Canada building its own PPE network in China

Note: This story was updated with new information on April 16, 2020.

When Cargojet flight 1392 touched down in Hamilton on Saturday it brought with it millions of badly needed N95 respirator masks to help in the fight against COVID-19.

The Boeing 767 was the third delivery of critical supplies arriving under a made-for-Canada plan set up with the help of diplomats and consultants in China, a warehouse in Shanghai, and two of Canada's airlines.

The plan was born out of urgency. With the global market for medical supplies overwhelmed by chaos and acts of piracy, Canada needed to take some of the risk out of securing everything from badly needed medical masks to gowns to gloves. 

Federal bureaucrats and political staff handling procurement of medical supplies were frustrated by deliveries showing up late. Unreliable and profiteering brokers were driving prices through the roof. Rival countries were buying shipments out from under each other.

There are even stories circulating of unnamed countries sending government planes to China — ferrying suitcases stuffed with cash — to buy supplies right on the tarmac or at the factory door.

"It is really a Wild West when it comes to buying medical supplies right now," Deputy Prime Minister Chrystia Freeland told reporters on April 6.

That intense global competition comes as health professionals in Canada warn of extreme shortages of personal protective equipment (PPE) that they say is putting the lives of front-line workers at risk. 

Some staff have even walked off the job because of a lack of protective gear.

Ambassador with China know-how

What Canada hopes will be a partial solution got its start in the embassy in Beijing.

Dominic Barton, Canada's ambassador to China, may be new to the world of diplomacy, but the former managing director of the management consulting firm McKinsey brings a deep understanding of the Chinese economy to his role. 

Prior to his ambassadorship, Barton also sat on the advisory board of the state-run China Development Bank. His experience is being put to use in the global bidding wars for medical supplies. 

"We're lucky we have Barton," said a federal official working directly on the procurement efforts. "He's a business person first. He has good links into China, gets China, gets Chinese business."

Barton redeployed much of the staff at Canada's embassy, consulates and trade offices all over China. The diplomatic staff flipped their role from selling Canada to the Chinese, to buying Chinese medical supplies for Canada.

"We have engaged our embassy on the ground in efforts to ensure that our orders are delivered on schedule and those parties are also identifying new opportunities for us," Public Services and Procurement Minister Anita Anand said on April 7.  

But Canada's diplomats lacked an intimate knowledge of China's medical manufacturing sector and supply chains. So Canada hired a multi-national management consulting firm to help officials navigate what had suddenly become the world's most competitive industry. 

Federal officials would not initially confirm the name of the consulting firm because of the sensitive nature of these operations, but a source with direct knowledge of the arrangement said it was not Barton's old firm McKinsey. 

The unnamed consulting firm is helping Canada identify which factories are more reliable in terms of delivering quality goods that will meet Canadian standards. Stories have been surfacing around the world of sub-par masks and other defective supplies arriving from China only to be sent back or thrown out.

Public Services and Procurement Minister Anita confirmed April 16 that Deloitte Canada will provide assistance on transportation, receiving, storage services and customs clearances.

Members of the Chinese diaspora in Canada are also using their business connections to help federal and provincial governments secure reliable supplies. 

Next challenge is ensuring orders arrive

Canada's plan helps. But it isn't foolproof. The Toronto Star reported that Canada recently received a shipment of badly needed testing swabs only to find they were contaminated with what is believed to be mould. 

"Cutting deals and securing quality supplies quickly is probably the biggest challenge in this entire thing," said the official working on procurement. 

There is also the challenge of ensuring that what Canada orders actually arrives. Barton may know business and the consultants may know the supply chains, but none of that guarantees medical supplies actually make it to Canada. 

"Ordering of course does not guarantee a delivery," Anand said recently. "In order to make sure that goods find their way back to Canada, we are taking very serious steps on the ground."

Those steps include hiring France-based Bolloré Logistics — a global transportation and logistics firm that has operated in Shanghai since 1994 — to help with on-the-ground support, including the transportation and receiving of goods, to ensure the Canadian orders are delivered in as timely a fashion as possible and are not diverted to a higher bidder. 

Bolloré Logistics helps get the supplies from the factory to a secure warehouse in Shanghai near the airport where they can be stored while the company works on customs clearance. 

This is where the near shut-down of international travel that is crippling global airlines actually helps Canada. There is a sudden glut of planes and pilots available to fly and maintain a critical air bridge for medical supplies. 

Ottawa has arranged for future supply flights

The first two flights organized as part of this effort arrived in Toronto on April 1 and April 6, delivering a resupply of personal protective equipment. The April 6 flight arrived with about eight million surgical masks ordered by the federal government, and other orders made directly by the governments of Nova Scotia and Quebec. 

The federal government has secured an arrangement with Air Canada and Cargojet to run more supply flights from China once Bolloré Logistics has enough supplies in the warehouse ready to go. 

The Cargojet flight that landed in Hamilton was the most recent delivery. Air Canada is due to send planes to Shanghai this week to deliver additional shipments. 

The plan is for the number of flights to grow as the supply chain in China is able to deliver more supplies. Airlines are working to be ready to meet the demand.

On April 7, Air Canada's Vice President of Flight Operations Murray Strom issued an internal call for pilots to volunteer for special flight assignments to support this effort.

"The government of Canada has requested Air Canada provide emergency airlift capabilities to operate cargo-only flights" from Shanghai to Canada, Strom wrote to his pilots in a memo obtained by CBC News. 

Strom specifically asked pilots trained to fly Boeing 777s and 787s to step up — suggesting there could be as many as four daily flights travelling to Shanghai via Japan. 

"This operation will require a lot of pilots over the next seven to 10 days to assist both Canada and our airline to make this happen," Strom wrote. 

"These are truly unique times we are going through, but we all need to be willing to do our part to assist our fellow Canadians who are going through some very tough times."

Air Canada boosts cargo capacity

On Saturday Air Canada publicly announced that it was boosting its cargo capacity by stripping the seats out of three of its enormous Boeing 777 aircraft to double their cargo capacity.

"Bringing critical medical and other vital supplies rapidly to Canada and helping distribute them across the country is imperative to combating the COVID-19 crisis," Tim Strauss, vice-president of cargo at Air Canada, said in a statement. 

It is a significant ramping up of air cargo capacity. But it's backstopping a still-fragile supply chain in a time of great stress. To further reduce risk, Canada is buying from as many Chinese factories as possible so it doesn't become reliant on a single operator. 

The idea is to reduce the exposure from having a manufacturing line bought out by a rival country or being left vulnerable due to a sudden drop in quality from a specific supplier. 

"These supply chains are complex," Anand said on April 7. "But we are taking every effort to make sure that we get those goods back to Canada and in the hands of front-line health-care workers."

The global procurements are part of what Public Services and Procurement Canada calls an "aggressive approach" to getting PPE for front-line workers, including bulk-buying for the provinces and scaling up domestic manufacturing capacity. Provinces and territories are also taking steps to build their own inventory of supplies.

"We are exploring all options for securing the necessary equipment and supplies to fight COVID-19, through both domestic and international supply chains, to ensure that front-line health-care workers across the country are equipped and protected in the fight against COVID-19," spokesperson Michèle LaRose said in an email.