The co-CEO of Cargojet Inc. says rising e-commerce demand will fuel major business gains in the second half of the year after boosting revenues last quarter.
Jamie Porteous, co-chief executive at the air freight company, told analysts Wednesday the remainder of 2024 will be “much stronger” than the first six months due to resurgent online sales.
“We’ve seen sequential quarter-over-quarter, year-over-year growth for all of our customers and in all three segments, largely driven by e-commerce growth,” he told analysts on a conference call.
Revenues in the quarter ended June 30 rose roughly 10 per cent year-over-year to $230.8 million, the company reported.
Business from Amazon has spiked, particularly during the e-commerce giant’s popular “Prime days” promotions, Porteous said.
“We had a very successful Prime week,” he said, referring to the mid-July bargain hunt.
Amazon has also asked Cargojet for “dedicated capacity” via charter flights for the online retailer’s sales push in mid-October. Last year, no charter freight trips were requested, the co-CEO said.
The market also may be ripe for more deliveries between Asia — where so many consumer goods originate — and Canada, where e-commerce remains less tapped than in some other rich countries.
“Demand … for e-commerce products coming out of China has somewhat exploded this year,” Porteous said.
In Canada, e-commerce sales now make up 11.5 per cent of total retail sales, according to a May report from shipping firm Landmark Global. In the United States, that figure stood at nearly 16 per cent in the first quarter, according to the U.S. Department of Commerce — suggesting room for growth north of the border.
Thatgapmay already be shrinking, and Cargojet hopes to capitalize on the trend.
E-commerce retail sales in Canada will grow 6.8 per cent to nearly $113 billion in 2024, according to market research firm Emarketer last week. The boost would mark a ramp-up from growth of 5.8 per cent last year and three per cent in 2022.
A three-year deal that Cargojet signed in June with Chinese firm Great Vision HK Express to provide scheduled charter flights between Vancouver and China will add more than $50 million a year to its coffers, according to the company.
Cargojet plans to bolster its fleet to 43 planes by the end of next year, up from 41 currently.
The new jets will be welcome additions after a pair of aircraft took a pounding when a hailstorm ripped through Calgary last week, hitting the airport.
One was a Boeing 767 used for Amazon deliveries under a so-called wet lease — where the lessor typically furnishes the aircraft, crew, maintenance and insurance for another company. The other was a smaller Boeing 757 that suffered “a significant amount of hail damage,” Porteous said.
Both were moved to Hamilton, Ont., for repairs and expected to return to service before September.
Other airlines felt the storm’s wrath, which damaged 18 WestJet planes and two Flair jets on Aug. 5, prompting hundreds of flight cancellations.
On Tuesday, Cargojet reported a 6.5 per cent increase in adjusted earnings for the second quarter to $79.1 million, roughly in line with analysts’ expectations.
“Overall, we view the results as positive to sentiment given that the company achieved solid volume growth (over five per cent) in domestic despite weak Canadian consumer data points — suggestive of a strong ramp when macro improves,” said RBC Capital Markets analyst Walter Spracklin.
This report by The Canadian Press was first published Aug. 14, 2024.
Companies in this story: (TSX:CJT)
