DB Schenker has stopped operating its own dedicated airfreight fleet in the U.S., opting instead for a non-fixed asset model. The company will being phasing out its dedicated air fleet, which is expected to last a few weeks. This doesn’t mean the company will stop serving North America, just that it won’t be using its own planes.
According to Heiner Murmann, Schenker’s CEO, the company is simply reacting to customer demands.
“As a result of the prolonged recession and spiking fuel prices, more and more of our customers are opting for expedited ground-based solutions instead of domestic air freight, and they are looking for partners who can provide transportation management services rather than transactional transportation,” he said in a statement.
It’s a move some in the industry have been talking about for months, but the decision still comes as a blow to long-time customers. Paul Toth, CEO of the Toldeo-Lucas County Port Authority, said Schenker subsidiary BAX Global had used the Toledo airport as its hub for more than 20 years. Though he was “disappointed” with the decision, the airport will soldier on despite the estimated 700 layoffs expected as a result of the news.
“Toledo Express has a strong background in the global cargo market and it is the desire of the Toledo-Lucas County Port Authority to continue cargo operations absent of BAX Global,” he wrote in an email. “The Port Authority continues to actively pursue various activities and opportunities relative to cargo development at Toledo Express.”
The aircraft leasing company Air Transport Services Group had been dedicating eight DC-8 planes and eight 727 aircraft to freight business from DB Schenker. CEO Joe Hete said that a lot is still unkown about the DB Schenker’s realignment, but the one certainty is that the company’s use of aircraft will be reduced.
“While we are continuing to evaluate that notice in the context of our other communications with DB Schenker, we expect a reduction in our role as a provider of main-deck freighter lift for DB Schenker in North America,” Hete said.
Correction: Due to an editing error, this article was previously given a misleading headline. The correct headline is DB Schenker realigns its US domestic transportation system. Air Cargo World regrets the error.
Why are they doing this? So, now UPS Freight and FedEx are going to have the monopoly on small NDA/2DA shipments? This is a disaster for our business.
I wouldn’t really call FedEx and UPS a monopoly, I would more call it a realignment of the future of our industry. Schenker is absolutly correct when they say the future of the North American Supply Chain is on the ground.
Customers are looking for cheaper alternatives than overnight freight and are planning inventories better than ever for this reason. LTL is starting to make a strong comeback. Why do you think YRC keeps getting bailed out? Everbody knows that they will turn a profit again in the distant future. Ground expeditors such as Tri-State, Panther, and Express 1 are having problems with having enough trucks in their fleet because there are so many customers that request ground expedite. Rail is also becoming an attractive and cheaper option than Air Freight. Customers are getting smarter and we have to adapt to the changes that they want. We have to start offering them more modes of transportation if you want to survive as a Forwarder.
Globalization is here to stay and air carriers are well aware of this. FedEx is increasing it’s capacity by purchasing new B777′s and sending the B727′s to Kingman.
It is sad that BAX will cease to exist beause they were such an excellent operator but in the end, it’s all about cheaper alternatives and it’s all about what the customer wants.
-Flyboy
What happen’s to their direct international operations (leased cargo space) from Toledo; i.e.: Germany,UAE, Australia. Will these continue to operate as usual ?
Its sad to see the end of BAX (formerly Burlington Northern Airfreight and then Burlington Air Express) but the beginning of the end started long ago when the team which turned BAX around from a company losing $100s of millions to a profitable company and oversaw the development of Toledo hub were terminated and went on to found what is now UTI Worldwide one of the worlds most profitable freight forwwarders. The exodus of many of the industry’s top talented people from BAX was a blow to BAX during the 90s stunting its growth. The sale to a German company (like Airborne and DHL) further added to BAX demise with many shippers prefering to use US based companies. Its unlikely Toledo will find anyone to replace BAX since Dayton and Wilmington and TerreHaute and Fort Wayne have also been unable to find tenants for former airfreight hubs. Toledo is already seeing the shift of 747 freighter services to Chicago and New York leaving Toledo again as a small airport in the shadows of Detroit.