Cargojet CEO says inflation, labour shortages suggest 'almost recessionary economy'

The CEO of Cargojet said fuel prices and labour challenges suggest a recession is imminent.

He said in an interview with the Financial Post that all the challenges he sees are pointing towards a recession.

There is a sightline on what is happening in the economy. As consumers started ordering goods for delivery that they typically would have purchased at a store, Cargojet tripled its loads. Revenue increased by 46 per cent in the first quarter of this year compared to the first quarter of last year.

Despite beating expectations, the business has leveled off.

blockades, floods, and shortages have disrupted the supply chain. The chaos of the past couple of years has generated debate about whether supply chains will be shortened, as manufacturers and retailers seek suppliers closer to home to reduce the risk of being left with empty storerooms in the future.

He isn't seeing that yet. Extreme labour shortages have come with the recovery from the COVID recession.

The biggest challenge right now is making sure that we have people on the ground.

Canada's inflation rate hit a new 31 year high of 6.8 per cent in April. Firms are trying to keep staff in a tight job market.

Everybody is increasing prices. Airport landing and parking fees, NAV Canada navigation charges, and jet fuel prices are examples of recent price hikes in the airline industry.

Many of Cargojet's customers have locked-in contracts so passing on inflationary costs has been difficult.

You can't pass on all of the increase to your customers.

The international market is part of Cargojet's growth strategy in the post-pandemic world.

Cargojet needs to be more diversified, and we have the infrastructure in place, so we had to get some planes.

When it launched in 2001, the airline used to be mostly domestic. The CEO said that domestic orders now account for 50 per cent of the business.

It's like McDonalds. They used to serve lunch and dinner and now they have breakfast.

Air Canada acquired new freighter aircrafts. The playing field for Cargojet has not changed.

He said that international is a big market.

Cargojet is protected from Air Canada and other competitors because few have been in the business for as long as he has. The CEO of Cargojet said that the company has taken over 20 years to build its network in the Canadian market.

There is a cargo pedigree. There is a cargo system in place. I don't think anyone who wants to expand in that market field will have a lot of luck.

Email: novid@postmedia.