HALIFAX, NS – Global economic instability is creating a shift in trade flows and supply chain strategies that, in turn, is reshaping airfreight carriers approach to business, Lise Marie Turpin, vice president, Air Canada Cargo, told a packed room of shippers and carriers attending the opening Multi-Modal C-Suite Panel at CITT’s Reposition 2012 conference here today.
Turpin included shifting trade flows on her list of top three issues affecting air freight today. Her two other top issues included regulatory pressure and the high cost of fuel.
“We are seeing changes in Asia with a slowdown in exports. In the US, the outcome of instability is leading to the US looking to bring jobs back to the US. And there is also the effect of natural disasters, which seem to be coming more frequently and hitting with greater vengeance, shutting down manufacturing in certain areas,” Turpin explained – Last year’s tsunami in Japan, floods in Thailand and the recent hurricane damage in the US northeast coast are all recent reminders of how fragile global supply chains can be. And that is leading companies to reconsider concentrating all their manufacturing and/or sourcing in one area.
Turpin added that the combination of economic uncertainty and the impact of natural disasters is making the traditional three- and five-year business plans harder to put together.
“It’s becoming really hard to call. We have to be very nimble,” she said. Air Canada Cargo reviews its capacity and where that capacity is placed two times a year but sometimes has to review it even more often than that.
Air Canada Cargo freight is booked on passenger flights and so is dependent on where the main line wants to deploy. The 777 freighters which came online recently, however, allow for up to 25 tons of carrying capacity and so require cargo contribution to the flight to be profitable. Thus the cargo side has a voice at the table when it comes to deployment.
Her second top issue, security legislation, is also increasing in intensity. And the complexity and, even more so, the inconsistency of the new rules, can be very taxing for a global services provider, Turpin explained.
“Complying with various regulations is challenging. Not all the regulatory bodies are of the same mindset. They are at different levels of understanding and ability when it comes to security legislation. We don’t want to have to reinvent the wheel every time. We want to invest in equipment and technology that is recognized around the world,” Turpin said.
She advocates working with industry committees to plead the case for harmonized security standards.
For air cargo operators in Canada 2013 starts with a bang -- the implementation of Transport Canada's mandate to screen all cargo in the bellyholds of passenger planes taking off from Canadian airports. Cargo not prescreened can’t be mixed with prescreened cargo.
Turpin said the last few months have been very challenging because on the one hand many shippers don’t want to pre-screen the cargo themselves and want the airfreight carriers to handle that task while it has not always been clear what Transport Canada expects from the new regulation.
“Ideally, we would like to see goods tendered to us pre-screened. But we have put in equipment at all our major stations. Someone who doesn’t tender prescreened will have a bit of a delay,” Turpin said.
A few months back there were still serious misgivings about the state of preparedness in the industry, but much progress has been made since, industry executives report.
Fuel was the last top issue on Turpin’s list. She is not being lulled into a false sense of security over the current drop in oil prices.
“I don’t think that’s long term. We have to wrap our heads around the high price of fuel and embrace fuel efficiency,” she said.
Turpin also had a game changer: E-business, or turning current manually-intensive paper reporting to more efficient electronic data. She said the industry has been slow embrace e-business but that must change.
“To do that we need to have high quality data,” she said.
Turpin was joined on the blue-chip panel by Doug Harrison, COO of Day and Ross Transportation Group; Jeff Cullen, CEO Bellville Rodair; Neil McKenna, vice president, transportation, Canadian Tire; Rudy Mack, founder Rudy Mack Associates; and Jean Jacques Ruest, executive vice president & chief marketing officer, CN Rail.