Delta Cargo is focusing on expanding its network to South America as tariff strife has seen air cargo volumes between China and the US decrease.
Speaking to Air Cargo News at Air Cargo Europe in Munich, Peter Penseel, president of Delta Cargo, said the business is working with LATAM Cargo to offer US-Brazil freighter capacity.
“We believe there are additional opportunities in the South American market, and we have been working with our partner, LATAM Cargo Colombia, to offer capacity on their freighter. To that end, we started interline service from Los Angeles to São Paulo, Brazil on 10 July, and from Seattle to São Paulo, Brazil on 17 July," he said.
The collaboration with LATAM Cargo Colombia reflects a shared commercial alignment between the two carriers. Penseel elaborated: “Partnerships have to add value for our customers, and in this case, we have found a solution to generate more freighter capacity southbound, where of course, the market is often dominated by northbound business for perishables out of South America.”
At the same time, the impact of tariffs has contributed to volatile China-US capacity and volumes, although Delta recently started operating new flights from Shanghai to Los Angeles. “We are anticipating less business to North America, but there has always been pressure on fixed capacity to South America," pointed out Penseel.
In addition to Delta Cargo’s partnership with LATAM, Delta Air Lines recently announced plans for a partnership with IndiGo, Air France-KLM and Virgin Atlantic to connect India with Europe and North America. While the MoU (Memorandum of Understanding) signed is focused on passenger business, it also allows for potential commercial collaboration on cargo in the future.
“What we are focusing on is how can we extend our footprint around the world with cargo capacity for our customers,” said Penseel. “That’s the key driver, because that is what drives our revenue and our market share in the world.”
Optimistic outlook
Penseel is optimistic about the second half of the year following a successful first half for Delta Cargo, despite the tough operating environment the air cargo industry has faced.
The first quarter of the year was positive for Delta despite the tariffs and de minimis changes, meaning less capacity out of the US and adjusted supply chains, although being a belly capacity only airline, it has not been as vulnerable to trade volatility as freighter operators.
“We did well, with double-digit growth versus previous year,” said Penseel. “Now (businesses) are getting adjusted to the tariffs, so the big flows from Asia are now starting to settle down.
"We are seeing fewer cancellations of charter contracts. That means that there is more stability in the market, and that has made it much easier for us to plan and to serve our customers in a much better way.”
As well as cargo, the overall Delta airline is also confident about the second half of the year and saw continued growth and market stability in the second quarter, according to Penseel.
Penseel is also optimistic for the second half because Delta Cargo has continued to make investments, most recently with the continued roll out of its iCargo technology platform.
“I think the glass for us is half full, because putting energy into negative things that we cannot control is a waste of energy. And I believe that if you are positive in delivering new possibilities for your customers, that will also help.”
Delta reported a 14% year-on-year increase in cargo operating revenue for 2024 -- $822m up from $723m in 2023.
