Atlantic Canada Opportunities Agency Greater Moncton International Airport Ville de Dieppe City of Moncton


Canada East Air Cargo Gatewayan initiative to increase export markets

Overview

The Canada East Air Cargo Gateway's objective is to expand the Atlantic region's export markets. Development of a trade gateway centred on the Greater Moncton International Airport would support the growth of a New Brunswick/Atlantic Canada export system that is more flexible and more market responsive.

The Canada East Air Cargo Gateway's goal is in keeping with the opportunities identified in The Atlantic Gateway Business Case, (Atlantic Canada Opportunities Agency: September, 2007). It focuses on ways to develop new export markets, particularly in the European Union, both broadening export scope and reducing reliance and dependency on our main trading partner, the United States. Our project aligns with the federal government's vision for a national framework of trade gateways and corridors, with the appropriate mechanisms to facilitate the movement of goods and people.

The Gateway has received initial financial support from the Province of New Brunswick, the City of Dieppe, the City of Moncton and the private sector.

Economic Context

The Gateway concept is being pursued in light of changes in the global economy and the need for Atlantic Canada to increase its participation in the global marketplace.

The rapid growth in international trade and changing patterns of trade have been driven in large part by the development of global supply chains, facilitated by lower transportation and communication costs, technological advances and market and trade liberalization. In the face of increased competitive pressures and the appreciation of the Canadian currency, Atlantic Canadian businesses have adopted practices such as supply chain management, off-shoring and outsourcing in order to improve their productivity or to take advantage of new market opportunities. Going forward, this will require better transportation services to bring supplies to the region and to ensure rapid delivery of products to key markets.

Atlantic Canada predominately trades with the United States. However, it is clear we need to grow other markets, not only because this would broaden our reach and limit our vulnerability, but because the appreciating Canadian currency has made US trade more difficult. Over the last five years, the CAD has appreciated close to 40% compared to the USD. For the same period, the CAD has only slightly appreciated versus the EUR.

The European Union – which with 475 million people, has the world's third largest population – presents very attractive market opportunities for Atlantic Canada in a number of major sectors, including perishables and high value (refinery, aerospace and machine parts) products. Looking specifically at the seafood market, the opportunities are clear.

Currently Atlantic Canada exports very little live and fresh seafood to the European Union. Of the region's combined landings and aquaculture of over 750,000 tonnes of seafood, only approximately 7,500 tones or 1% is exported as live and/or fresh product to the EU. However, the EU is home to five of the 10 biggest seafood importing countries in the world. Spain, France, Italy, the UK and Germany combined annually import approximately $20 billion US of seafood. Annual per capita seafood consumption in the EU is 24kg, which is 50% higher than the world average of 16kg.

Within the EU market, Atlantic Canada has the opportunity to expand its live lobster exports, to develop markets for live and fresh mussels, oysters, clams, crab and to expand supply of fresh scallops, hake and cod. Atlantic Canada leads the world in exports of lobster and snow crab, yet we are not selling directly to one of the most, if not the most, lucrative market for these products in the world. Ironically, industry sources in Canada indicate there is a brisk re-export trade in live lobster in the U.S. and that as much as 70% of Canadian lobster exported to the US may be re-exported. This re-export trade with Europe and Asia occurs because of the wider array of airfreight options and lower rates available to US shippers.

Our region has minimal lift capacity for shipping live and fresh seafood to the European Market. To access the EU market, Atlantic Canadians must truck 85% of their export volume to airports in Boston, New York, Montreal and Toronto. Shipping from Moncton would save 10 to 12 hours – very significant in an era when consumers want their seafood live and/or fresh – and give Atlantic Canadian producers greater access and greater presence.

Gateway Description

The Canada East Air Cargo Gateway is a not-for-profit organization created to focus on export development opportunities centred on the Greater Moncton International Airport. It is governed by a board of directors with representatives from Enterprise Greater Moncton (EGM), Dieppe Economic Development Corporation, the City of Moncton, the food and transport sectors, and other professionals from the Greater Moncton Area who believe that great economic benefit can be derived from developing air freight capacity within the region. The organization was formed following the release in November 2006 of the Canada East Inland Port – Feasibility Study by the Atlantic Institute of Logistics and Transportation (AILT).

A trade gateway is defined as a geographic area through which freight and/or passenger traffic flows, typically via a variety of modes (air, land and sea), on the way from its origin to its ultimate destination. Gateway areas through which international traffic moves can derive significant economic benefit from this activity. The Canada East Air Cargo Gateway concept is for an inter-modal cargo hub, focused on the European Market.

Moncton offers significant Gateway advantages:

  • Location: 12 hours from several major centres/markets such as Boston and Montreal. This is vital since truck drivers are legally limited to drive no more than 12 hour a day.
  • Climate: Favorable climate for air transport. This is imperative when for the shipment of time-sensitive products.
  • Logistics industry: The Greater Moncton Area has a well-developed logistics industry due to its role as a regional distribution centre.

The development of this Gateway would create many opportunities and open new markets for the Greater Moncton Area, New Brunswick and Atlantic Canada, as a whole. Numerous transportation cost savings could be achieved by using an inter-modal concept, a combination of air and road transportation services from and/or to Greater Moncton's Gateway.

Atlantic Canadian manufacturers and processors could save at least one day's delivery, as well as 10% to 20% on transportation costs, depending on the airport they are currently using. Savings of 6% to 12% are also possible for US and Québec-based companies that are located less than a one day's driving distance from the Moncton airport.

The goal is to diversify markets by building networks to simplify access to new markets and to get people to see a different way of doing business. In the beginning, the focus will be placed on Perishables and High Value (Refinery, Aerospace Industry, Machine Parts) products. The biggest opportunity, at the outset, lies in the food and beverage industry. This industry is an $8 billion a year industry in Atlantic Canada, with seafood alone representing an annual $4 billion for the region.

Economic Benefits

By diversifying and expanding markets, our companies will have more possibilities and, therefore, a better chance for success. And it is a truism that economic activity brings more economic activity. A well-developed Gateway in Moncton, generating more transportation of freight, and more flights in and out of Moncton, will benefit the local and regional economies – and many industries.

Canada is the most trade dependent nation of the G8 countries. A world-class multi-modal transportation system – with the Canada East Air Cargo Gateway as one component – intimately connected to the global network, is necessary to maintain and enhance Canada's competitive advantage as a trading nation.

A nimble, effective and efficient transport system is the key to Atlantic Canada's future. The Gateway concept will give a tremendous boost to the economy as well as making our own import-export system more flexible and market responsive

Transport also contributes to economic development through job creation and its derived economic activities. Accordingly, a large number of direct (freighters, managers, shippers) and indirect (insurance, packaging, handling, travel agencies, transit operators) employment opportunities are associated with transport. Consumers take economic decisions on products, markets, costs, location, prices which are themselves based on transport services, their availability, costs and capacity.

 

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