Delta, Aeromexico sign accord to serve trans-border cargo market

Delta Air Lines Inc. and Grupo Aeromexico said yesterday they have signed a joint co-operation agreement covering air and truck services in the trans-border market.

The agreement, which follows a similar compact reached last month governing passenger services, allows shippers and air freight forwarders to work with either carrier to move goods either by air or truck between the U.S. and Mexico. Delta and Aeromexico Cargo have co-located warehouses in Mexico, Boston, New York, Miami, San Francisco, and Chicago, with Orlando, Fla., and Detroit expected to open this summer. The carriers are working to integrate their respective IT systems and will be able to implement joint sales and marketing initiatives in both countries, according to a joint statement. Atlanta-based Delta will provide service in the United States through its connecting hubs in Atlanta; Detroit; Los Angeles; Minneapolis-St. Paul, Minn.; New York; Salt Lake City; and Seattle. Mexico City-based Aeromexico will offer access to Mexico through hubs in Mexico City, Monterrey, and Guadalajara.

The agreement comes 10 months after the U.S. and Mexico signed an aviation accord that, among other things, enabled cargo carriers to expand their connections between Mexico and their global networks. For example, U.S. carriers now have the authority to move cargo from a point outside the U.S., fly to the U.S., then to Mexico and on to another country—rights known in aviation diplomacy as "fifth and sixth freedoms." Cargo carriers can also operate between Mexico and a third country without touching the U.S., a right known as the "seventh freedom."

The vast majority of trans-border freight moves by truck because the average length of haul is less than 300 miles. A small part of total goods moves by air but, as is the case worldwide, the value per ton is far greater than for goods moved by any other mode. Shippers will use the speed of air transport to quickly get high-value goods to market.

Delta and Aeromexico have collaborated on various ventures for about 20 years. In March, Delta, which owned 4.2 percent of Aeromexico, acquired another 32 percent for $620 million. Delta holds options to acquire another 12.8 percent stake in Aeromexico, so eventually it could own 49 percent of the carrier.