Cargojet's Strategic Position in E-Commerce & Logistics Growth: Labor Stability as a Catalyst for Shareholder Value

In the rapidly evolving e-commerce and logistics landscape, Cargojet Inc. (CJT) has positioned itself as a critical player by securing long-term partnerships with industry giants like Amazon and DHL. These contracts, combined with strategic labor stability initiatives, are proving to be pivotal in driving operational efficiency and unlocking shareholder value. As the global supply chain grapples with labor shortages and inflationary pressures, Cargojet’s ability to align workforce stability with financial discipline offers a compelling case for investors.

Securing Long-Term Partnerships: A Foundation for Growth

Cargojet’s recent contract extensions with Amazon and DHL underscore its strategic relevance in the logistics ecosystem. The airline renewed its Air Transportation Services Agreement with Amazon Canada Fulfillment Services until March 31, 2029, with an option to extend to 2031 [1]. Separately, it extended its partnership with DHL Express for freighter operations across Canada and Latin America until 2033, with renewal options through 2037 [4]. These multi-year agreements not only solidify Cargojet’s role in high-growth markets but also provide predictable revenue streams, reducing exposure to short-term volatility.

The significance of these partnerships lies in their alignment with the e-commerce boom. Amazon’s logistics network, for instance, relies heavily on air cargo to meet consumer demand for fast delivery, while DHL’s expansion in Latin America reflects a broader trend of cross-border e-commerce growth. By locking in these contracts, Cargojet ensures its capacity remains utilized at scale, leveraging its high operating leverage—where 85% of direct costs are fixed—to drive margin expansion as volumes rise [2].

Labor Stability: A Competitive Edge in a Tight Labor Market

Labor stability has emerged as a critical differentiator in the logistics sector. According to a 2025 industry report, companies are increasingly prioritizing workforce retention through improved amenities and technology-driven efficiency [5]. Cargojet’s 2024–2025 labor contract extensions, which cover key operational roles, are designed to mitigate turnover costs and ensure consistent service reliability. While the company faced a 50-pilot shortage earlier in 2024, leading to increased training and overtime expenses [1], the long-term contracts now provide a framework for structured workforce planning.

The benefits of this stability are already materializing. Cargojet reported a 15% increase in Q3 2024 revenues and a 17% rise in adjusted EBITDA, despite the pilot shortage [1]. By Q4 2024, the company surpassed revenue forecasts by 32% year-over-year, demonstrating resilience in the face of operational challenges [2]. These results highlight how labor stability, even amid short-term disruptions, can underpin financial performance by reducing the costs associated with high turnover and ensuring consistent service delivery.

Financial Discipline and Shareholder Returns

Cargojet’s focus on labor stability is complemented by a robust capital return strategy. The company launched a National Candle Buy-Back (NCIB) program targeting 8.7% of its public float by year-end 2024, with plans to increase this to 10% [2]. This initiative, paired with a growing dividend, reflects management’s commitment to returning excess cash to shareholders. The NCIB program is particularly impactful in a market where Cargojet’s stock is perceived as undervalued, as noted by analysts at The Fool [2].

Debt reduction further strengthens the company’s financial position. Cargojet redeemed its 5.75% senior unsecured hybrid debentures in 2024, lowering leverage to 2.2 times EBITDA [1]. This move not only improves credit metrics but also frees up cash flow for reinvestment or shareholder returns. Morningstar DBRS affirmed Cargojet’s BBB (low) issuer rating in 2025, citing stable operating profits and prudent balance sheet management [3].

Industry Trends and the Path Forward

The logistics sector’s shift toward automation and digital tools is another tailwind for Cargojet. As noted in a 2025 supply chain analysis, companies are adopting AI and predictive analytics to offset labor shortages and enhance productivity [5]. While Cargojet has not explicitly detailed its technology investments, its focus on labor stability aligns with broader industry trends that prioritize workforce retention and operational agility.

Looking ahead, Cargojet’s strategic alignment with Amazon and DHL positions it to benefit from the continued growth of e-commerce. The company’s high operating leverage means that incremental volume gains—driven by its partners’ expansion—will translate into disproportionate margin improvements. For investors, this creates a compelling narrative: a business that is not only navigating near-term challenges but also building a durable competitive advantage through labor stability and financial discipline.

Conclusion

Cargojet’s strategic focus on labor stability and long-term partnerships is a masterclass in aligning operational resilience with shareholder value. By securing contracts with Amazon and DHL, the company has anchored its role in high-growth markets, while its labor contracts and NCIB program ensure that excess cash is returned to investors. As the logistics sector continues to grapple with labor and supply chain challenges, Cargojet’s disciplined approach positions it as a standout investment opportunity.

Source:
[1] Cargojet Extends Agreement with Amazon, [https://cargojet.com/2025/07/02/cargojet-extends-agreement-with-amazon/]
[2] Rc-2024-winning-written-report-university-of-waterloo (pdf), [https://www.cliffsnotes.com/study-notes/20207527]
[3] Morningstar DBRS Assigns an Issuer Rating of BBB (low), [https://dbrs.morningstar.com/research/456586/morningstar-dbrs-assigns-an-issuer-rating-of-bbb-low-with-a-stable-trend-to-cargojet-inc]
[4] DHL Express renews with Cargojet until 2033, [https://www.aircargonews.net/freighter-operators/dhl-express-renews-with-cargojet-until-2033/1080504.article]
[5] Straws in the wind: supply chain quarterly update, [https://www.ey.com/en_us/ey-center-for-executive-leadership/supply-chain-quarterly-update]