For U.S. exporters moving goods to Canada by air transport, rates have been fairly consistent for 2013, but demand for air services has dropped off.
According to Purolator International President John Costanzo, shippers who had traditionally put their goods on flights are now asking for a mixed solution that puts most of their cargo on trucks, accepting an extra day of transport for cheaper shipping.
Overall, Purolator’s U.S. exports into Canada are growing by 20 percent to 25 percent annually, Costanzo said. He added while most of this growth occurs on the ground, air transport still plays an important role for industrial shippers entering the United States’ largest trading partner.
As an example, he uses a shipper with a distribution center in Cleveland that exports its goods to Toronto and Montreal. There’s no reason to use air transport for the majority of those shipments because that route can be done quickly by truck.
“Customers are looking for more creative solutions for sure, but air is always going to be a part of that solution because they’ve got to compete in that market against local competitors,” Costanzo explained. “They’ve got to be able to serve the market as quickly as that local competitor.
“But the rate of (air freight) growth is not going to be as high as it was until economics around the world improve and people can afford to spend on that kind of service,” he added.
Whichever transport a shipper chooses the biggest challenge for moving exports within North America is complying with governmental regulations. Costanzo said the best way to counter the increasing trade threat from emerging markets and keep what’s left of North American manufacturing is to harmonize tariffs between the United States, Mexico and Canada, and eliminate duties on key products.
Costanzo said shippers and carriers across the transport field “need to make sure our governments and the people responsible for those things understand the threat to our industry as well as other industries by not being more competitive.”
With the current low value of the U.S. dollar compared to its Canadian counterpart, exports from the United States have remained attractive and have even helped to increase e-commerce activity in Canada.
“We’re seeing lot of growth in the e-commerce sector,” Costanzo said, “and I think that’s a huge opportunity for a lot of (North American) companies that are investing in e-commerce,” and could stimulate more need for air cargo transport into Canada.