Maersk targets air cargo with Senator acquisition and freighter order

By Damian Brett

Shipping giant AP Moller Maersk is expanding into the air cargo market with the acquisition of freight forwarder Senator International and the addition of five freighters.

The company, which owns the world’s largest container shipping line Maersk Line, said it “intends” to acquire Senator International to “accelerate its product offering which integrates Logistics, Ocean, Rail and Air and expand its global air network”.

Air Cargo News sister title DVZ reports that the deal is worth eight times the adjusted operating profit (EBITDA) expected for 2021, equating to an enterprise value of around $644m. The transaction is subject to regulatory approval during the first half of 2022.

Senator has an advanced airfreight operation centered around own controlled capacity using nineteen weekly flights across its network with a dedicated air bridge with own controlled capacity.

“This focus on own controlled capacity is highly aligned with Maersk´s airfreight strategy,” the shipping group said.

Maersk’s ambition is to have approximately one third of its annual air tonnage carried within its own controlled freight network.

“This will be achieved through a combination of owned and leased aircraft, replicating the structure that the company has within its ocean fleet,” the shipping group said. “The remaining capacity will be provided by strategic commercial carriers and charter flight operators.”

Senator chief executive and shareholder Tim-Oliver Kirschbaum said: “Senator’s own controlled air product started in 2016 and has proven to be a success story.

“By joining Maersk, we strongly believe that we will be able to deliver an even broader portfolio with own controlled air capacity as well as also in other modes of transportation. Senator´s customers and team will love it.”

Maersk’s aim is to increase its presence in the airfreight industry, combining its airfreight services with Senator’s offering will “benefit customers through extended global routes and capacity”.

Senator said: “For many customers operating in technology, Fast-Moving-Consumer-Goods, lifestyle, pharmaceuticals, and the automotive industry, airfreight solutions are a critical component of their supply chain.

“These industries have high demand for speed and delivery reliability, and high value cargo.

“Servicing a high demand for speed and delivery reliability is the core of Senator’s business.

“Events like the pandemic and Suez vessel blockage have demonstrated that integrated logistics, including airfreight solutions, provides critical flexibility to manage supply chain disruptions.”

Freighter orders

Meanwhile, the company has also announced that Star Air, its in-house aircraft operator, will purchase two new B777 Freighters to be delivered by Boeing in 2024 and leased three B767-300 Freighters which will be operational next year through Cargo Aircraft Management, the leasing arm of ATSG.

Boeing senior vice president of commercial sales and marketing Ihssane Mounir said: “We are delighted to welcome Star Air to the Boeing family of 777 operators and we look forward to many years of partnership as they continue to grow their air cargo division.

“The market leading efficiency and incredible range of the 777 Freighter will provide Maersk the flexibility to profitably operate the airplane across its large air freight network while helping to deliver on its sustainability objectives.”

Maersk is committed to explore carbon neutral fuels for the Star Air operated fleet of aircraft in line with IATA guidance.

AP Moller Maersk executive vice president and chief executive of ocean and logistics Vincent Clerc said: “As a global provider of integrated logistics, Maersk is improving the ability to provide a one-stop-shop and end-to-end logistics capabilities to our customers.

“We have strengthened our integrated logistics offering through E-commerce logistics acquisitions, tech investments, expanding our warehouse footprint and, as a natural next step, we are now ramping up our airfreight capacity significantly and creating a broader network to cater even better for the needs of customers.”

Star Air, which was founded in 1987 and is based at Copenhagen Airport, already has a freighter fleet of 15 aircraft: 12 Boeing 767-200 SF’s, one Boeing 767-300BCF and two Boeing 767-300F

So far, the airline has primarily been using its capacities to serve other cargo airlines. Star Air’s planes have long been flying from Cologne-Bonn Airport for the US integrator UPS.

Senator has more than 1,700 employees across a global network with 64 offices in 21 countries across Europe, the Americas and Asia.

It operates across three segments: Air freight (65% of 2020 revenue), Ocean freight (30% of revenue) and Logistics & Packaging (5% of revenue).

Its primary vertical is automotive – BMW is one of its major customers – with established and growing exposure within industrials, technology and pharmaceuticals.

In 2020, Senator reported revenues of $730m and adjusted EBITDA of $50m. For 2021, Senator is expected to raise revenues of $950m and adjusted EBITDA of more than $80m.

 

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