'Drastic' rate drops on transpacific bode badly for carriers ahead of negotiation season
Container spot rates from Asia to Europe held up this week, while rates to the ...
Fourteen US airlines have won contracts, worth up to $228m over five years, from the US Department of Defense (DoD).
Starting on February 1, the freight contracts award the mix of passenger and freighter airlines a minimum of $2,500.
US Transportation Command issued the awards, which are for worldwide indefinite-delivery/indefinite-quantity (IDIQ) and fixed-price contracts.
The base period runs to January 31 2019, with four one-year option periods up to January 31, 2023. The carriers supplement military capacity.
However, there are more contracts, ranging between $100m and $499m, for the selected airlines to bid for, with a request-for-proposals release date of March 1, to be awarded in November.
Figures from the DoD for 2017 reveal carriers can earn significant amounts from freight contracts. FedEx received some $260m for air and ground services; Atlas Air and subsidiary Polar received contracts worth some $16m; National Air Cargo earned $26.5m; Kalitta more than $9m; and UPS reaped contracts worth about $42m.
United Airlines, which did not apply to become part of the list of commercial airlines which serve the US government, last year was awarded passenger contracts worth $14m.
There is even better money to be made by container lines and forwarders. XPO Logistics received contracts worth $98m, APL won $85m-worth of business, Maersk got $48m in contracts and Hapag-Lloyd received $10m.
Government agencies must use DoD-appointed carriers where possible, and it has published a list of air freight rates for 2018 – which appear markedly higher than commercial rates.
The average charge for a shipment from the US to Europe for the full year is $4.14 per kg, or $1.88 per lb. Agencies may not buy capacity commercially, even if the price is lower.
The full list of the 14 cargo-carrying airlines, the only bidders, is: ABX Air, American, ATSG, Atlas, Delta, FedEx, Hawaiian, JetBlue, Miami Air, National Air Cargo, Polar, UPS, USA Jet Airlines and Western Global Airlines. United Airlines was not available for comment.