Canada vows retaliation as Trump brings back aluminum tariff. Canada intends to swiftly impose dollar-for-dollar countermeasures, says Deputy Prime Minister Chrystia Freeland. OTTAWA – The Trudeau government is promising to impose retaliatory tariffs on American products after U.S. President Donald Trump announced Thursday, he is restoring an import tax on raw aluminum from Canada later this month. “In response to the American tariffs, Canada intends to swiftly impose dollar-for-dollar countermeasures,” Deputy Prime Minister Chrystia Freeland said in a written statement. She called Trump’s decision to reimpose tariffs on Canadian aluminum “unwarranted and unacceptable” and suggested his timing could not be worse. “In the time of a global pandemic and an economic crisis, the last thing Canadian and American workers need is new tariffs that will raise costs for manufacturers and consumers, impede the free flow of trade and hurt provincial and state economies.” Freeland noted that the new Canada-United States-Mexico Agreement that replaced NAFTA went into force on July 1, including a provision that ensures 70 per cent of aluminum purchased by North American automakers must be produced in North America. She argued that the trade deal partners should be using the new deal to “advance North American competitiveness _ not hinder it.”
Air Canada on course with cargo flights, but more cost-cutting on the cards. Retreating yields are not putting a dent in Air Canada’s (AC) cargo flight operation. The Canadian carrier is set to maintain about 100 cargo flights a week, although it is unlikely to repeat its historical feat of the second quarter, which saw cargo revenue outpace turnover in its passenger business. Despite the drastic reduction in belly capacity AC’s cargo revenues increased 52% to C$269m (US$202m) – C$62m more than the airline’s passenger revenues in the period, which slumped 89% to C$207m. It was the first time AC’s cargo revenues exceeded its passenger income – without a single freighter aircraft in the fleet. “Over the course of the pandemic and through the second quarter we’ve continued our focus on airfreight to meet immediate and exceptional demand for medical equipment, critical goods and the regular movement of time-sensitive air cargo,” said AC president & CEO Calin Rovinescu. Since March, the airline has operated more than 2,000 cargo flights across a global network. Cargo flights represented 38% of all widebody flights in the second quarter and accounted for more than 40% of total cargo revenue. AC was one of the first carriers to deploy passenger planes on cargo missions, and also one of the first to remove seats from passenger cabins to boost payload. It has reconfigured four 777-300ERs, as well as three A330 aircraft, to that end. All seven modified aircraft currently operate on international routes, with PPE, mail and perishables in the cabin. Demand for PPE lift has been on the wane since the latter half of May, which has also brought yields down from their peak. Observers have predicted that cargo flights with passenger aircraft would diminish as yields and operating costs converge. But AC has no intention of cutting back its cargo programme.
Union ‘ups the ante’ at Montreal: latest strike pushes more ships to rival ports. The stand-off between port employers and labour at the port of Montreal went from bad to worse yesterday morning as longshoremen launched an indefinite strike that has shut down most of Canada’s second-largest port. The union ‘upped the ante’ after several limited work stoppages in recent weeks, and this is the fourth industrial action since 2 July; the last strike, which paralyzed two of the port’s four container facilities, ended on Friday morning. Moreover, this time the strike targets breakbulk as well as container terminals, having previously concentrated on container facilities. Only liquid bulk handling, grain and the Oceanex service to Newfoundland and Labrador are not affected. However, the union says containers with medical supplies will still be allowed to pass through the port. The confrontation is chiefly about work hours. Longshoremen object to the requirement to be available 19 out of every 21 days, while their employers argue that on average, they work 14 days out of 21, and only need to be on call for the rest of the time.
Calm before the storm: shippers brace for hefty Asia-Europe rate hikes. Asia-North Europe shippers are bracing for a wave of FAK rate increases and peak season surcharges this month as carriers look to capitalize on several weeks of fully booked ships. The North Europe component of today’s Shanghai Containerized Freight Index (SCFI) edged up slightly, by $9 to $910 per teu, in what shipper’s fear is the ‘calm before the storm’. “The market remains strong on the Asia-Europe route,” Martin Holst-Mikkelsen, head of ocean freight EMEA at Flexport, told The Loadstar. “We are seeing services out of China full for the coming two weeks from nearly every port of loading. We are also seeing South-east Asia services facing some space pressure at this point.” The Loadstar reported yesterday that the 2M partners, Maersk and MSC have upgraded their Griffin/sweeper service to a weekly link, and it is understood that THE Alliance is considering reinstating its suspended FE4 loop after its weekly ‘extra loader’ vessel had been fully booked on each voyage. However, The Loadstar is still hearing that shippers are struggling to book space. One UK forwarder said he had tried to book seven boxes from China at the carrier’s FAK rates but had been told the earliest availability was on a vessel sailing on 28 August.
Canadian Pacific launches first train of international containers from Port of Saint John. Canadian Pacific yesterday launched its international intermodal service through the Port of Saint John, N.B. The inaugural train carries containers from the Hapag-Lloyd vessel Detroit Express bound for intermodal terminals on the CP network in Canada and the U.S. “CP has been without access to a deep-water Atlantic Ocean port for a quarter-century, and today I’m pleased to deliver a simple message: We’re back,” said Keith Creel, CP President and Chief Executive Officer. By year’s end, CP anticipates it will be able to offer 24-hour service between Saint John and Montreal.
Preparing for an upswing, Intermodal traffic and projects moving forward. In spite of the pandemic’s chilling effect on economic activity, two major Canadian intermodal infrastructure projects have announced significant progress in recent weeks, alongside a mixed prognosis for short-term recovery in the sector. Intermodal traffic in North America “bottomed out” in April, said transportation consultant Larry Gross in a recent IANA webinar. International traffic reached its nadir in March, and began to rebound in April as Chinese manufacturing began to come back online. Gross said there was a huge increase in trailer volumes between April and May, largely due to a surge in premium traffic of parcel and LTL in support of the massive increase in e-commerce during the pandemic lockdowns. He also noted that train speeds were 9.5 percent better than average for the Class I railroads, and Association of American Railroads (AAR) data showed an uptick in traffic since mid-May. Gross said he was “quite pleasantly surprised at how rapidly things are recovering.” Providing a prediction for a recovery’s timeline and size, however, is a feat of prognostication that he said would require the combined skills of a Ph.D. in epidemiology, an M.A. in political science, an M.A. in sociology, and a Ph.D. in economics to unravel all the different factors that may affect the future of transportation. “The degree of uncertainty at the moment makes any forecast highly speculative,” he said
Wait times plummet as capacity tightens. Shippers are struggling with a volatile freight market for the second time in three short years as carriers are rejecting load tenders at rates not seen since the middle of 2018, the mythical anomaly of a year. One of the side effects has been that carrier wait times have fallen in a near-perfect inverse proportion to national tender rejections. The question remains: How much of this relationship is a direct result of a shift in leverage to carriers? One of the biggest challenges for carriers is managing wait time or detention at a dock. Most truckload carriers build one to two hours into their rate for loading and unloading. Too much variance can throw off the carrier’s ability to pick up the next loads, which are probably time-sensitive. Looking at the relationship between the average carrier wait time and tender rejections, it would appear that shippers and consignees attempt to assist the carrier by loading and unloading more efficiently. As tender rejection rates fell from 25% to 10% (meaning capacity increased) in the second half of 2018, wait times rose almost 11%. Wait times continued to trend higher through February 2020, topping out around 160 minutes. The trend reversed course in March and fell through June before bouncing from 103 to 108 minutes in July. Even though there is an implied connection between capacity and wait time, that is probably not all of the answer considering the environment is much different now, which is the understatement of the year.