Logistics companies looking for ways to avoid crushing congestion at Chicago O’Hare airport have resorted to yet another workaround: putting shipments on Air Canada passenger freighters to Toronto and then trucking them to their Windy City facilities.
Air Canada (OTCUS: AC) was one of the first airlines to pivot to dedicated cargo flights when COVID-19 decimated passenger flying. It even removed seats from seven twin-aisle Boeing 777s and Airbus A330 planes to create extra space for light cargo in the cabin and is still deploying cargo-only passenger aircraft even though U.S. counterparts have cut back as passenger traffic rebounds faster south of the border.
Constrained by staffing shortfalls and older warehouses with limited space, cargo terminals at O’Hare International Airport are unable to keep up with the enormous growth of shipments moving in large, all-cargo aircraft that have become more common during the pandemic. Freight forwarders increasingly are chartering freighter aircraft because of limited, and unreliable, capacity in passenger networks and huge delays associated with ocean shipping. Many complain that it can take a week to 10 days to retrieve consignments that have arrived at the Chicago airport.
Several freight management companies say they are avoiding those delays by booking shipments from Asia to Toronto on Air Canada auxiliary freighters.
San Francisco-based Flexport, for example, operates full charters with Air Canada several times per week to Toronto, with shipments transloaded to trucks qualified to make cross-border deliveries to the company’s bonded warehouse near O’Hare and John F. Kennedy airport in New York. Under the in-bond process, goods skip the sometimes lengthy customs clearance process at the border and are not released until the destination facility files the formal customs entry and it is approved by U.S. Customs and Border Protection.
“It’s brilliant. It works really well,” Neel Jones Shah, Flexport’s executive vice president and global head of airfreight, said in an interview. “It’s absolute clockwork. We avoid all the congestion. Air Canada has a very good product and we have been very pleased with the solution.”
Air Canada doesn’t have traffic rights to fly directly to the U.S. from a third country. It has always operated a truck network to Chicago because its narrowbody flights can’t carry containers, but the service has picked up in popularity.
Chicago is more than 500 miles from Toronto and takes about eight hours to reach by truck.
Flexport helps speed the process by delivering fully built pallets that don’t require the airline to sort cargo from multiple customers on arrival. The freight arrives at the Flexport freight stations by 6 a.m. the next morning, Jones Shah said.
Tendering pre-filled containers rather than loose cargo is one of the techniques third-party logistics providers have adopted this year to minimize delays for import cargo at O’Hare. Some large forwarders are also permanently redirecting a portion of their inbound volume to nearby cargo-friendly airports such as Chicago Rockford and Rickenbacker International Airport near Columbus, Ohio. Others even send employees to walk through the airline warehouses, locate shipments and expedite their transfer to a truck.
O’Hare has processed more than 1.5 million metric tons of cargo through July, a 44% increase from a year ago, according to the Chicago Department of Aviation.
SEKO Logistics, located in the Chicago suburb of Itasca, also uses Air Canada flights to Toronto Pearson International Airport because ground handlers at O’Hare are inundated and not providing minimum levels of service it expects, Shawn Richards, vice president of global airfreight, said in an email. The forwarder’s shipments vary between full containers and smaller shipments mixed in with those of other customers. Air Canada uses its line-haul delivery network to move mixed loads to its Chicago facility where forwarders like SEKO recover their cargo.
“We are currently using those carriers which show genuine care for our clients and communicate when there is an issue, but more importantly, go above and beyond to make sure we get our shipments in a timely manner and without damages,” he said.
Global 3PL C.H. Robinson began operating charter flights from China to Toronto last year.
“This was helpful because our team could transport the freight from Toronto to any Upper Midwest or East Coast destination fairly quickly with the help of our large North America contract carrier network,” said Vice President of Air Matt Castle. “Given the congestion in Chicago, going through Toronto has saved our customers multiple-day delays.”
Air Canada generated a record CA$358 million ($284 million), or loonies as the dollar is colloquially known, in the second quarter. It has operated more than 11,000 cargo-only flights since March 2020.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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a little confusing why toronto is being used plus the trucking component. There are cargo operations all over the midwest that are closer than toronto. Airline accountants have been looking at this diversion. so as i am lacking the costs/benefits that they have approved, I will repeat that i find this dance confusing. Love to read a long-form explaination of it all.
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