Amazon and cargo airlines are scouring the Arizona desert for old and cheap passenger jets to fly packages

A stored Boeing 767-300 aircraft - Pinal Air Park Aircraft Storage Facility Visit
A stored Boeing 767-300 aircraft.

  • Cargo carriers such as Amazon’s Prime Air are searching the American Southwest for former airliners stored in the desert.
  • Arizona is home to Pinal Air Park, where between 40 and 50 jets have been bought by cargo carriers.
  • Older passenger planes were bought at a discount during the pandemic and converted to freighters.
  • See more stories on Insider’s business page.

When consumers turned to Amazon to buy more goods during the pandemic, Amazon turned to aircraft storage facilities in the desert to buy more cargo planes.

The rise of pandemic online shopping and e-commerce caused a cargo industry boom in the past year. While passenger airlines found themselves with too many airplanes, cargo airlines had too little and went shopping for planes being stored in the American Southwest.

“80% of all the stored aircraft worldwide are stored basically in the Southwest,” Scott Butler, chief commercial officer for Marana, Arizona-based Ascent Aviation Services, told Insider. Ascent is responsible for storing most of the aircraft at Pinal Air Park in Marana on behalf of airlines and aircraft leasing companies.

While some might know these facilities as the places where aircraft go to die, they’ve been keeping airliners alive by preserving them through the pandemic. More than 400 aircraft from airlines around the world were stored in Marana alone during the worst of the crisis.

They’ve also been veritable shopping malls for cargo carriers and startup airlines looking to purchase planes on the cheap.

A stored Boeing 767-300 aircraft - Pinal Air Park Aircraft Storage Facility Visit
A stored Boeing 767-300 aircraft.

Between 40 and 50 aircraft left Marana bound for cargo airlines since the start of the pandemic, with Boeing’s 737-800 and 767-300ER being the most popular. Aircraft sales didn’t occur straightaway after March as airlines contemplated whether to hold on to the planes until aircraft values recovered from the nosedive they took in the pandemic’s early days.

“[Airlines] didn’t want to sell an aircraft that had multiple years of use left,” Butler said, “but as pandemic dragged on, the need to convert assets into cash became necessary.”

Airlines were losing billions each quarter and shedding aircraft was one way of stopping the bleeding. Amazon was a major customer and bought 11 Boeing 767-300ER aircraft from Delta Air Lines and Canada’s WestJet to power its Prime Air fleet.

Read More: Amazon Air’s plane-buying spree could put 95% of Americans in 1-day shipping range, a new report says

Once purchased, the former passenger jets still need to be converted into freighters, a process that’s only performed in a handful of facilities around the world. And there is a backlog of aircraft waiting to be converted.

Israel Aerospace Industries is one of Amazon’s conversion partners of choice. The Middle Eastern firm is a long-time player in the conversion realm with experience on Boeing jets and is also working on converting the world’s largest twin-engine passenger plane into the world’s largest twin-engine cargo plane.

Boeing 767-300ER cargo conversion
Converting a Boeing 767-300ER to a cargo plane.

Conversions take between 90 and 120 days, depending on the aircraft, and can cost between $13 and $14 million for a Boeing 767-300ER, almost the cost of a second-hand 767 itself. There is a wait, though, and Israel Aerospace Industries’ Yossi Melamed told Insider in February that the firm is booked through 2022.

Some cargo carriers that had planes stored in Marana were quick to get them flying again. Atlas Air was one that reactivated four Boeing 747-400F cargo planes to handle the increase in demand, Air Cargo News reported.

“We had three 747-400s on-site for National Airlines for an extended period of time and when cargo picked up last year, they put them back into service,” Butler said, adding that it wasn’t a cheap endeavor to restore the planes to flying service but the airline likely saw more value in having the planes flying than sitting on the ground.

The modern-day gold rush in the Arizona desert, however, has largely dried up as Marana’s best aircraft have been bought off. But that doesn’t stop airlines from trying.

“I get calls, still, from people looking for cargo aircraft in the desert and they just don’t exist right now,” Butler said. “Anything that has storage capacity, has some good engines on it, and has some time on it left, [cargo operators] are utilizing the aircraft far more than passenger operators were.”

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The largest container ship to ever visit the East Coast just arrived at the Port of New York and New Jersey: Meet the Marco Polo

CMA CGM Marco Polo arrival
The CMA CGM Marco Polo arriving at the Port of New York and New Jersey.

  • The CMA CGM Marco Polo is the largest container ship to visit the US East Coast.
  • It can carry a total of 16,022 containers that ship goods such as furniture, foodstuffs, and clothing.
  • Its arrival was possible due to a $1.7 billion project to raise the roadway of the Bayonne Bridge.
  • See more stories on Insider’s business page.

A new record was just set at the Port of New York and New Jersey.

The CMA CGM Marco Polo arrived in New York Harbor on Thursday morning after completing a three-week journey from China through the Suez Canal. It’s the largest container vessel to ever visit, or call, the East Coast of the US and was the largest in the world when it was built in 2013.

A total of 16,022 20-foot-equivalent containers, also known as TEUs, can fit on the ship that’s roughly the size of the Empire State Building. That many containers could cover 61 miles if put in a straight line, almost the width of New Jersey.

Inside the containers are a variety of consumer goods including home goods, furniture, and construction materials, bound for US customers. Over 10,000 shipping companies and customers are represented by the containers on the ship.

CMA CGM Marco Polo arrival
The CMA CGM Marco Polo arriving at the Port of New York and New Jersey.

While it’s in the port, 5,000 TEUs will be offloaded onto a constant stream of trucks and then transported either by road or rail to their final destinations. Over 140 million people are served by the Port of New York and New Jersey and even destinations as far as Chicago are a short two-day train ride away.

Once the offloading process is complete, new containers will be put on the ship to be delivered at other ports of call as the Marco Polo continues its around-the-world journey. Popular exports from the US include cotton, forest products, agricultural supplies, and foodstuffs.

Before arriving in the US, the ship made stops in Vietnam, Singapore, Malaysia, Sri Lanka, and Canada as part of CMA CGM’s Columbus JAX service. The Port of Savannah in Georgia will be the last port of call before the long trip back to Asia.

A record-setting pandemic

The Port of New York and New Jersey just celebrated a similar milestone in September when the CMA CGM Brazil broke the record now being broken by the Marco Polo.

Larger mega-ships have only recently been able to access the East Coast’s largest port since 2019. Standing in the way between the port and the massive freighters has been the Bayonne Bridge, connecting Bayonne, New Jersey with Staten Island, New York.

The Port Authority of New York and New Jersey spent $1.7 billion to raise the roadway of the bridge and allow larger ships to pass underneath. Engineers also dredged the bottom of the Kill van Kull, using explosives to break up the bedrock below, to increase the depth of the port’s waterways to 50 feet.

CMA CGM Marco Polo arrival
The CMA CGM Marco Polo arriving at the Port of New York and New Jersey.

Ships with capacities as much as 18,000 TEUs can now access the Port of New York and New Jersey, giving shipping companies another option when serving the US. Some ships have been choosing to call the East Coast port instead of waiting in the backlog of ships outside the Ports of Long Beach and Los Angeles, as Insider’s Brittany Chang saw firsthand.

Read More: 22 companies cashing in on the brutal log-jam at America’s busiest ports

And the Bayonne Bridge project was completed not a moment too soon. A backlog of consumer goods like furniture has been building up during the pandemic, and larger ships are required to meet the newfound demand.

The Marco Polo is just one ship that’s helping chip away at that backlog so consumers can receive the long-awaited goods they’ve ordered during the e-commerce boom of the pandemic.

Read More: The untold story of how the furniture industry crashed during the pandemic – and how smart players are rethinking it now

And while the Marco Polo’s arrival is a monumental occasion for the port, the ever-growing demand for mega-ships will likely mean an even larger ship may break the record once again in a few month’s time.

Read the original article on Business Insider

The e-commerce boom fueled by Amazon has led to the creation of the world’s largest twin-engine cargo plane – meet ‘Big Twin’

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

  • The growth of e-commerce companies like Amazon is prompting cargo carriers to take on more planes.
  • Israel Aerospace Industries and GECAS are developing a new cargo plane based on the Boeing 777-300ER.
  • The world’s largest twin-engine cargo will carry more cargo and be more efficient than its predecessors.
  • See more stories on Insider’s business page.
The booming e-commerce industry is fueling a need for more cargo aircraft to carry packages around the world.

prime air

Instead of buying new aircraft, many cargo carriers are choosing to purchase former passenger planes and convert them to freighters.

Boeing 767-300ER cargo conversion
Converting a Boeing 767-300ER to a cargo plane.

It’s a months-long process that can cost upwards of $10 million for larger aircraft. But the financial savings make it worth it compared to purchasing new planes.

Boeing 767-300ER cargo conversion
Converting a Boeing 767-300ER to a cargo plane.

Cargo airlines such as Amazon Prime Air have been among the top customers for converted aircraft like the Boeing 767-300ER and 737-800F.

amazon prime air

Read More: The airline industry’s loss is Amazon’s gain as the e-commerce giant purchases 11 Boeing 767 airliners to use as cargo planes

Right now, the Boeing 747 is the largest mainstream cargo plane but its reign may be coming to an end. Boeing will stop producing the aircraft in 2022 and the ones currently flying will only be doing so for a few more decades.

Boeing 747 Cargo

Read More: Boeing ending production of the 747 means cargo carriers will lose a key feature and be left scrambling when it’s gone

As a result, Israel Aerospace Industries is turning to a new aircraft as a candidate for conversions: the Boeing 777-300ER.

Boeing 777 300ER

It’s the largest twin-engine aircraft currently flying passengers and is slated to become the largest twin-engine cargo plane. It’s called “Big Twin.”

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

This 16-year-old aircraft is currently in development to be the world’s first converted Boeing 777-300ERSF.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

It started its life as an Emirates passenger plane that was first delivered in 2005, with the conversion giving the aircraft a second life beyond flying people.

FILE PHOTO: Emirates Airline Boeing 777-300ER planes are seen at Dubai International Airport in Dubai, United Arab Emirates February 15, 2019. REUTERS/Christopher Pike
Emirates Airline Boeing 777 planes at are seen Dubai International Airport in Dubai

Source: Planespotters.net

IAI is developing the aircraft along with GECAS, the aircraft leasing division of GE Capital.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

True to its name, the Boeing 777-300ER freighter offers 25% greater volume compared to the Boeing 777-200F, an already successful freighter flying for the likes of Lufthansa Cargo, FedEx Express, and Qatar Airways Cargo, with 90% commonality between the two aircraft.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

The Big Twin also offers a fuel savings of 21% per tonne compared to the Boeing 747-400F aircraft while offering a comparable range and fewer engines to service.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

A range of 4,650 nautical miles will allow Big Twin to connect city pairs including New York-Istanbul, Turkey; Seattle-Tokyo, Japan; and Miami-Buenos Aires, Argentina.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

The Big Twin will be powered by two GE Aviation GE90 engines offering 115,000 pounds of thrust each.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

IAI plans to achieve certification for the Big Twin in 2022. After that, each conversion will take up to 130 days, only 10 more days than Boeing 767 conversions.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

Converting the 777-300ER is proving to be a different animal than the aircraft IAI has converted in the past. But the firm says that the Big Twin is nothing it can’t handle.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

“The 777 is different than the 747 and 767, for example, as it’s a more modern aircraft,” Rafi Matalon, IAI’s executive vice president of marketing, told Insider. “It’s a challenge but based on our very strong engineering capability for the last 60 years, we are solving the problems.”

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

The conversion process for the Big Twin will include converting the passenger cabin for cargo use. That means removing the no-longer-needed passenger seats, strengthening the cabin floor, and creating a barrier between the cargo hold and cockpit.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

Read More: Desperate for more planes, cargo airlines are buying up aging passenger jets. Here’s how they’re converted to fly Amazon packages instead of people.

A cargo door will then be installed on the side of the fuselage for loading and unloading cargo pallets.

Boeing 777-300ER cargo conversion
Converting a Boeing 777-300ER to a cargo plane.

Michigan-based cargo carrier Kalitta Air is the Big Twin’s first customer.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

The Big Twin is a natural next step for Kalitta, which currently operates the Boeing 777-200F.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

Pilots trained on the smaller 777 can fly the Big Twin with minimal additional training.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

The Big Twin will still be Kalitta’s second-largest plane behind the Boeing 747-400F.

Kalitta Air Boeing 747-400F
A Kalitta Air Boeing 747-400F aircraft.

But, as the passenger airlines are proving, the future is in twin-engine planes and IAI is in talks with more airlines and leasing companies for potential Big Twin orders. “Let’s just say, as a marketing guy, I am happy that I’m very busy,” Matalon said.

Israel Aerospace Industries Boeing 777-300ER "Big Twin" cargo plane
Israel Aerospace Industries’ Boeing 777-300ER “Big Twin” cargo plane.

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An unusually high ‘spring’ tide might help refloat the Ever Given on the Suez Canal, reports say

Suez canal ever given
The Ever Given in the Suez Canal.

  • An unusually high spring tide is expected in the Suez Canal on Monday.
  • The tide, also called a king tide, could help refloat the Ever Given, according to multiple reports.
  • If the ship can’t be moved soon, teams will begin removing some of its containers.
  • See more stories on Insider’s business page.

Tides go out, then come back in again but the boat blocking the Suez Canal still won’t budge.

Monday, however, will bring an unusually high tide, called a “spring” tide, to the canal. It’s expected to push the canal’s water level up as much as 18 inches, which could help dislodge the Ever Given, as The New York Times and other outlets reported.

Tugboats and dredging crews are working to refloat the ship, which has been blocking the canal since Tuesday. They moved it slightly on Saturday. But Monday’s tide will add a little extra room for it to float, which might help move the ship, according to experts.

“The significance of this high water is that it’s higher than at the time of the grounding so in theory it gives you your best shot,” a retired British Navy commander, Tom Sharpe, told The Wall Street Journal.

Suez Egypt
Tides for the next seven days at the Suez Canal.

“You have a significant increase in water in there,” Richard Meade, a managing editor of Lloyd’s List Maritime Intelligence told Bloomberg.

Spring tides are also called “king tides,” according to the National Oceanic and Atmospheric Administration (NOAA0. The “spring” is a reference to the “springing forth” of the tide as a new or full moon arrives, according to NOAA.

Spring Tide Graphic NOAA
Spring tides occur with the arrival of a new or full moon.

After Monday, when the spring tides peak, the high tides will begin getting lower, according to data from Tide-Forecast. As the tides become lower, it may become more difficult to refloat the Ever Given, although Reuters reported that experts were divided on the subject.

If the ship can’t be moved soon, teams will begin removing some of the containers aboard the ship, attempting to lighten its load, Lt. Gen Osama Rabie, the chairman of the Suez Canal Authority, told reporters on Saturday. That process may take weeks.

“I think the most likely outcome is that it will be refloated on Sunday or Monday. But the worst case (stuck for weeks) is a real possibility,” Clemens Schapeler, of Transporeon, told Reuters.

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Tankers and container ships, including Cheniere and Shell/BG vessels, are changing course to avoid the Suez Canal logjam

ever given suez canal
Ever Given, a Panama-flagged cargo ship, that is wedged across the Suez Canal and blocking traffic in the vital waterway.

  • Cheniere and Shell/BG vessels change routes to avoid congestion at the Suez Canal in Egypt.
  • The logjam has disrupted one of the busiest trade routes in the world.
  • At least 10 tankers and container ships are altering course.
  • See more stories on Insider’s business page.

At least 10 tankers and container ships, including two that are carrying natural gas for Cheniere and Shell/BG Group, are averting their routes to avoid the congestion in the Suez Canal, CNBC reports.

The outlet quoted MarineTraffic spokesman Georgios Hatzimanolis as saying: “We expect that number to go up as this closure progresses. From Asia to Europe we are seeing ships divert in the Indian Ocean, just below the southern tip of Sri Lanka.”

MarineTraffic released data showing the diversions. According to the service, there are 97 shipping vessels stuck in the upper end of the canal, 23 vessels waiting in the centre, and 108 vessels in the lower end, as reported by CNBC.

Data showed that one tanker, named Maran Gas Andros, left Texas on March 19. It is apparently carrying 170,000 cubic meters of liquified crude oil.

According to the CNBC report, it changed course, along with other tankers, in the middle of the North Atlantic Ocean, before diverting to go around the Cape of Good Hope.

The most recent update on the Suez Canal crisis came from a statement by Evergreen, the corporation that owns the stricken Ever Given vessel. It said more than 20,000 tons of sand and mud have been removed in a dredging operation.

The rudder and propeller are fully functional and expected to provide additional support to tugboats, according to the statement.

Egyptian president Abdul Fattah al-Sisi has made plans to ease the pressure on the stranded ship, according to the BBC. That would involve moving some containers to another vessel or land near the canal.

The rescue team is carrying on with the dredging efforts and will resume endeavours to refloat the shipping vessel at 14:00 local time on Sunday.

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Energy-sector ETFs the only group to see $1 billion in weekly inflows as Suez Canal blockage and coming summer demand create favorable backdrop for oil

oil texas
Workers extracting oil from oil wells in the Permian Basin in Midland, Texas.

  • Energy-sector ETFs took in more than $1 billion in inflows this week, the only funds from a major sector to do so.
  • Energy inflows accompanied some recovery in oil prices after they dropped into correction territory.
  • Oil prices could stick to higher ground if a cargo ship stuck in the Suez Canal remains lodged there for weeks.
  • See more stories on Insider’s business page.

Energy sector exchange-traded funds were the only group this week to add more than $1 billion in inflows as the cargo-ship blockage in the Suez Canal helped oil prices recover from their slump into correction territory.

Energy ETFs were a standout as flows to sector funds “fell prey to the general uncertainty” that ran through the week ended March 24, said EPFR, a subsidiary of Informa that provides fund flows and asset allocation data.

Four of the 11 major groups — commodities, telecoms, technology and financial sector funds — logged outflows for the week, according to a note issued Friday.

Investors pushed into energy sector funds “during a week when the blockage of the Suez Canal, the prospect of the North American spring and summer driving season and expectations of less investment in new supply helped the price of oil rebound from an earlier correction,” said Cameron Brandt, director of research at EPFR, in the note.

Brent oil, the international benchmark, and West Texas Intermediate crude prices tracking US light, sweet crude this week fell into correction territory, with prices down 10% or more from recent highs.

Prices have since recovered some ground, with Brent and WTI each rising by more than 4% on Friday. Brent traded above $64 a barrel after sliding below $61 this week. WTI hovered close to $61 following its drop under $58 a barrel.

Also on Friday, the Energy Select Sector SPDR Fund rose 1.8%, the Vanguard Energy ETF picked up 1% and the SPDR S&P Oil & Gas Exploration & Production ETF added on 2.3%.

Oil prices gained on expectations of tighter oil supplies while a cargo ship remains stuck in the Suez Canal, a key trade route that’s used to transport crude and refined products and connects Europe to Asia. Analysts have said it may be weeks before the Ever Given, a nearly 200-foot-wide and 1,300-foot-long vessel, is dislodged from the canal.

The blockage is costing $400 million an hour in delayed goods, according to a Lloyd’s List estimate, with hundreds of cargo ships are now unable to pass through the canal.

“The blockage has impacted over 20 oil tankers and the longer this lasts, it should drive oil prices higher,” Edward Moya, senior market analyst at Oanda, wrote in a note. Meanwhile, “Europe is slowly getting their vaccine rollout in order and that should trigger energy traders to price in an improved crude demand outlook by the summer,” he said.

As the summer driving season approaches in the US, roughly 14% of the population has been vaccinated for the coronavirus, according to the Centers for Disease Control and Prevention. President Joe Biden on Thursday raised his vaccination goal to 200 million for the first 100 days of his administration after hitting his previous target of 100 million.

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