Post by
retiredcf on Nov 15, 2022 8:52am
CIBC
Currently have a $203.00 target. GLTA
EQUITY RESEARCH
November 14, 2022 Flash Research
CARGOJET INC.
UPS Canada Renews Air Cargo Services Agreement
Key Takeaway: Positive impact. CJT announced it has renewed and
extended its Air Cargo Services Agreement with UPS Canada for an
additional five-year term out to December 31, 2030. This highlights CJT’s
competitive moat and unmatched service levels, in our view, and the
extension of the agreement provides the company with more long-term
visibility on its contracts.
Details Of The Announcement: CJT has renewed and extended the Air
Cargo Services Agreement with UPS Canada for an additional five-year
term. The current agreement was due to expire on July 1, 2025 and the new agreement is extended to December 31, 2030. CJT has been the exclusive provider of time-sensitive domestic overnight air cargo services to UPS Canada since 2003.
Main Takeaways: We view the announcement positively and we highlight
the following: 1) UPS Canada renewing its contract three years before
contract expiring highlights CJT’s Canadian domestic market competitive
moat. We also saw CJT renewing agreements with TFI and AND earlier this year. 2) The agreement speaks to what we believe are unmatched service levels, with UPS looking to secure capacity out to 2030. This suggests to us that UPS did not significantly contemplate moving its business to another carrier. CJT continues to operate on-time performance of more than 98%. 3) The extension of the contract provides CJT with even more long-term visibility on its growth plan, given that it is out to 2030. We also see this contract as supportive of CJT’s long-term fleet plans