Cost and Capacity: import and export challenges for traders under COVID-19

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By Ken Mark

The European Union Chamber of Commerce in Canada (EUCCAN) recently presented an update by Montreal-based logistics consultant Christian Sivière on the challenges Canada’s international trade community now face on importing  and exporting goods with their European partners.

The main challenges include rising carrier costs and decreased capacity. Air cargo carriers top the list since they face stiffer regulations than ocean-going freighters. Civière cited force majeure pandemic-related concerns that may lead to legal issues resulting in financial and other penalties arising from transit damage and delays.

Air cargo faces severe challenges in the wake of the global Covid-19 pandemic. Losing cargo space from cancelled passenger flights has really hurt. Most of us do not realize how much air cargo is carried below decks along with their luggage. Sivière estimates that almost 50 percent of conventional air cargo was stowed in the belly of of such planes.

To fill that gap, shippers and forwarders others are pinning their hopes on placing cargo above decks in passenger aircraft. To do so, they are bundling cargo in strong bags and netting, placing them on existing seats or in spaces under them, in aisles as well as overhead compartments. Some carriers have started removing all seats following new related government regulations. But Sivière points out that smaller doors on passenger aircraft limit the size of cartons that can be carried above deck.

He also warns shippers that the cost of such air shipments have jumped.  “If they were used to paying one € per kilo before, it’s now up to 3.5€ to 4€ now. The major challenge carriers now face is to attract enough traffic to keep earning revenue and even more important to keep their pilots active. They are the carriers’ most valuable assets, not the the aircraft.”

Rumours have now started to swirl about converting the Airbus A380, the world’s largest passenger plane, most of which have been taken out of service, to be refitted to carry cargo.

Since Canada is a small market, planes servicing Europe typically land only in our largest cities i.e., Montreal, Toronto, Calgary and Vancouver. Most other large American and European airlines offer more service to major US markets such as New York, Chicago and Los Angeles. From there they can be trucked up to Canada. That also include courier parcel carried such as FedEx and UPS that arrive at their terminals in Middle America.

In the other direction, several smaller carriers are landing in Leipzig, Gatwick and other smaller airports. One Canadian carrier, Cargojet Inc. offers a fleet of 26 all-cargo aircraft that serves 15 major cities across North America each business night and other selected international destinations.

Air Canada continues to offers a limited number of regular flights such as Montreal-Paris and Toronto-London and possibly soon Brussels and Amsterdam.

But since passenger air traffic has been drastically reduced to limit the spread of covid-19 virus on planes and in crowded airports, all shippers must must now adapt to the “new normal”- closer inspections, fewer flights and higher rates and the complexities of dealing with new and different supply chain partners.