United Airlines leverages small freighter for Puerto Rico pharma exports

United Airlines has arranged a quasi-charter service with a small cargo airline that flies narrowbody freighters from Puerto Rico to feed its Chicago hub with pharmaceutical shipments heading overseas and to health care companies in the Midwest.

The transaction is noteworthy because of the supply chain benefits for businesses, the fact that United Cargo is supplementing capacity with a narrowbody freighter for the first time, and because it is partnering with a startup FreightTech company and a startup cargo airline to expand its network.

Puerto Rico is the top bioscience manufacturing center in the U.S. by export volume. United Airlines is one of the largest air transport providers for temperature-controlled pharmaceutical shipments.

The ability to use direct cargo jets instead of limited lower-deck storage on standard passenger aircraft, or routing large containers on a daily widebody flight through United’s Newark, New Jersey, hub gives customers more capacity and better shipping options, according to executives involved in the deal.

Miami-based Global Crossing Airlines, a startup carrier with four Airbus A321 converted freighters that also rents passenger aircraft to groups for private flights, two weeks ago began carrying shipments tendered by United’s cargo division from San Juan to Chicago O’Hare International Airport, GlobalX President Ryan Goepel confirmed. 

United Cargo is taking commercial responsibility for the northbound leg of GlobalX’s three-times-weekly service to Chicago on behalf of Airblox, a newbie digital exchange where airlines sell future blocks of cargo space, or even entire aircraft, to freight forwarders that need consistent, reliable capacity.

The bulk of cargo United transports from San Juan is pharmaceuticals and medical devices. The passenger airline operates a Boeing 737 MAX 9 twice daily between Chicago and San Juan, but the narrowbody aircraft can’t carry containers. Utilizing containers is more efficient because ramp personnel can make aircraft-to-aircraft transfers, whereas loose lower-deck cargo has to be brought into a warehouse and sit until there is enough volume to consolidate into a standard shipping unit.

“Chicago offers a great outlet with the rest of the network” and simplifies operations, said Manu Jacobs, managing director of specialty products for United Cargo, in a video interview. Shipments from Puerto Rico will be transferred to planes headed to the Asia-Pacific, Europe and even South America. “We’ll also use Chicago as a hub to other gateways in the U.S., either by truck or by flight.” 

The airline has numerous widebody flights from Chicago O’Hare to San Francisco, Los Angeles and Denver, for example, where cargo can be transferred to jets heading to Japan and other locations in Asia and the South Pacific. Trucking to customers in the Midwest or Ohio Valley is more efficient from Chicago than Newark.

United previously moved pharma shipments to Chicago on a Boeing 767 via Newark, where they were put on a dedicated refrigerated truck for overnight delivery. During some months, United flies a widebody passenger aircraft between Newark and Chicago that carries transshipment cargo from Puerto Rico.

A dedicated cargo jet to Chicago also opens the door for United to carry dangerous goods, such as bulk shipments of lithium batteries and certain chemicals, that aren’t permitted on passenger flights.

A dozen of the world’s 20 top-grossing pharmaceutical companies, including Johnson & Johnson, Roche, and AbbVie, operate in Puerto Rico, and eight of the 15 top-selling biopharma products in the world are manufactured there. Many of the top medical device makers, including Medtronics, CooperVision and Boston Scientific, also have facilities on the island, according to the Puerto Rico Air Cargo Life Sciences Community, a stakeholder group.

“That destination that basically was never flown before as a freighter. Bringing that flight down here three times a week is a great idea,” said Sascha Herzig, CEO of ETH Cargo, a freight forwarder on the island. Many pharmaceutical shipments to Indianapolis, a center for drug and device makers, previously went to Miami and were trucked north if they weren’t being flown by an express carrier like FedEx, but Chicago is only a two-hour drive, he noted.

Health care exports from Puerto Rico to the U.S. fell 34% from January through November versus the same period in 2023, primarily because medical devices shifted to ocean transport, said Ronald Veldman, a project manager at Rotate, an air cargo consultancy that has studied the Puerto Rico market.

In 2024, United Airlines operated about 110 tons of widebody capacity per week out of Puerto Rico to the U.S., with 90% going to Newark Liberty International Airport, according to Rotate data.

Connective tissue

Airblox brought GlobalX and United Airlines together.

The airfreight capacity wholesaler was first to develop an electronic platform for logistics providers to reserve a predetermined volume of cargo space on specific flights. Until recently, freight marketplaces facilitated price comparison, shipment booking and payment for immediate airline transactions, where pricing and capacity are more volatile. Airblox caters to shippers that need guaranteed space over the medium term by standardizing capacity purchases through flexible, scalable digital contracts.

Airblox took the risk of signing a contract with GlobalX four months ago for dedicated transportation on the expectation it could find customers. So far southbound flights have been solidly booked with e-commerce, automotive supplies, medical equipment components, precursor ingredients for drugs, perishable foods and irregular types of general cargo. International Bridge, a parcel agent that provides logistics services for e-commerce shippers, uses the GlobalX scheduled service three times per week, President Arthur Brown confirmed. But Airblox board member Neel Jones Shah acknowledged flights were mostly empty going north since they started in mid-October.

“The one thing we learned about the northbound is that if you’re not tied into a global network it’s really difficult because the vast majority of the exports are pharma and they’re not going to the U.S. They’re mainly going to international destinations,” said Shah, a former high-ranking executive at Delta Cargo and logistics provider Flexport. “So that was proving very challenging for us.”

The largest customers manage shipments through the Airblox platform, but the company has also hired global sales agent ECS Group to promote the flight to companies with less frequent shipments, he added.

Now, United Airlines will exclusively sell the northbound leg of the GlobalX charter flight under what is effectively a sublease arrangement. United Airlines, which saw cargo revenue increase 16.6% to $1.7 billion last year, regularly charters large freighters as needed to fill network gaps. This is the first time it has commercially controlled capacity on a narrowbody cargo jet.

The Airblox technology connects GlobalX capacity to United’s booking system and allows United to enter loads so GlobalX and its ground handler, Miami-based Amerijet, can plan loading. United has a sales team in San Juan that markets flights to shippers. United warehouse crews fill the containers and deliver them to the GlobalX ramp for uplift. 

GlobalX and United Airlines signed an electronic interline agreement spelling out the basic rules for payment, handling requirements and documentation. Interlining is a common way airlines move shipments when a single carrier cannot handle the entire route due to geographical or logistical constraints. The tripartite arrangement enabling United to have exclusive access to an entire aircraft takes interlining to another level.

Airblox this year plans to push standardized electronic interline agreements as a way to streamline a manual, bilaterally negotiated process and create greater connectivity between airlines, said Jones Shah. 

“You are taking a heck of a lot of time and bureaucracy out of the process of getting agreements like this established. The goal is to make doing business between parties that actually need each other easier,” he said.

Click here for more FreightWaves stories by Eric Kulisch.

RECOMMENDED READING:

US carrier GlobalX in joint venture to launch Australian cargo airline

GlobalX Airlines to open cargo lane between Chicago, Puerto Rico

The post United Airlines leverages small freighter for Puerto Rico pharma exports appeared first on FreightWaves.