Quality not quantity

posted on 4th April 2018

Size-wise, Canada has a slight edge over the US, although from an economic perspective, the US has obviously long overshadowed its neighbour to the north. But Canada’s prolific automotive, aerospace, mining, and oil and gas sectors mean the country is a major player in the global economic arena and in the international cargo sector, insists Vito Losurdo, vice president of global airfreight services for UPS.

Some of this also reflects Canada’s location and geography, and Canada remains the US’s largest trading partner, Losurdo says, with $1.6 billion worth of goods flowing daily between the two nations. He says shipping freight between the US and Canada is so commonplace that it has become a nearly seamless process.

“At UPS, we often route shipments between US gateways to Canada and vice-versa for onward international movement,” he observes. For instance, UPS may ship Middle Eastern-bound goods from Dallas/Fort Worth International Airport to Toronto Pearson International Airport before they reach their final destination. Toronto airport is especially key to UPS’ North American network, Losurdo says, providing it with “excellent belly capacity options through our preferred carriers to best connect our customers in North America with certain parts of the world”.

Gary Ogden, vice president of Toronto-based air cargo handler GTA World Cargo, agrees that Pearson airport provides freight carriers with strong connectivity, dubbing it “the Kennedy of Canada” − a major international hub like New York’s JFK that also competes with the likes of Chicago O’Hare International Airport and Miami International Airport. “But with the Canadian dollar being what it is, we’ve become a lot more competitive,” he says.

Geographically, Toronto is fairly well placed, Ogden says, with many heavily populated cities located within a 500-mile (800km) radius. “So we can be a good transshipment hub if cargo comes in by air and out by truck or in by truck and out by air,” he says. “We can be a good transfer point.”

Capitalizing on this benefit led GTA World Cargo to increase its freight-handling capabilities at Toronto Pearson in late 2013. Unlike the company’s previous facilities − which Ogden admits were “slightly outdated and not specialized enough” − GTA World Cargo’s new, 83,000-square-foot (8,000sqm) warehouse is capable of handling the high-value freight that has become Pearson’s bread and butter. Ogden reveals that he has seen particularly strong volumes of Canadian lobsters lately since consumption of the food is surging in Central Asia and Russia. “We make three things very well in Canada,” he says, laughing: “Ice wine, maple syrup, and lobster.”

Handling such specialized cargo is key to GTA World Cargo’s business plan, Ogden says, since it provides airlines and freight forwarders with the highest yield. After all, he points out, high-value freight such as perishables and pharmaceuticals remains an extremely profitable market, despite the capacity issues currently plaguing the airfreight sector.

Air Canada Cargo vice president Lise-Marie Turpin praises such efforts to invest in high-value freight, agreeing that they help combat the challenge of overcapacity to and from many air freight markets. Right now, Turpin says, cargo supply and demand are out of sync.

“We’re having an overcapacity situation,” she says. “It’s been going on for a number of years and we’re still in that scenario. So we do feel that pressure.” Turpin cites the prevalence of passenger carriers buying new fuel-efficient aircraft that offer strong cargo lift as a key reason for this.

While there may be overcapacity from a belly-hold freight perspective, UPS’s Losurdo says he has witnessed the reverse phenomenon when it comes to freighters. One of his biggest grievances with the Canadian airfreight sector is the lack of large freighters in and out of Canada, which, he says, limits upper-deck cargo capacity for direct international shipments.

Turpin doesn’t refute this point, but says that Canada’s challenges only reflect today’s global economic reality. “We’re not different from anywhere else,” she says. “We’re all dependent on trade and traffic flows and whatnot.” And traffic flows, she admits, are still somewhat stagnant.

“There’s a little bit of uncertainty in the global economy; we haven’t seen anybody bounce back really strongly,” she says. That’s why like Ogden, Turpin recommends that cargo personnel focus as much on quality as quantity.

“We have to consider the products we offer our customers and how they provide them with added value,” she says. Think in terms of retaining the relevance of air cargo, Turpin advises. Many carriers are focused on pharmaceutical solutions, for instance − and “being in Canada, we’re sitting on a fairly large perishables market,” she says.

Addressing this profitable sector led Air Canada Cargo executives to take a long, hard look at how they handle perishables and to determine whether their facilities and processes were sufficient. Their answer came in the form of AC Cool Chain, a specialized offering for pharmaceutical shipments, allowing customers at more than 30 Air Canada Cargo locations to select the active and passive packing conditions for their freight − a service that attempts to eliminates temperature deviations during transit. Turpin says the product is indicative of Air Canada Cargo’s current focus area.

Another key area of focus for the Canadian cargo carrier is e-freight, Turpin reveals. She says eliminating the industry’s dependence on paper is of utmost importance to Air Canada Cargo, and claims it has illustrated its commitment to e-freight by working with customers and IATA to encourage e-air waybill (eAWB) adoption.

“We believe that the eAWB is essential for our industry to evolve,” Turpin says. increasing efficiencies and improving the quality of data. Currently more than 65% of stations in the carrier’s network currently accept eAWBs, and Turpin expects that number to grow to 80% by the end of the year. Full e-freight implementation is what she really has her eye on, however, and she’s confident that such a scenario will one day become an industry reality.

Calling e-freight the “next step on our paperless journey”, she says it removes even more kinks in the supply chain. In addition to ensuring that freight data accompanies each shipment, e-freight enables customers to tender cargo and documents seamlessly, Tuprin says, even when they are produced from two different sources.

To support this process, Air Canada Cargo executives recently launched an online booking tool that enables the creation of e-AWBs, along with developing new functionalities for its airfreight portal. Turpin says customers can also transact with the carrier via FWB messaging and the EzyCargo portal.

She says she’s proud of the strides her company has made to facilitate greater e-freight penetration, although she believes the paperless battle is far from over. “Along with carrier and forwarder interest and support, to be truly successful and of value, e-freight would benefit from more engagement from the regulatory bodies,” Turpin says. Simply put, she says more countries need to recognize the advantages of accepting electronic documents.

Canada, she says, does many things right from an airfreight perspective. In addition to having a pro-business government − “Our [leaders] are very focused on how Canada’s economic gateways can remain attractive, be it aviation or the maritime sector in central or western Canada,” Turpin says − Canada benefits from a strong cargo infrastructure. “We have really good hubs in Canada − particularly Montreal, Toronto, Vancouver and, to a lesser degree, Calgary,” Turpin says. What’s also good about Canada, she asserts, is the level of conversation among aviation stakeholders about how to improve the nation’s cargo infrastructure.

That’s not to say that all of Canada’s problems have been solved, however. Turpin acknowledges that the nation’s extreme weather − snowstorms in the winter and thunderstorms in the summer − often creates challenges from a cargo-handling perspective, although she says Canadians are used to this environment. “But the weather does upset the operation of airports, and we have to adapt to that.”

She also admits that some of Canada’s roadways need renovations, and access to cargo zones within the nation’s airports could be enhanced. But the intermodal connectivity at Canadian gateways − particularly between air and truck − largely compensates for these challenges, Turpin explains. Thanks to the nation’s sophisticated transport infrastructure, “Canada is very nimble, very dynamic and can turn [freight] very quickly when we need to from an operational perspective”, she says.

GTA World Cargo’s Gary Ogden says Canada’s size also plays a role in its success as a cargo hub. Since the nation is so large and spread out, developing an intricate transport system is a necessity, he says. “The large spaces between populations in Canada help the trucking and airfreight industries,” Ogden says, “although they do present challenges, too.” He says operating in such a vast country has led GTA World Cargo to focus on the two greatest assets it can give Canadian customers: speed and efficiency. “That way, our airlines and airports have a bit of an advantage,” Ogden says.

But also giving Canadian airlines and airports an advantage, Ogden says, is the favorable foreign exchange rate. “Right now, the exchange rate makes Canada very attractive in terms of paying us in Canadian dollars for services that you could pay elsewhere in America,” he says. “It gives us savings of over 20% right off the cuff.”

Even so, Ogden admits that the US does have one key advantage over its northern neighbor − more cargo-focused airports. Canada’s big three, he says, are Toronto Pearson, Calgary International Airport and, to a lesser extent, Montréal-Mirabel International Airport; the latter is open to cargo operations only. “Once you get beyond that, you don’t have the same numbers of cargo-focused airports as you do in the US or, for that matter, Europe,” he says.

What the top Canadian airports do well, however, they do very well, asserts Darryl Horzelenberg, manager of route development at Greater Toronto Airports Authority. He says Toronto Pearson, in particular, attracts businesses from around the world to Canada and drives foreign investment. For one thing, Horzelenberg says, Toronto Pearson is within a day’s drive to more than 40 percent of the US population, “putting us in that sweet spot of opportunity.” The airport also boasts top-notch cargo-handling facilities, he says, as evidenced by Toronto Pearson’s 1.23 million square feet of warehousing space and three dedicated cargo aprons. “We also have the advantage of [housing] many world-class handling firms that cater to the ever-changing business needs of air cargo,” he says.

Horzelenberg’s vision? One day Toronto Pearson will become “North America’s premier portal to a world of possibilities”.

No doubt the airport will have some stiff competition from its US rivals. Canadian carriers certainly do, Lise-Marie Turpin maintains, although she says Air Canada Cargo competes “quite well” in the US. The carrier offers good wide-body capacity to points in Los Angeles, as well as Canada, she says, and Air Canada Cargo feeds freight from these locations to its European and Asian networks. Turpin also pooh-poohs any issues related to cross-border operations. “Canada and the U.S. have relatively good mutual agreements about how we’re going to do certain things,” she says, “and they work well.”

Turpin adds that Air Canada Cargo is “very attentive” to US security regulations, as enforced by the US Customs and Border Protection (CBP) and the US Transportation Security Administration (TSA). “We also make sure that we’re partnering in any kind of industry groups,” Turpin says, revealing that Air Canada Cargo was one of the first foreign carriers to join the US CBP and the US TSA’s joint Air Cargo Advance Screening pilot program. She believes that such an action highlights the level of collaboration, respect and cooperation among US and Canadian cargo authorities. After all, the US and Canada may have their differences, but the nations share a common commitment: keeping cargo secure and profitable for all.