DHL Corporation's Engaging Business Agreement
In a significant move for the logistics industry, DHL Express and Cargojet Airways have renewed and extended their strategic partnership until March 31, 2033, with options for two consecutive two-year renewals that could extend the deal until 2037.
Under this renewed agreement, Cargojet will continue providing its full range of air transportation services—ACMI (Aircraft, Crew, Maintenance, and Insurance), CMI (Crew, Maintenance, and Insurance), charter, and dry lease—to support DHL's global logistics network. DHL will maintain a guaranteed minimum monthly block hours commitment and give Cargojet preferred opportunities to operate additional routes as DHL adjusts capacity globally.
The extended agreement positions Cargojet for continued operational growth by guaranteeing revenues up to C$3.2 billion and preferred access to routes, while DHL benefits from assured air capacity, operational flexibility, and a refined equity position in Cargojet.
In a shift from the previous agreement, DHL has reduced its potential ownership stake in Cargojet from 9.5% to 6.6% as part of the early renewal agreement. The old warrants enabling DHL to acquire over 1.6 million shares have been terminated, and instead, new warrants have been issued that entitle DHL to buy 1 million shares at a fixed price over eight years, with vesting tied to delivery of up to C$3.2 billion in business volume during the contract period.
This renewed partnership solidifies a long-standing collaboration dating back to 2005 and confirms Cargojet's role as a key strategic air transport partner for DHL in Canada, Mexico, and Latin America.
Cargojet's fleet consists of 44 cargo aircraft, mainly Boeing 767 and Boeing 757-200 freighters, which fly central routes to Canada, Mexico, and various Latin American countries for the DHL Group. The company's strategic cooperation with Amazon Canada, which runs until March 2031, further bolsters its position in the market.
This mutually beneficial arrangement enhances long-term collaboration while adjusting shareholding to reflect the renewed partnership framework. DHL would become the third-largest institutional shareholder of Cargojet with this acquisition.
Despite a challenging market environment, DHL Group (WKN: 555200) is currently trading on the DAX, and the shares are considered worth holding. A stop-loss for the DHL share has been suggested at 30.50 euros. The current price level of the DHL share is believed to account for the challenges in the market.
[1] DHL Express and Cargojet Airways Renew Strategic Partnership, DHL Press Release, [Link] [2] DHL and Cargojet Extend Partnership, Air Cargo World, [Link] [3] DHL and Cargojet Renew Partnership, Air Cargo News, [Link] [4] DHL Reduces Cargojet Stake in Renewed Partnership, FreightWaves, [Link] [5] DHL and Cargojet Agree on New Warrants, The Logistics Point, [Link]
- As part of the renewed partnership, DHL, a prominent player in finance and technology, will continue to support Cargojet's air transportation services, leveraging technology to ensure operational flexibility and a refined equity position in Cargojet.
- The extended agreement between DHL and Cargojet, two key players in the logistics technology sector, positions Cargojet for continuous operational growth, securing revenues up to C$3.2 billion and preferred access to routes, while DHL benefits from assured air capacity and financial stability.
