Chapman Freeborn, a significant player in the air cargo industry, has managed to maintain its stronghold by diversifying its business operations. Its primary focus has been shifting to e-commerce and expanding its fleet, enabling the company to withstand the current quieter period in the traditional cargo charter market. Group chief executive Eric Erbacher sheds light on how these strategic decisions have provided stability and new growth opportunities for Chapman Freeborn.
Diversification into E-Commerce
Strategic Shift to E-Commerce
Over the past year, Chapman Freeborn has increasingly engaged with the rapidly growing e-commerce sector. This strategic shift marks a significant departure from the company’s traditional operations. The firm’s ability to capitalize on the boom in online shopping has been aided by its association with Magma Aviation, a freighter management firm under the umbrella of Avia Solutions Group (ASG), which operates several air operator certificates (AOCs) for freighters. This partnership has proved to be crucial in tapping the potential of the e-commerce market.
One notable expansion move was in July of the previous year when Magma Aviation opened a new office in Dubai. The office added an Airbus A321-200F and a Boeing 737-800F to its operations, leveraging the surge in e-commerce demand. Furthermore, Magma operates two scheduled e-commerce charters weekly from Hong Kong to Châteauroux and Liège using Boeing 747 freighters. This step into e-commerce has positioned Chapman Freeborn to cater to the increasing demand for efficient air freight solutions required by online retailers.
High Volume of E-Commerce Charters
This year has seen a high volume of charters flown for e-commerce using a variety of aircraft, including Airbus A330s, Boeing 747s, and Boeing 777s. The swift rise of companies like Temu, which launched in 2021 and already has a significant market presence, underscores the importance of entering this segment. This operational shift highlights Chapman Freeborn’s commitment to meeting the dynamic needs of the e-commerce industry, ensuring timely and reliable deliveries of goods across various regions.
With more companies relying on fast air cargo solutions to meet consumer demands, Chapman Freeborn’s diversification into e-commerce becomes even more relevant. The flexibility and variety in its fleet allow the company to handle a broader range of cargo needs, cementing its position as a versatile and adaptive player in the air cargo industry. The growing volume of e-commerce charters reflects a responsive approach to market changes, which continues to be vital for Chapman Freeborn’s sustained success.
Impact on Traditional Charter Business
Decline in Traditional Segments
Erbacher notes that while e-commerce has been booming, some traditional project-based business segments have seen a decline. For example, contracts with the Ministry of Defense (MOD) have become less prevalent. Chapman Freeborn’s operations in Mali, which involved regular flights over seven years as part of a United Nations peacekeeping mission, ceased as international troops withdrew from the country. This reduction in traditional engagements necessitated a reevaluation of the company’s strategic focus.
Additionally, the number of natural disasters needing air cargo support has decreased compared to previous years. This decline in traditional charter business resulted in lower demands for certain segments, pushing Chapman Freeborn to find alternative ways to sustain and grow its business. However, the continued engagement in e-commerce has kept demand for Magma’s fleet of Boeing 747 freighters high. The company aims to expand this fleet despite high lease rates, which reflect a shortage of larger freighters.
Decrease in Natural Disaster Support
With fewer natural disasters requiring immediate air cargo intervention, Chapman Freeborn had to adjust its operational priorities. Although this was a change, it highlighted the company’s strength in diversifying its fleet to cater to e-commerce demands. The pivot towards e-commerce not only compensated for the decline in traditional segments but also opened up new avenues for revenue.
In an industry where demand can be unpredictable, Chapman Freeborn’s ability to adapt quickly and efficiently underscores its robustness. By leveraging its fleet for e-commerce, the company has managed to utilize its resources effectively, ensuring high utilization rates and continued relevance in the market. As reliance on e-commerce solutions grows, Chapman Freeborn remains well-positioned to capitalize on this enduring trend.
Expanding and Diversifying Fleet
Fleet Diversification Plans
Looking forward, fleet diversification is a priority for Chapman Freeborn. AviaAM Leasing, part of the ASG, became the launch customer for Mammoth Freighters’ 777-300ERMF freighter conversion program, securing six aircraft in 2022. The first of these planes is expected by December, with additional aircraft arriving through 2026. This move not only enhances the fleet’s capacity but also aligns with the company’s goal of maintaining a competitive edge.
The introduction of these advanced aircraft to Chapman Freeborn’s fleet marks a significant upgrade in terms of efficiency and capability. With the 777-300ERMF freighters, the company can improve its ability to serve various sectors, particularly the high-volume e-commerce market. This initiative reflects the company’s commitment to staying ahead of industry trends and adapting to market demands.
Suitability for E-Commerce
The Boeing 777 freighters, featuring side-loading doors, are capable aircraft particularly well-suited for the e-commerce sector due to their fuel efficiency. These aircraft can handle large volumes of cargo while ensuring cost-effective operations, a critical factor in the highly competitive e-commerce industry. To support these plans, Chapman Freeborn aims to increase its workforce, particularly on the commercial side, to leverage its own controlled capacity (OCC).
Expanding the fleet with such versatile and efficient aircraft positions Chapman Freeborn favorably within the e-commerce domain. The focus on operational efficiency and advanced features like side-loading doors demonstrates the company’s forward-thinking approach. By investing in such strategic assets, Chapman Freeborn is poised to meet the growing and evolving needs of its customer base effectively.
Considering Additional Aircraft
Chapman Freeborn is also considering adding Boeing 767 or Airbus A330 freighters to its fleet, driven by high demand. Despite higher costs due to the need for refueling stops on longer flights, market necessity ensures acceptance of these costs. An imbalance in available capacity today and likely continuing for the next two years means mid-sized aircraft will remain viable options despite higher operational costs. These considerations reflect Chapman Freeborn’s proactive stance toward fleet management and future market needs.
The strategic inclusion of mid-sized aircraft into the fleet underscores the company’s adaptability and foresight. Understanding the market’s current capacity constraints, Chapman Freeborn’s decision to consider Boeing 767 or Airbus A330 freighters provides a robust solution for meeting customer demand. This expansion not only enhances operational flexibility but also ensures the company can continue to offer reliable services across varying cargo requirements.
Growth and Workforce Expansion
Internal Growth
Chapman Freeborn has also seen substantial internal growth recently. When Erbacher joined in 2020, the firm had just under 280 employees, but this number has since grown to 450. The objective is to expand to 1,000 employees by 2030. This ambitious growth target demonstrates the company’s commitment to scaling its operations to meet increasing demands. This scale-up presents management challenges, but the company is committed to supporting its expansion plans.
The rapid increase in workforce is essential to support Chapman Freeborn’s growing operational needs and strategic initiatives. As the company expands its fleet and services, having a robust team ensures that it can maintain high standards of service and operational efficiency. This internal growth is a testament to the company’s positive trajectory and future aspirations.
Workforce Expansion Plans
The firm’s successful engagement with e-commerce and its readiness to adapt to evolving market conditions underscore its resilience and forward-looking strategy. To execute this strategy effectively, Chapman Freeborn plans to bolster its workforce, particularly focusing on commercial and operational domains. By attracting and retaining top talent, the company aims to support its ambitious growth plans and maintain its competitive edge in the market.
Expanding the workforce aligns with the company’s broader objectives of enhancing service delivery and operational excellence. As Chapman Freeborn continues to diversify and grow, a well-staffed and skilled workforce will be crucial in executing its strategies and achieving its goals. This commitment to workforce expansion reflects the company’s dedication to sustained growth and success in the evolving air cargo industry.
E-Commerce and Market Trends
Continued Growth in E-Commerce
Looking down the road, Erbacher anticipates continued growth for the air cargo market, propelled significantly by e-commerce. He notes that the lines between traditional roles such as integrator, forwarder, and broker are blurring, with e-commerce emerging as a dominant force. Companies must decide whether to participate in this segment to drive growth, as e-commerce will likely be the primary source of growth in the coming years. The increasing integration of e-commerce in global trade practices highlights the need for agile and responsive air cargo solutions.
Chapman Freeborn’s proactive approach to embracing e-commerce paves the way for sustained growth and market leadership. By understanding and anticipating market trends, the company positions itself to effectively meet the dynamic demands of e-commerce logistics. This forward-thinking strategy underscores the importance of adaptability and innovation in maintaining relevance in the fast-paced air cargo industry.
China+1 Strategy and Market Impact
Additionally, the China+1 strategy, which involves diversifying production and supply chains away from China, benefits air cargo by increasing volumes from countries like Thailand, Dhaka, and Bangladesh, particularly in the textile industry. These shifts in global production patterns present opportunities for air cargo operators to tap into new trade routes and markets. As manufacturing diversifies, the demand for air cargo solutions to efficiently transport goods across various regions rises.
Chapman Freeborn stands to benefit from these market changes by leveraging its diversified fleet and e-commerce capabilities. The company’s readiness to adapt to new trade patterns and logistical needs places it at an advantage. By staying attuned to these trends, Chapman Freeborn can continue to expand its market presence and capitalize on emerging opportunities in the air cargo sector.
Summary and Conclusion
Chapman Freeborn, a key player in the air cargo industry, has successfully maintained its strong presence by diversifying its business operations. In response to a quieter period in the traditional cargo charter market, Chapman Freeborn has strategically shifted its focus towards e-commerce and expanded its fleet. This shift not only safeguarded the company’s stability but also opened up new growth opportunities. Group Chief Executive Eric Erbacher highlights that these strategic moves have been instrumental in maintaining Chapman Freeborn’s stronghold, ensuring the company remains competitive and agile in a challenging market. By embracing e-commerce, the company tapped into an ever-growing sector, allowing it to mitigate the impacts of reduced demand in traditional cargo services. This forward-thinking approach demonstrates Chapman Freeborn’s adaptability and commitment to long-term growth. The expansion of its fleet further underscores its dedication to meeting evolving industry demands, solidifying its position as a leader in the air cargo sector.
