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12
FREIGHT TRANSPORTATION
Air Transportation
Air Cargo
The domestic transportation of cargo by air is deregulated,
with no restrictions on routing, capacity or price. Air cargo
is carried in the belly-hold of passenger aircraft, on combination
passenger/cargo aircraft and on dedicated cargo aircraft. Transborder
and international air cargo services are offered within a framework
of bilateral air agreements, international agreements and national
policies. Canada acquires the international rights for scheduled
all-cargo air services through bilateral negotiations, and it
is the Minister of Transport's prerogative to designate which
Canadian operators will exercise those rights. Although no Canadian
carriers are exercising such all-cargo rights at this time, Air
Canada operates three so-called "combi" aircraft in
which a part of the passenger deck is dedicated to cargo, providing
service to Europe.
Canada's policies governing international all-cargo charter
air services and the designation of Canadian air carriers for
scheduled international all-cargo air services were most recently
modified in 1998.
The integration of Air Canada's and Canadian Airlines International's
schedules in 2000 resulted in a reduction in scheduled cargo capacity,
causing some difficulties for specialized cargo shippers. This
is because the airlines provide air cargo service mainly as a
by-product of its passenger air services, using the portion of
the belly-hold not required for passenger baggage. Air Canada's
cargo revenue in 2000 made up only six per cent of its total revenue.
There are 33 air carriers licensed by the Canadian Transportation
Agency to operate domestic service all-cargo aircraft. While the
majority of these carriers operate with smaller, non-jet equipment,
a small number of them have significant domestic and international
all-cargo operations.Note 9 Canadian air carriers use their
all-cargo licences to carry cargo for domestic and international
courier companies, freight forwarders and consolidators, and to
serve directly shippers.
Air NorTerra, which operates as Canadian North, and First Air
frequently use combi aircraft to move significant amounts of air
cargo northbound, including perishable goods, as part of their
scheduled services. These large jet operators, along with numerous
smaller operators, provide a vital transportation service in the
North, where year-round alternative means of transportation is
often unavailable. Preliminary data for cargo activity in the
North indicate that large jet operators carried seven per cent
less domestic cargo in 1999 compared with 1998. There are no data
available on regional and local cargo carrier activity, as they
are not required to file cargo data.
Domestic Services
On February 17, 2000, the federal government introduced Bill
C-26 in response to the restructuring of Canada's airline industry.
Under amendments made in Bill C-26, the Canadian Transportation
Agency was given authority to review cargo rates on monopoly routes.
(The Agency has similar authority over passenger fares. See Chapter
13 "Passenger Transportation" for details.)
Table 12-23 shows the volume of goods carried by Canadian air
carriers on all-cargo air services, by sector, from 1993 to 1999.
There was little change in the total tonnes of air cargo carried
between 1998 and 1999. Domestic tonnes carried increased by three
per cent to 501,000 tonnes, accounting for 61 per cent of the
total tonnes carried in 1999. During the same period, transborder
air cargo tonnage decreased by four per cent, while international
tonnes did not change significantly.
Table 12-24 shows the operating revenues generated by goods
carried on Canadian air carriers on all-cargo services, by sector,
from 1993 to 1999. Total cargo operating revenues increased by
four per cent between 1998 and 1999. Domestic revenues increased
by six per cent, to $806 million, in 1999, accounting
for 70 per cent of total cargo operating revenues, while
international revenues (including transborder) increased by one
per cent.
Canada-US Services
From 1993 to 1999, air cargo transport between Canada and the
United States soared from $15.3 billion to $37.7 billion,
for an annual average growth rate of 16 per cent. Air
growth rate was larger than the average 12 per cent growth registered
for total Canada-US trade over the same period. As a result, the
air share of total Canada-US trade rose from 5.8 per cent in 1993
to 7.2 per cent in 1999.
The "electrical/electronic machinery and material"
sector contributed to the growth in air transport between Canada
and the United States from 1993 to 1999. During this period commodities
recorded an average annual growth rate of 30 per cent in exports
by air, rising from $0.9 billion to $4.6 billion. In imports,
the average growth was 21 per cent rising from $2.2 billion to
$6.9 billion over the period.
In 1999, commodities shipped by air to the United States totalled
$17.5 billion. These included electrical/electronic machinery
and material with $4.6 billion, other machinery and equipment
with $3.9 billion, and a variety of manufactured goods (mainly
transportation material and high-valued aircraft equipment) totalling
$8.5 billion. Imports by air from the United States amounted to
$20.2 billion. They included electrical/electronic material with
$6.9 billion, machinery and equipment with $4.6 billion, chemical
products with $1.5 billion, and various manufactured goods and
end-products.
It should be noted that a significant portion of cargo moving
on air waybills is actually trucked between Canada and the United
States, but is recorded in trade data as air traffic. Many Canadian
all-cargo operators also provide transborder cargo services under
contract to the major courier companies.
Table 12-25 shows the evolution of the air share in Canada's
trade with the United States and other countries from 1993 to
1999.
Other International Services
From 1993 to 1999, air cargo transport between Canada and countries
other than the United States was robust, growing at an annual
average rate of 13.9 per cent, from $15.6 billion to
$34.1 billion. This increased growth was largely fuelled by strong
imports from Europe and Pacific Rim countries, with an average
annual growth of 17.4 per cent. As a result, the air
mode share rose from 17 per cent to over 22 per cent of total
trade between Canada and overseas countries.
Main imports shipped by air from overseas countries included
the "electrical/electronic machinery and material" group
with $7.5 billion in 1999, other machinery and equipment with
$5.4 billion, chemical products with $2.6 billion, and various
manufactured goods (mainly transportation material such as high-valued
aircraft equipment) totalling nearly $8 billion. The electronic
machinery and material group registered the highest average annual
growth, with a rate of 28 per cent over the period 1993-1999.
As for exports by air to countries other than the United States,
their growth was only 7.6 per cent over the period. The currency
crisis and recession that hit the Asian and Latin American economies
in 1998 combined with a slow recovery in 1999, have affected Canadian
exports to these countries.
Tables 12-26 and 12-27 show main origins/destinations for Canada's
trade with countries other than the United States shipped by the
air mode in 1999. Western European and Asian countries dominated
air transport as origin/destination of shipments moved to/from
Canada. Over 80 per cent of air transport trade with overseas
countries involved eastern provinces, mainly Ontario and Quebec.
Cargo Transshipment Program
To improve the use of Mirabel Airport, in 1982, the federal
government introduced a program to allow the Canadian Transportation
Agency to permit Canadian and foreign carriers to carry international
cargo transshipments via Mirabel coming from and destined to points
outside Canada. In-transit cargo may be stored in bond pending
its transportation by air or other mode to its final destination.
Carriers are not authorized to carry Canadian originating or destined
cargo unless specifically licensed to do so pursuant to a bilateral
air agreement, an arrangement or under Canadian charter regulations.
The program was expanded to include Hamilton and Windsor airports
in Ontario in 1987 and 1993, respectively, and once again in 2000
to include Gander, Newfoundland.
Air Transportation
NOTES:
9
Canadian carriers that have a significant all-cargo operation
with large aircraft include: All Canada Express Ltd., Bradley
Air Services Limited, ICC International Cargo Charters Canada
Ltd., Kelowna Flightcraft Charter Ltd., Morningstar Air Express
Inc., Royal Aviation Inc. and Winnport Logistics Ltd.
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