Cargojet Inc. could benefit from the tariff threat looming over North America by seizing on the new supply routes opened up by a trade war, its top executives say.
Pauline Dhillon, co-CEO of the air freight company, said shippers looking to avoid sending their cargo through the U.S. could opt for shipments straight into Canada, including via freighter aircraft.
"Cargojet is uniquely positioned to excel during tariffs, and may even benefit from direct shipments to Canada versus carriers going into the United States," Dhillon told analysts on a conference call Tuesday morning.
Rather than causing a drag on its business, the potential import taxes have made Cargojet "hopeful that we see more freight coming into Canada," she said.
U.S. President Donald Trump has threatened to impose sweeping tariffs of 25 per cent on Canada and Mexico as early as next month, with Prime Minister Justin Trudeau vowing to retaliate.
The Bank of Canada has projected that across-the-board tariffs could bring on a recession and boost inflation within the first year of a trade war.
Cargojet's business hinges on air delivery of e-commerce goods on its fleet of 41 planes. The company deploys them on its domestic network, on ad hoc charter flights and on more regular charter routes for clients such as DHL, which leases the aircraft, crews and mechanics to fly freight around the globe.
Jamie Porteous, Cargojet's other chief executive, pointed to its growing international charter service that would steer clear of any U.S. import duties.
"Our scheduled charter services from China to Canada were specifically and deliberately targeted to serve the Canadian market, leveraging our domestic network, avoiding the U.S. market and any potential tariff restrictions," Porteous said.
"As manufacturers across the globe plan shipments directly into Canada to avoid any potential U.S. tariffs versus routing them through Mexico and the United States, it may present new opportunities for Cargojet — although this remains a very fluid situation."
The Mississauga, Ont.-based company said charter freight revenues rose 136 per cent year-over-year in its latest quarter, with chances for further growth through the four additional Boeing 767 freighters joining the fleet this year.
Amazon may become more dependent on the carrier after its departure from Quebec, Cargojet suggested. The online retail giant began to shutter all seven of its warehouses in the province earlier this month. Labour leaders have accused the company of doing so to punish employees who unionized at one of the facilities, a claim Amazon has denied.
"If anything, it's a growth opportunity for us, because with them pulling out of their distribution and fulfilment centres in Quebec, they're going to have to source more product from other fulfilment centres and warehouses across Canada. And we're uniquely positioned," said Porteous.
He cited Cargojet's deal with Amazon for charter service as well as a so-called block service agreement, where the client reserves a certain amount of freight space on flights.
In 2024, Cargojet's full-year sales topped $1 billion in a record for the 24-year-old company. Fourth-quarter revenues jumped by a third year-over-year to $293.2 million. Net earnings in the three months ended Dec. 31 hit $71.2 million, versus a $34.9-million loss in the same period the year before, Cargojet reported Monday.
However, the month-long Canada Post strike late last year dampened its domestic revenues, it said.
"To achieve 30 per cent growth when a large customer is on strike demonstrates the benefit of its array of revenue channels," said analyst Walter Spracklin of RBC Dominion Securities, referring to a year-over-year revenue increase from Cargojet's main segment.
Demand for next-day delivery of e-commerce items continues to grow rapidly, he added.
In November, global air cargo volumes hit their 13th consecutive month of double-digit growth amid an e-commerce boom, according to freight analytics firm Xeneta.
That surge in demand, combined with only two per cent growth in worldwide air cargo capacity as of late last year, meant that air freight rates hit their highest level in nearly two years, the firm said.
This report by The Canadian Press was first published Feb. 18, 2025.
Companies in this story: (TSX:CJT)
Christopher Reynolds, The Canadian Press
