Canada's air cargo industry could find itself in a holding pattern if changes aren't made, an industry organization warns.
The Canadian Airports Council (CAC) says "urgent care" is needed if Canada is to play a leading role in the global air cargo sector. It notes that not one Canadian airport is in the top 50 airports for air cargo tonnage despite overseas air cargo tonnage increasing 55 per cent since 1995.
"Our major concern is the continued inability for Canada to attract major cargo traffic into this country," says CAC president and CEO Jim Facette, who favours an open skies-type agreement for air cargo. "We have repeatedly heard that our air service agreements limit the ability of larger air cargo providers to do business in Canada."
The CAC's 45 members encompass 180 airports across the country. The council's warning was delivered at the recent International Air Cargo Association (TIACA) international air cargo forum and exposition held in Calgary, the largest exhibition in the event's 46-year history.
Opening the skies, through agreements with other countries, generally means an absence of restrictions on the number of carriers that could serve a market, flight frequencies and capacity, and on the prices charged.
But Canada's current approach to international air service is focused on passengers, not cargo, Facette notes. Further, Canada has just one open skies agreement with the United States, while another one with the United Kingdom is in the works. The U.S., by contrast, has 77 open skies agreements.
"Canada is well placed to serve as a leading player in air cargo, as the first stop on the polar route from Europe or Asia to the Americas, with great truck and rail access to the U.S., and growing air links to Central and South America," says Facette. "But while other countries have liberalized, a restrictive international air policy here in Canada keeps air cargo carriers out and is stifling the ability of Canadian communities to participate in this profitable $40-billion US industry."
Transport Canada is projecting that 10 years from now, air cargo tonnage in Canada will rise by at least 35 per cent and possibly as high as 65 per cent.
Facette says a number of Canadian airports would like to increase their cargo operations, such as Prince George, Ottawa, Montreal, Moncton and Halifax. In Alberta, both Calgary and Edmonton have major plans to beef up their cargo operations.
"Their ability to grow the cargo market is restricted. To the extent they can exploit it right now, they're doing so, but there's a cap on their growth" under existing air agreements.
Improved air cargo links not only help Canadian businesses, they create jobs, he adds.
An economic impact study conducted for Vancouver International Airport shows that every time a cargo plane lands at the airport from the U.S., more than 200 hours of employment are generated along the supply chain, resulting in 40 person-years of employment over a year of daily service.
Federal Transport Minister Lawrence Cannon is expected to unveil a new air industry policy later this year. Facette believes there is a good chance the Conservative government will take a more open view that could enhance the ability of airports to increase their traffic.
As the CAC lobbies for a more liberalized Canadian air cargo regime, TIACA delegates also deal with issues ranging from the impact of air cargo on the global economy to concerns about excessive regulatory paperwork.
Michael Ducker, executive vice-president of international operations for FedEx Express and a moderator for one of the conference panels on the impact of air cargo on the global economy, says air cargo is not just a trade facilitator.
"It is a trade creator that contributes to the competitive advantage of nations," says Ducker. "The air cargo industry is primarily the key facilitator of economic prosperity. We (the industry) carry two per cent of the tonnage in global trade, but air cargo represents more than 40 per cent of the value. We're the clipper ships of the computer age."
Ducker says there is a proclivity to over-regulate the industry and there is a need to replace "regulatory rules that are out of date and out of step with today's global economy."
For Bill Gottlieb, president of Montreal-based David Kirsch Forwarders Ltd., the issue is paperwork.
A past president of the Canadian International Freight Forwarders Association and a senior vice-president of the International Federation of Freight Forwarders Associations, Gottlieb agrees that air cargo would move faster if the industry went electronic and replaced standard paper waybills with versions that could be transmitted by fax or e-mail.
"The industry has not kept pace with the advances available to trading and supply chain partners in terms of documentation and delivering data to the parties that require it," says Gottlieb, who spoke at the forum.
But he isn't buying into the claim by the Montreal-based International Air Transport Association (IATA) that the air cargo industry could fill 39 Boeing 747 freighters each year with paper wasted on documentation, or that paperless cargo processing could save the industry $1.2 billion each year.
"IATA likes to fly high with some panache and big headlines - that they can provide big savings," says Gottlieb. "The question that begs to be asked when you drill down to actual shipment is, who is going to save that money?" He adds that while $1.2 billion sounds like a large number, it actually covers millions of shipments and may only translate into small savings, meaning that not all parties on the shipping chain might find it worthwhile.
The air cargo forum and exhibition, which takes places every two years, is recognized as the world's biggest and most important gathering of the air cargo industry. This year, organizers increased exhibition space by 10 per cent to meet an unprecedented demand from air-logistics organizations around the world to participate.
(Laura Severs can be reached at laura@businessedge.ca)
