Consultant Insight: Will US cross-border air demand continue gains in 2020?

[caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Airfreight could play a significant role in cross-border movements this year because of the COVID-19 pandemic, although the commodity mix will likely shift to such items as medical equipment and supplies, pharmaceuticals, and food and beverages — at least for the foreseeable future. Meanwhile, the automotive and aircraft industries, which make up a large part of all three countries’ manufacturing sectors, will see a decline in cross-border trade. Last year, $1.2 trillion in freight crossed U.S., Mexican and Canadian borders. This was a slight decrease of 0.2% compared with 2018, with the decrease attributed to a 0.8% decline in overall Canadian freight value offset by a positive Mexican freight value, up 0.5%. The majority of cross-border trade is conducted by truck. However, in terms of modes of transport, air was the only mode to report positive year-over-year growth in 2019, up 6% to $50 billion. U.S. exports of harmonized tariff code 88: Aircraft, Spacecraft and Parts noted the largest gain in air customs value to Canada, up 8.2% to just over $4 billion. Likewise, the same tariff code was also the largest for U.S. air exports to Mexico, up 17.4% to $1.4 billion. In terms of U.S. imports, the largest commodities were harmonized Tariff Code 71: natural and precious stones from Canada, up 77% to $3.5 billion; and Code 97: works of art, collectors’ pieces and antiques from Mexico, up 78.8% to $182 million. Limited travel across the U.S.-Canada and U.S.-Mexico borders has been enacted to contain the spread of the virus, but the borders remain open for trade, thus allowing for trucks and rail to transport freight between the countries. As for air, passenger airlines are parking many planes and focusing on cargo. A recent Air Cargo World story noted that Air Canada’s cargo continues to move between Canada and the U.S., particularly as goods move by truck from Air Canada’s U.S. hubs into Toronto. Meanwhile, Canadian cargo carrier CargoJet is redeploying some of its international capacity to domestic overnight routes to help support the country’s northern communities, which are only accessible by air. In a March 19 announcement , the company said, “Cargojet is a critical service provider in the Canadian supply chain and is experiencing significantly higher demand and volumes from e-commerce and health care and essential supplies. “We are redeploying aircraft that are currently serving international scheduled and charter routes back to our Canadian overnight network, and to support the integrated supply chains of Canada-USA-Mexico routes, which are essential to maintain timely access to essential supplies,” the carrier added. In Mexico, Aeromexico will use part of its grounded fleet for cargo-only through its airfreight division, Aeromexico Cargo. Among the first of such flights, to Frankfurt Airport (FRA), was a charter, which according to the airline, is for on-demand and for shipping perishable products, live animals, high-value goods, technology and drugs, among others. The current status of the previously announced Aeromexico Cargo and Delta Cargo partnership is not known. When announced in 2017, it was touted as the first U.S.-Mexico cargo partnership. According to the press release , Delta would provide service in the U.S. through its connecting hubs in Atlanta, Detroit, Los Angeles, Minneapolis-St. Paul, New York, Salt Lake City and Seattle; and Aeromexico would provide service through its hubs in Mexico City, Monterrey and Guadalajara. From the U.S. to Mexico, the leading commodities include turbine parts, medical equipment, auto, perishables and aircraft parts. In the reverse direction they are tequila, medical equipment and aircraft and auto parts. Cross-border trade among the three countries is important and, with the signing of the U.S.-Mexico-Canada Agreement (USMCA), now completed by all three countries as of this month, the importance may be tested in the coming months. The agreement goes into effect June 1, but American automotive industry groups have asked for a delay due to extra costs imposed on automotive manufacturers with facilities in Mexico, in particular.

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