The Logistics Review – Cross-Border Trucking

by Array

There is arguably no more potent indicator of the frail state of the Canadian economy than cross-border traffic figures. By the end of 2009, it is expected that two million fewer commercial trucks will have made the trip between the US and Ontario—the province with the greatest over-the-road cross-border traffic—than did in 2008. The numbers are smaller across the rest of Canada, but the story is similar.

The drop in traffic is attributable to a combination of factors. There have been steep declines in shipments that typically travel between Canada and the US, most notably in the automotive and consumer packaged goods sectors. The Canadian dollar is currently hovering at a point that’s too high for Canadian exporters to boost business but not high enough for importers to gain any real advantage. Complicating matters is a burgeoning sense of protectionism that is keeping many US shippers from looking to the north.

The challenge

With less traffic at the border, one might expect that shippers who do continue to ship cross-border would benefit from a smooth, quick transit. But it hasn’t been the case.

“Despite the drop in trucks going over the border and decreased trade, delays going over the border have remained consistent,” says Jennifer Fox, assistant vice-president of operations and education at the Ontario Trucking Association.

“It still takes a truck an average of 10 to 15 minutes to cross the border.”

Fox attributes the delays to the increased regulatory requirements enacted on both sides of the border. Since 9/11, security measures between Canada and the US have steadily intensified. Over time, the focus has changed—officials are now more occupied with the trio of issues she calls “drugs, thugs and bugs” than they are with the threat of terrorism—but the intensity remains high.

That means that while traffic may be down, the level of scrutiny is not. In fact, Brian Bowen, a Customs and cross-border specialist for the Private Motor Truck Council, reports that inspections are becoming more onerous. “Since there’s less traffic, inspectors have the luxury of asking more questions.”

While there are several voluntary security programs intended to expedite the passage of low-risk cargo—the Canadian Partners in Protection (PIP), the US Customs-Trade Partnership Against Terrorism (C-TPAT) and the joint Free and Secure Trade (FAST) programs, each of which requires rigorous prep work—their effectiveness is rendered null if a border agent on duty chooses to investigate.

“We are seeing heightened levels of truck inspections,” confirms Sandro Caccaro, vice-president and general manager at Schneider National. “When legitimate carriers are being pulled aside for inspection, that’s when delays and costs start to rack up for both the carrier and the shipper.”

The opportunity

So is there any way to make cross-border shipping any less of a hassle? The answer is yes—but only if shippers are willing to do a little legwork.

Most security programs are significantly more effective when supported by shippers. When border officials are presented with well-documented evidence that shipments are safe, there is much less likelihood that they will probe further.

This is because in order to be classified as low-risk, carriers need information about what they have in the trailer, which almost always must come from the owners of the cargo. This is a particularly important issue for less-than-truckload (LTL) shipments; to get any benefit at the border, carriers must ensure that each shipper with a load in the trailer has provided sufficient information to be deemed low-risk.

This trying situation is prompting carriers to encourage their customers to go through the security certification process.

“We’re really under the microscope now for both PIP and C-TPAT,” says Clayton Gording, president of cross-border carrier YRC Reimer. “We’re at the point where we have to do internal audits to make sure all our security programs are in place in-house. And we really should be auditing our shippers to make sure they’re compliant as well. But it’s very difficult to do that.”

Indeed, many shippers—who are paying good money for someone else to carry their cargo for them—resent being asked to do more work for the carrier. But the interests of the two parties are intertwined; when a truck gets stopped at the border, the consequences for shippers are every bit as serious as they are for carriers.

In the past, many shippers have been able to dodge security responsibilities by blaming border delays on high volume. The past year has shattered that theory. As a result, many are now recognizing the value of doing the extra work needed to become PIP- and/or C-TPAT-compliant.

“Shippers are a lot more savvy now,” Caccaro says. “They’re realizing that if they just give the carriers what they need, it will run much more smoothly.”

“If the shipper is going to have a problem, if it’s dealt with before the driver gets the goods, ultimately the shipper will be able to keep transportation costs down,” Bowen adds.

Today, cross-border shippers have the potential to secure low rates, at least in the short term, as cargo-strapped carriers scramble to fill their trailers. When shippers opt for consolidation methods like drop-shipping, there’s a very attractive value proposition—but only if the truck carrying the load can clear the border. And the industry consensus is that smart shippers will recognize their own responsibility in making that happen.

“It’s all about increased security now, and I don’t think we’ll ever go back on that,” Fox says.

“When the shipping community pushes to adopt security programs, they themselves benefit, because cost savings to the carrier are cost savings to the shipper.”