Shippers face an upended market amid pandemic
MONTREAL — Shippers are flying into uncharted territory as the COVID-19 pandemic upends delivery patterns, with surging consumer demand mitigating a slumping global economy exacerbated by border closures and travel controls.
E-commerce is on the rise as non-essential businesses remain closed in Ontario and Quebec and the prime minister encourages Canadians to stay home.
Amazon Inc., the country’s largest online retailer, said Tuesday it is hiring more than 1,000 workers in Ontario, British Columbia and Alberta to handle the spike in direct-to-consumer sales.
Business-to-business (B2B) deliveries are down, however, despite exceptions such as grocery store suppliers, said Marc Wulfraat, president of Montreal-based logistics consulting firm MWPVL International Inc.
“The B2B business — which dominates FedEx and UPS in terms of their package volumes, that’s down,” Wulfraat said, noting bulk deliveries tend to yield higher margins than business-to-consumer (B2C) shipments.
“The B2C, that’s up. But that’s not the lion’s share of what these companies are doing.”
Greater labour shortages — already an entrenched problem in trucking — are looming, adding to shippers’ woes.
“When you make the children stay home from school, a lot of people can’t go to work. Those are the same people that drive the trucks and go to warehouses and do all the things we take for granted,” Wulfraat said.
Teamsters Canada, whose truckers work for Purolator Inc. and United Parcel Service Inc., said that long-haul deliveries continue apace in spite of the economic downdraft.
“Based on the information we — and it’s changing every minute — the package delivery business is doing OK,” said Francois Laporte, president of Teamsters Canada.
Canada Post, which relies heavily on direct-to-consumer parcels, said volumes remain “steady.”
At Cargojet Inc., rising e-commerce sales have offset a downturn in international deliveries, said Laurentian Bank Securities analyst Mona Nazir. The Mississauga, Ont.-based cargo airline “may be a net beneficiary in the current environment.”
Nazir said Amazon’s surge in sales has directly impacted Cargojet, which provides charter aircraft services to move packages from Amazon warehouses to distribution centres for final delivery.
Air Canada has started using its aircraft to operate cargo-only flights to Europe, with other flights planned for Latin America and South America.
The planes have no passengers, but instead carry time-sensitive shipments, including medical supplies, the airline said Wednesday.
The flights come as Air Canada slashes capacity in response to plunging travel demand due to government measures to stem the spread of the novel coronavirus.
The first cargo-only flights departed from Toronto for Frankfurt, London and Amsterdam this past week on Boeing 787 aircraft capable of carrying 35 tonnes of freight.
Air Canada said it is also exploring opportunities to offer the service domestically using smaller Air Canada Express regional aircraft.