Continuing to take hold of its own logistics, Amazon reached a strategic agreement with Cargojet to expand their existing commercial agreement for overnight air cargo services and charters that incentivizes Amazon’s use of the provider to support fast delivery for its customers in Canada.
“Cargojet has been a key player in our Canadian middle mile operations for several years,” said Adam Baker, vice president of global transportation for Amazon. “We’re thrilled to build a longer-term relationship that will allow us to provide even faster service to Amazon customers in Canada.”
Amazon uses Cargojet’s overnight air network to move packages from its own facilities to other Amazon or last mile carrier locations before final delivery to customers.
As part of the agreement, Cargojet will issue the warrants to Amazon.com NV Investment Holdings, an affiliate of Amazon.com.ca Inc., in two tranches, the first of which allows Amazon to acquire up to 9.9 percent of Cargojet’s variable voting shares at an exercise price of $91.78 per share. These warrants will vest over a period of six and a half years, with vesting tied to the delivery by Amazon of up to 400 million Canadian dollars in business volumes during the same term.
Amazon will also receive additional warrants to acquire up to an additional 5 percent of Cargojet’s variable voting shares, with vesting tied to Amazon’s delivery of up to an additional 200 million Canadian dollars ($151.1 million) in business volume after the first tranche of warrants is fully vested. The vesting period for the second tranche of warrants will continue for an additional year.
Cargojet plans, over time, to add more non-stop flights allowing later departures and earlier arrivals to the 15 major cities that Cargojet already serves, and to add new cities on its overnight network. These service and frequency enhancements will be available to all Cargojet customers, and will expand Cargojet’s reach to approximately 95 percent of the Canadian population.
Expanding its reach south of the border, FedEx Corp. has agreed to acquire Cargex S.A., an international freight forwarding company, and Agencias de Aduanas Aduanamos S.A. Nivel 2, an affiliate of Cargex specializing in customs brokerage services.
These additions strengthens the FedEx air freight forwarding and customs brokerage capabilities in Colombia and the broader Latin American region, the company said. The acquisition is expected to close later this year and is subject to customary closing conditions, as well as a Colombian regulatory filing.
Headquartered in Bogotá, Cargex has operations in Bogotá, Medellin, Cartagena, Buenaventura and Santa Marta, and would operate as a subsidiary of FedEx Logistics upon closing.
“The addition of Cargex offers future growth opportunities in the Latin American region, a key market for us,” Udo Lange, chief operating officer and incoming president and CEO of FedEx Logistics, said. “This acquisition perfectly complements the roundtrip Colombia-to-Miami flight recently announced by FedEx Express. We will connect customers throughout the Latin American market with even more possibilities by combining world-class FedEx transportation solutions with a comprehensive line of logistics service offerings.”
Last month, FedEx said it will no longer make ground deliveries for Amazon once its contract expires at the end of August, as Amazon developed its own delivery fleet.