Cargojet's Amazon Deal: A Steady Flight Toward Long-Term Gains

Cargojet Inc. (CJT.TO), Canada's premier air cargo carrier, has just secured a landmark agreement that solidifies its position as a critical partner in Amazon's logistics network. The recently announced four-year extension of its Air Transportation Services Agreement with Amazon Canada Fulfillment Services, ULC—now running through March 2029—comes with an option to renew further until 2031. This deal isn't merely a contract renewal; it's a strategic anchor for long-term revenue stability and operational scalability in a sector primed for growth.

The Contract: A Foundation for Predictable Cash Flows

The extension underscores Cargojet's unmatched reliability in North America's premium air cargo market. By locking in Amazon's business for at least five more years—with the option to stretch to 2031—the company gains visibility into steady cash flows, a rarity in an industry often plagued by volatility. The renewal clause adds further comfort, as Amazon's option to extend demonstrates its confidence in Cargojet's ability to handle escalating e-commerce demands.

Operational Scalability: 41 Aircraft, 25M Lbs of Capacity

Cargojet's fleet of 41 aircraft, including Boeing 767-300Fs and 757-200s, is its workhorse. These planes collectively transport over 25 million pounds of cargo weekly, a capacity that positions the carrier to capitalize on surging e-commerce logistics needs. The partnership with Amazon leverages this infrastructure, with dedicated ACMI (Aircraft, Crew, Maintenance, Insurance) services ensuring Amazon's packages move efficiently across North America.

The fleet's age—averaging 30.7 years—might raise eyebrows, but Cargojet's rigorous maintenance programs and focus on utilization rates mitigate risks. A single parked 757 and strategic orders for additional 767-300Fs (four added in 2025) demonstrate prudent expansion. Meanwhile, the Hangzhou-Vancouver charter service with Great Vision HK Express highlights Cargojet's ability to scale into new markets, a capability that bodes well for future revenue streams.

Reduced Volatility: Contracts and Certainty

Cargojet's agreements with Amazon and Canada Post/Purolator include minimum guaranteed volumes, a clause that stabilizes earnings. Unlike carriers reliant on spot-market pricing, Cargojet's long-term contracts act as a shield against demand swings. This predictability is reflected in its financials: 2024 revenue hit $1 billion, with a 32% year-over-year jump in Q4 2024 driven by ACMI and charter demand.

The ISO 9001:2015 certification, maintained for 22 years, signals operational discipline. This reliability isn't just for Amazon—it's a magnet for other high-volume clients seeking premium air freight solutions.

The Investment Case: Buy the Dip, Hold the Trend

For investors, Cargojet's deal with Amazon is a high-conviction buy for three reasons:

1. Low Earnings Volatility: The extended contract reduces dependency on cyclical demand, offering smoother earnings growth.
2. Accretive Cash Flows: Steady revenue streams from Amazon and Canada Post will fund debt reduction and shareholder returns (the company recently declared a dividend).
3. Strategic Positioning: As e-commerce continues to shift toward faster, premium shipping, Cargojet's niche in time-sensitive cargo becomes more valuable. Its 767 fleet's range and payload capacity make it irreplaceable for cross-border logistics.

Risks and Considerations

No investment is risk-free. Fuel costs, labor negotiations, and potential overcapacity in the air cargo sector could pressure margins. However, Cargojet's strong balance sheet (with $160M in cash) and pricing power in its ACMI contracts provide a buffer.

Conclusion: A Flight Plan for Patient Investors

Cargojet's extended partnership with Amazon is more than a contract—it's a blueprint for sustained growth. With a scalable fleet, predictable revenue streams, and a dominant position in Canada's premium air cargo market, the company is poised to weather near-term headwinds while capitalizing on long-term e-commerce trends. For investors seeking stability in a volatile market, Cargojet's stock offers a rare blend of defensiveness and upside potential.

Actionable Takeaway: Accumulate Cargojet shares on dips below its 52-week high, targeting a 5–7 year holding period to capture the full value of its extended contracts and strategic advantages.

This analysis is for informational purposes only and not financial advice. Always consult a licensed professional before making investment decisions.