Changes to the supply chain for Arctic Co-operatives Ltd. are creating new transportation routes in the High Arctic.

Arctic Co-operatives Ltd. is ending its decades-long relationship with First Air. Starting Saturday, Canadian North will coordinate Arctic Co-op's freight deliveries to the Baffin region of Nunavut, pairing up with Cargojet and Calm Air and using Winnipeg as a hub.

Cargojet will bring groceries from Winnipeg to Iqaluit and Canadian North will move them through the Baffin region. Calm Air will deliver goods even further north using two new routes from its base in Churchill, Man. One flight will delivery groceries to Kugaaruk and Resolute, and the other will make stops in Pond Inlet and Arctic Bay.

Gary Bell, the president of Calm Air, admits the routes are a big change.

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Duane Wilson, vice-president of merchandising and logistics with Arctic Co-operatives Ltd., says the company will switch to using Canadian North, with Winnipeg as a hub for shipping food due to changes in the food subsidy program for northern residents. (CBC)

"Well why are they being changed? Well because they never were considered that way before," he said. "Either there was infrastructure that way or it was a traditional routing. Quite often with your medical contracts, all the Baffin Island communities wanted to be routed through Iqaluit, either for language reasons or cultural reasons, so that's typically the way the freight went as well."

Bell said the distances from Churchill are not much different from the distances from Iqaluit.

Calm Air has already expanded its Churchill base, and has more plans to expand there.

Nutrition North cause of changes

The switch is part of some major changes in the way northern retailers do business, and it's all because of the Nutrition North Canada food subsidy program.

Under the old Food Mail program, First Air held a contract tendered by Canada Post to deliver groceries to Nunavut communities at set rates. To get the subsidized freight rate, retailers were obligated to rely on First Air.

"The old Food Mail program dictated set delivery days, it dictated which carrier, it restricted which product," said Duane Wilson, vice-president of merchandising and logistics with Arctic Co-ops.

Under Nutrition North Canada, retailers access a subsidy per kilogram of product moved to each community, but how they get the product there is up to them. 

"Now we're taking into our own control the ability to prioritize the freight based on community need, and the type of product. And that's a degree of influence that never existed in the Food Mail days," said Wilson.

Arctic Co-op's first Cargojet freighter from Winnipeg will arrive in Iqaluit this Saturday: a Boeing 767 Super Freighter, packed full of groceries. 

This follows a similar move by the North West Company, which started moving produce from Winnipeg to Iqaluit last fall.

"What we're doing now is booking entire planeloads with 767 equipment and we're able to achieve cost savings that way," said Edward Kennedy, the president and CEO of the North West Company.

Both companies say taking control of supply lines is saving money, reducing waste, and lowering costs for consumers.

First Air declined to comment.