SUPPLEMENT


CANADA’S AIR CARGO: E-COMMERCE SOARS, FREIGHTERS FADE AND BELLY SPACE BECOMES HOT NEW REAL ESTATE


C Meanwhile,


anada’s airfreight market in mid-2025 is growing organically, but unevenly. E-commerce and trans-Pacific trade are driving momentum, yet domestic and transborder volumes remain soft. Air Canada and WestJet have leaned into belly cargo strategies, minimising freighter exposure. infrastructure upgrades and digital cargo tools are


strengthening efficiencies at major hubs. In short, while global headwinds persist, Canadian air cargo is


adapting with leaner operations, infrastructure modernisation and digital solutions to capture the most profitable trade lanes. The sector continues to face notable headwinds. Tariff


uncertainty and trade friction have constrained freight flows, while cross-border trucking costs have surged - some lanes, such as between Ontario and Chicago, have seen rates double. These disruptions are further compounded by reduced lane availability. Additionally, persistent labour disputes at Canada Post have led


many businesses to shift their parcel traffic to private carriers such as UPS and FedEx. Canada Post’s market share in parcel delivery has dropped sharply, from roughly 62% in 2019 to just 26.7% by the end of 2024, with further erosion likely if industrial action continues.


Regulatory developments and infrastructure expansion As of 1 April 2025, Canada has implemented the Pre-Load Air Cargo Targeting (PACT) initiative, mandating security risk assessments for all inbound shipments prior to loading at origin airports. This policy aligns Canadian protocols with international best practices and aims to bolster cargo security and compliance. At the infrastructure level, major airports - including Toronto


Pearson, Vancouver, Calgary and Montréal-Trudeau - are investing heavily in expanding cargo terminals, apron space, and handling technology. A federal policy introduced on 10 March 2025 has enabled increased private-sector participation in airport logistics infrastructure, facilitating a wave of modernisation projects. Calgary International Airport, for example, recorded approximately


5,200 cargo landings in 2024, underlining its growing importance as a Western Canadian logistics hub.


Current state and strategic outlook (2025) The Canadian airfreight market was valued at approximately US$6.39 billion/C$8.69 billion in 2024 and is forecast to grow at a compound annual growth rate (CAGR) of around 6.1%, reaching US$11.5 billion/C$16.16 billion by 2033. Despite this long-term optimism, recent figures point to a short-term softening. In 2023, cargo volumes at Canadian airports declined by 2.6% compared to the previous year. Domestic freight dropped by 4%, transborder volumes fell 1.2% and international (non-US) cargo decreased by 1.5%. Globally, airfreight demand has rebounded more robustly. As of April


2025, total cargo tonne-kilometres (CTKs) had increased by 5.8% year- on-year, while capacity rose 6.3%. However, yields remain under pressure due to heightened competition and relatively moderate cargo rates.


Strategic responses by major carriers Air Canada Cargo has adjusted its strategy in light of shifting market conditions.


The carrier currently operates six Boeing 767-300


freighters, having cancelled plans to expand to eight, citing a slowdown in demand. Nonetheless, it reported a 7% increase in cargo revenue in 2024, equating to approximately C$991 million/US$703.61 million. This growth was primarily driven by belly-hold capacity on long-haul passenger flights, particularly on transpacific and transborder routes. Significantly, Air Canada Cargo experienced an 18% year-on-


year surge in revenue from Asian routes in Q3 2024, fuelled by resurgent trade with China and India. The company continues to focus on expanding its digital platforms, cold-chain capabilities,


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and capacity on high-yield international corridors. Air Canada and Air Canada Cargo have introduced its redesigned


eBooking platform, providing an optimised booking experience for customers and new tools to self-manage shipments. “We are excited to reveal our updated eBooking experience,


which provides a more user-friendly interface and a smoother experience for our customers booking their cargo online. With the ability to get real-time feedback and validation, easily create batch bookings, e-AWB, submit release letters and more, this new platform will transform the customer experience and is part of Air Canada Cargo’s ongoing digitalization,” said Matthieu Casey, managing director – commercial, at Air Canada Cargo. WestJet Cargo has also realigned its operations, fully withdrawing


from its dedicated freighter programme in early 2025. The airline now concentrates on leveraging bellyhold capacity across its passenger


network. This approach has proven commercially


successful, with 2024 marking its most profitable year for cargo. Dedicated freighters are now utilised only on niche, high-yield routes - such as those to the Caribbean or remote ecommerce- heavy destinations - when financially justifiable. To further bolster competitiveness, WestJet introduced a ‘Priority


Cargo’ product, offering guaranteed space on narrowbody domestic flights. It has also deployed new digital tools to facilitate forwarder bookings on international sectors, streamlining access to its available capacity.


Market drivers and structural challenges The Canadian airfreight sector continues to benefit from strong demand


drivers, particularly the expansion of cross-border


e-commerce. In 2025, approximately 63% of Canadian consumers made international purchases online, contributing to roughly 22% of total national e-commerce sales. This surge in cross-border transactions


has underpinned growth in parcel


expedited freight requirements. Furthermore, sectors such as pharmaceuticals and perishables,


including cold chain logistics, are emerging as key verticals. These categories have prompted increased investment in digital infrastructure, temperature-controlled solutions, and end-to-end shipment visibility. However, structural mismatches persist between capacity and


demand. Globally, available cargo capacity is growing at 3–4% per annum,


lagging behind demand growth estimated at 4–6%.


Within Canada, airlines are responding by adopting leaner operating models, with a focus on optimising bellyhold utilisation over costly dedicated freighter operations. This approach aligns with broader trends in urban freight consolidation and sustainability.


volumes and


“Canadian


air cargo is adapting


with leaner operations,


infrastructure


modernisation and digital solutions


to capture the most profitable


trade lanes.”


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