Did Purolator dump KFL for Cargojet??

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Been_there
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Did Purolator dump KFL for Cargojet??

Post by Been_there »

Does this mean KFL is out of the loop, or have they simply added Cargojet as a carrier?

http://www.cargojet.com/pressReleases/2014/2014-03.htm

Cargojet Awarded PUROLATOR And CANADA POST (Canada Post Group Of Companies) Domestic Air Cargo Network Services Contract

February 19, 2014
MISSISSAUGA, ON – Cargojet announced today they have been awarded the Domestic Air Cargo Network Services contract and have signed a Master Services Agreement with the Canada Post Group of Companies (CPGOC) for an initial seven-year (7) term with three (3) thirty-six month (36) renewal options. Projected revenues are estimated to be approximately one billion dollars during the initial seven-year agreement based on projected volumes.

Cargojet will provide comprehensive Canada-wide air cargo services for the Group of Companies, including Purolator’s national air cargo network. Cargojet’s domestic overnight network will be expanded and enhanced significantly to handle the additional volumes and provide a virtual dedicated Air Cargo Network to the Canada Post Group of Companies.

“Cargojet is extremely pleased to have been successfully chosen as the exclusive primary domestic air cargo service provider to the Canada Post Group of Companies. Cargojet operates an extensive overnight air cargo model, which will provide the most cost-effective and scalable solution to the Canada Post Group of Companies,” said Ajay Virmani President and CEO of Cargojet. “Cargojet and the Canada Post Group of Companies will work together to provide Canadians with world-class and flexible air cargo services in today’s changing business environment, “ added Virmani.
“We are excited about the prospect of working with Cargojet. Their extensive air network, combined with Purolator’s extensive ground network will enable us to continue to enhance and expand our service offerings for customers while assuring our market competitiveness in the long term,” said Patrick Nangle President and CEO of Purolator. “At the heart of all our decisions at Purolator is delivering on our promises to our customers. We are confident that this new partnership will be instrumental in helping us meet this commitment as we continue to evolve and grow.”

“Canada Post is undergoing a major transformation as customer demand shifts from mail to parcel delivery with online shopping,” said Jacques Côté, Group President, Physical Delivery Network, Canada Post. “This move will drive operational efficiencies, lower our transportation costs and help ensure our parcel delivery remains competitive from a cost and reliability perspective.”

About Cargojet
Cargojet is Canada's leading provider of time sensitive overnight air cargo services and carry over 500,000 pounds of cargo each business night. Cargojet operates its network across North America each business night, utilizing a fleet of all-cargo aircraft. Cargojet recently signed an LOI with Air Canada to explore strategic opportunities in both cargo and airline operations within Canada and international markets. For more information, please visit: http://www.cargojet.com.

About Purolator
Ranked one of the top 25 brands among Canadian consumers since 2011, Purolator is Canada’s leading integrated freight and parcel solutions provider. Celebrating over 50 years of delivering Canada on time, Purolator continues to expand its reach and renowned service levels and reliability to more people, more businesses and more places across the country and around the world. Purolator is proud of its Canadian heritage and is focused on sustainably positioning itself for future growth and success. Purolator is also committed to contributing to the well-being of the communities it serves and where more than 12,000 of its teammates live, work and play.
About Canada Post
Canada Post is the country’s leading provider of electronic commerce and customer communication solutions. It reaches more than 15.3 million addresses, operates the country’s largest retail network, and offers affordable and reliable service with convenient pickup and return options for online shoppers. Together, Canada Post, Purolator Inc. and SCI Logistics offer market-leading end-to-end solutions for e-commerce shippers by leveraging the assets and expertise of the Canada Post Group of Companies
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leftoftrack
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Is KFC dead

Post by leftoftrack »

Cargo jet just signed a 7year agreement for all of purolators domestic cargo handling.
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Been_there
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Re: Did Purolator dump KFL for Cargojet??

Post by Been_there »

Barry Lapointe is on Purolator's board and owns 7% of the company. Given that, I find it rather odd that KFC wouldn't be able to arrange some kind of extension to the existing contract. Purolator would have been steamrolled by UPS and FedEx years ago if KFC hadn't built the overnight network for them.
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MCDU
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Re: Did Purolator dump KFL for Cargojet??

Post by MCDU »

The News release from KFL states that the current contract ends in March 2015 so dumped? Maybe not the best chioce of words.
There was an RFP process so I guess Cargo Jet was cheaper
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Re: Did Purolator dump KFL for Cargojet??

Post by Told Card Writer »

Nope KFC is out 100% as of March 2015, no extensions. A sad day indeed for a lot of good long time pilots with carrier's.
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Re: Did Purolator dump KFL for Cargojet??

Post by North Shore »

I wonder if this is an end-run around the union at KFC? IS CJ unionised?

KFC loses contract (leaving planes and no work). CJ gets contract (work, and no planes) KFC sells or leases a/c to CJ, and no pesky union contracts..

Sad days for the guys at KFC...
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Re: Did Purolator dump KFL for Cargojet??

Post by iflyforpie »

Absolutely this is an end run... actually a pincer move with Flair (run by former KFC partner Jim Rogers) taking the charter business on one side.... and either selling of contract or leasing of aircraft to Cargojet taking the Purolator stuff on the other side.

There is no way Barry LaPointe was caught off guard... being that he is on the Purolator Board of Directors after all.... and he will make out just find monetarily.

I'm glad I've got more than a decade between me and that gong show.
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Re: Did Purolator dump KFL for Cargojet??

Post by Told Card Writer »

CJ guys I do believe are ALPA or another Union now. Working conditions were so bad I think it forced them into doing something.

I'm sure Barry LaPointe got himself a nice chunk of CJ stock before all this went down just to cover any losses. The employee's will be the big losers in all this. Can't imagine having 15+ years in a company and probably having to go to first year industry pay, that is a monumental pay cut. My heart goes out to the people who will suffer.
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Last edited by Told Card Writer on Wed Feb 19, 2014 11:32 pm, edited 1 time in total.
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Re: Did Purolator dump KFL for Cargojet??

Post by ScudRunner »

North Shore wrote:I wonder if this is an end-run around the union at KFC? IS CJ unionised?

KFC loses contract (leaving planes and no work). CJ gets contract (work, and no planes) KFC sells or leases a/c to CJ, and no pesky union contracts..

Sad days for the guys at KFC...
CargoJet is Unionized

How many 757/767 does KFC own? = ZERO (to my knowledge) so I doubt that KFC will be leasing anything to CJ unless they are going to keep the 727 flying. However I doubt that since they have been phasing them out and replacing them with 757s.
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Re: Did Purolator dump KFL for Cargojet??

Post by AEROMONKEY »

Hmm I wonder who will do the run from Yqt to Ywg? I love watching the old Convair! I hope it stays!
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Re: Did Purolator dump KFL for Cargojet??

Post by ea306 »

Cargo Jet is represented by UNIFOR Local 7378. Same union as Sunwing's Pilot union.
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Re: Did Purolator dump KFL for Cargojet??

Post by skypirate88 »

AEROMONKEY wrote:Hmm I wonder who will do the run from Yqt to Ywg? I love watching the old Convair! I hope it stays!
It won't be the Convair. That route was part of the award.
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Re: Did Purolator dump KFL for Cargojet??

Post by jsmetalbashers »

Barry always said he wouldn't run out and buy newer aircraft if it didn't make sense. He's no dummy, wouldn't be surprised if KF finds another cargo company to jump in bed with. He always has something in the works, he let Puralotor go because it wasn't economically viable anymore if he had to buy newer aircraft.
I feel for the guys out in Hamilton and the pilots, I'm sure somethings in the works.
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Re: Did Purolator dump KFL for Cargojet??

Post by Big Pistons Forever »

The 727 and the CV580 are great airplanes but their day has past. There is a desert full of these airplanes because they are not economical to run anymore, that is why Morningstar and Cargojet are going to the 757 and the ATR. For KFC it was go big or go home.

For what ever reason it would seem that Mr Lapointe has decided to throw in the towel on the current business model and time will tell what KFC version 2 looks like but I don't think it will be running the same equipment for someone else........
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Re: Did Purolator dump KFL for Cargojet??

Post by iflyforpie »

They did move up to the DC-10F.... but it's too fat of an airplane to serve most of Canada. I'm really surprised they didn't move to 757s years ago has they have all of the MRO capabilities to service them.... but likely in this case they felt it wasn't worth it.

The Convair 580 was the first plane I ever worked on in a professional capacity. I'll always have a soft spot for that plane and the 727 as well.
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Re: Did Purolator dump KFL for Cargojet??

Post by sstaurus »

Maybe Nolinor will pick them up? Can't think of any other 580 operators here...
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Re: Did Purolator dump KFL for Cargojet??

Post by iflyforpie »

Conair looking for more tankers? That's where most of those tired birds went when I was there. There's also lots that went to Kiwiland and still more that decorate the landscape at YLW.....
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Re: Did Purolator dump KFL for Cargojet??

Post by doorhandle27 »

The Canada Post contract went out to tender, like it should have many times over the years. It was awarded to a company offering a cheaper option than the current operator, for whatever reasons. This isn't a selling of a contract to another company or Barry Lapointe circumventing unions to reduce costs line his pockets, KFC and CJ are both unionized. This is purely a contract being awarded to the lowest bidder, a contract that is paid with taxpayers money for a service that has changed significantly over the years, think post office and reduction of mail being carried. CJ has won it's business over the years by pushing companies to consolidate their cargo with other companies on the same aircraft. You'll no longer see a DC10 operate at 60% capacity across the company while we the taxpayers are paying for 100% of it.

It is a sad day for all of the KFC drivers watching their hard work walk across the ramp to the slave house.
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Re: Did Purolator dump KFL for Cargojet??

Post by Been_there »

"The 727 and the CV580 are great airplanes but their day has past. There is a desert full of these airplanes because they are not economical to run anymore, that is why Morningstar and Cargojet are going to the 757 and the ATR. For KFC it was go big or go home. "

There was a solid business case for sticking with the 727s, as described by Lapointe in an article (maybe in Wings?) that appeared a year or two ago. In it he made the point that while the 27s are relatively inefficient, this was not a major factor since their hours flown per day was relatively low. The greater efficiency of the 757 was a moot point once you factored in the increased cost of leasing a $20M 757 vs a $1M 727, making the 727 a cheaper option overall. That's why they continue to operate the 727.
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Re: Did Purolator dump KFL for Cargojet??

Post by Been_there »

Here's the reference Barry Lapointe made in that article, taken from Wings:

"We’ve looked at the 727 replacement airplanes, and the trendsetter has always been the big courier companies. FedEx now has made a commitment for 95 757-200 freighters to replace their 727-200s. But when you’ve got a system like we have in Canada, that corridor, where you’ve got long routes, four time changes, you can’t afford a $20- to $25-million airplane flying 100 hours a month. If I was flying this airplane 300 hours a month, then I’d have to take a look at something different, which would probably be a 757 or 767 or something like that. (But) we can’t afford to go to Boeing and make a 757-300 cargo, it’s $60 million, you can’t do it. The capital cost just burns you out. So you have to have a low-capital-cost airplane, a reliable airplane, with the understanding that it’s only going to fly 100 hours a month.

I really question Cargojet when they went to the 767s, because unless you have something up your sleeve, flying it 200 or 300 hours a month, it just doesn’t make economic sense. It’s not sustainable, and I think they’ll find that out. We looked at that airplane, and if somebody says “what is the replacement for the 727-200,” I’m saying “a newer 727-200.” They made them up to 1984. I’ve got some that are 1968, I’m replacing the 1968, 1970 models with 1980, 1984 models. I’ve talked to Boeing, and they finally gave up saying “we’re going to ground the airplane at 50,000, 60,000 hours.” We’ve got airplanes that have got 50,000, 60,000 hours on them, and we’re saying, “why?”

If I had to start maintaining a 727 to fly 300 hours a month, I would be looking at probably a 757 because I can justify the cost, because I’m getting the utilization out of it. But on the particular geographic routes that our airplanes fly it just doesn’t warrant it, and the most important thing to my customers is to get it there on time, and get it there reliably. We’ve got reliability, and we’ve got a good time. You can’t fly any faster than a 727, they’re a Mach 0.82 airplane. So to carry another container at three times the cost just doesn’t make sense."
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Re: Did Purolator dump KFL for Cargojet??

Post by MCDU »

Thanks Been-There. I must say Barry's logic seems to make sense even now. I read somewhere that the Purolator 727 fleet was operating at >99% dispatch reliability.
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Re: Did Purolator dump KFL for Cargojet??

Post by skypirate88 »

MCDU wrote:Thanks Been-There. I must say Barry's logic seems to make sense even now. I read somewhere that the Purolator 727 fleet was operating at >99% dispatch reliability.
The logic makes sense, however Canada Post, as most have seen in the news, is looking to cut cost. Unfortunately it appears to have come down to who could do the work for less. In today's markets you have to adapt or die. The 727 is still a great machine for this type of work and I can only hope more business can be found for it. Time will tell I suppose.
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Re: Did Purolator dump KFL for Cargojet??

Post by pelmet »

iflyforpie wrote: There is no way Barry LaPointe was caught off guard... being that he is on the Purolator Board of Directors after all.... and he will make out just find monetarily.
I would think that if Mr. LaPointe were trying to stay legal, he would have excused himself from BoD meetings that have a conflict of interest and avoided buying any stocks(as someone else mentioned) where insider information could put him in court.
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Re: Did Purolator dump KFL for Cargojet??

Post by DanJ »

pelmet wrote:
iflyforpie wrote: There is no way Barry LaPointe was caught off guard... being that he is on the Purolator Board of Directors after all.... and he will make out just find monetarily.
I would think that if Mr. LaPointe were trying to stay legal, he would have excused himself from BoD meetings that have a conflict of interest and avoided buying any stocks(as someone else mentioned) where insider information could put him in court.
Unless the Purolator Board of Directors had nothing to do with it. It is a Canada Post/Purolator contract, not just a Purolator contract.
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Re: Did Purolator dump KFL for Cargojet??

Post by skypirate88 »

The bid was for the Canada Post Group of Companies. It seems this time around Canada Post was the one making the decision
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