six full-freighter aircraft of Air France-KLM Group based at Paris-Charles de Gaulle airport and Amsterdam Airport Schiphol, and the current four freighter aircraft of CMA CGM Air Cargo – which also has outstanding orders for an additional eight aircraft, of which two may be operated by Air France-KLM in the future. Air France-KLM Group also has outstanding orders for an additional four freighter aircraft.

Global sales partnership

This new commercial partnership also covers Air France-KLM’s belly aircraft capacity, including over 160 long-haul aircraft, and “will leverage both partners’ respective global sales teams, presenting one voice to the customer”.

The two companies said the strategic commercial partnership “is expected to generate significant revenue synergies, including the joint design of the full freighter networks and enhanced products and services mix opportunities. It will help meet customers’ ever-increasing need for more integrated and resilient supply chains and will leverage Air France-KLM’s vast existing franchise, experience and capabilities in air freight, backed by a global cargo network.

CMA CGM will mobilise its large commercial network and global logistics platform and will complete this offer with innovative logistics and multimodal solutions, particularly in sea and land transport.”

CMA CGM to become Air France-KLM shareholder

As part of this long-term exclusive partnership, CMA CGM “will reinforce its commitment in the air freight industry by becoming a new reference shareholder in Air France-KLM”. They said CMA CGM Group “has the firm intention to take up to 9% of Air France-KLM’s ex-post share capital, for a period consistent with the implementation of the strategic commercial partnership. This investment could be made as part of the contemplated capital increase of Air France-KLM, as announced on 17 February, 2022.

“Air France-KLM’s main shareholders will support a resolution for the appointment of one board member representing CMA CGM at the next shareholders’ meeting [May 24th, 2022]. Such appointment, if approved by the shareholders’ meeting, would be subject to the completion of CMA CGM’s investment,” the two partners said.

Rodolphe Saadé, chairman and CEO of the CMA CGM Group said: “I am very pleased with this strategic partnership with Air France-KLM. It allows us to significantly accelerate the development of our air division, CMA CGM Air Cargo, which was created just over a year ago, and to position our two companies among the world’s leading players in air freight.

“This partnership is fully in line with CMA CGM’s strategy and its ambition to become a leader in integrated logistics, for the benefit of its customers. Through our stake in the company, Air France-KLM will be able to count on us to support its future development.”

Air France-KLM Group CEO Benjamin Smith said: “This strategic partnership leverages the complementary skills, expertise and activities of Air France-KLM and CMA CGM. It is a landmark step which will significantly strengthen and expand the group’s position in the air cargo industry.

“I am also extremely pleased that this commercial partnership with CMA CGM has resulted in their decision to invest directly in the Air France-KLM Group, demonstrating a strong testimony of their belief in the future success of our group.”

CMA CGM accelerates strategic transformation

CMA CGM added: “With this industrial cooperation, the CMA CGM Group is moving forward with its plan to develop and provide end-to-end shipping and logistics solutions in order to support its customers’ supply chains. The Group announced, during the last three years, the acquisitions of CEVA Logistics, Ingram Micro’s Commerce & Lifecycle Services (CLS), Colis Privé and GEFCO. With these operations, CMA CGM have accelerated its strategic development into a global logistics leader.”

The Marseille-headquartered container shipping and logistics giant added: “In March 2021, Rodolphe Saadé, Chairman and CEO of the CMA CGM Group, created CMA CGM Air Cargo, a whole new operational and commercial arm specialized in air freight. CMA CGM Air Cargo provides the Group’s customers with an offering that harnesses the tight fit between shipping and logistics. This air cargo division has been expanding rapidly, thanks in particular to the entry into service of several full-freighter aircraft, and orders for new aircraft which will significantly boost the capacity in the months and years to come.”

The CMA CGM Group is present in 160 countries through its network of more than 400 offices and 750 warehouses. With its subsidiary CEVA Logistics, which transports 400,000 tonnes of air freight and 2.8 million tonnes of land freight each year, and its air freight division CMA CGM Air Cargo, “the CMA CGM Group is continually innovating to offer its customers a complete and increasingly efficient range of new shipping, land, air and logistics solutions”, the company highlighted.