CUSMA clears way for streamlined border processes, fleet execs say

by John G. Smith,

WASHINGTON, D.C. – Challenger Motor Freight CEO Dan Einwechter is clearly a fan of the new Canada-U.S.-Mexico Agreement (CUSMA).

The replacement for the North American Free Trade Agreement (NAFTA) establishes a framework that can be used to improve efficiency at the border, he said on Thursday, during an IRU webinar that featured fleet representatives from all three countries.

“Just give us the rules, make them clear, and we’ll work within them.

While the trucking executive says the border is more efficient than ever, Einwechter still sees room to improve.

Cabotage rules that restrict the repositioning of empty trailers are “arcane” and a “major inefficiency”, he said as an example. In contrast, a freer flow of trucks, trailers and drivers would help to reduce greenhouse gas emissions and improve operating efficiencies.

Einwechter also referred to the need to solve restrictions on in-transit moves. There are efficiencies to be gained by allowing trucks to travel through a neighboring jurisdiction on their way to final destination, he said, referring to trucks that might cut through Ontario when traveling from Michigan to Buffalo. But Canadian trucks have faced added restrictions to in-transit moves since 9-11.

Covid-19 has also reinforced the benefits of a broader shift to paperless transactions, he added. “We don’t need it, quite frankly.”

Derek Leathers, COO of Werner Enterprises, referred to his hopes for unified customs processes, so that loads don’t need to be stopped three times for inspections by different agencies.

“There are things we can do that take very important time out of every shipment,” he said.

‘Almost starting from anew’

Martin Rojas, IRU senior advisor for the Americas, pointed to CUSMA chapters that commit to improving the release of vehicles at the border, and a new committee devoted to refining the transportation system.

“We view USMCA as almost starting from anew,” he said, referring to the trade deal’s identity south of the border, where it’s known as the U.S.-Mexico-Canada Agreement.

Leathers said it was clearly time for a new deal, observing that no business would leave a contract unchanged for more than 25 years.

“I’m a supporter of USMCA. I see it as a natural evolution,” he said. “In general terms, I think this is a step forward at a time it was sorely needed.”

“North America has to be one unit. The transportation sector in Mexico is ready. We are fully committed,” added Alianza Trayecto general director Jorge Casares Lopez.

“We need the move to be paperless … We need to cross like there is no border whatsoever.”

Trucking volumes and free trade

Of course, there is no denying the impact of the North American Free Trade Agreement (NAFTA) on the trucking industry. Surface transportation crossing the U.S. borders with Canada or Mexico was valued at US $300 billion in 1994. Last year it was closer to $900 billion.

“In Canada’s case, 70% of our exports – a little more than 70% — go to the United States. Forty percent of our GDP depends on trade with the U.S.,” Einwechter said.

About 33,000 trucks cross one of the two borders every day, representing 70% of the total trade between the three countries.

It’s been a big change since 1994. Lopez recalled how one manufacturing facility accounted for 150 shipments a month at the time. Now he has a client that accounts for 150 shipments a day.

“It has been an exponential growth,” he said. “The free trade agreement forced us to be competitive in the international arena.” It’s meant a need for newer trucks and better-trained drivers alike.

Covid-19 and the border

Cross-border freight volumes undeniably plunged in the early weeks of Covid-19 shutdowns, however, but they appear to be recovering.

Comparing the last six weeks to the same period a year ago, the difference was measured by a single load, Einwechter said, referring to the Canada-U.S. border. “The traffic has come back tremendously.”

The recovery has been admittedly slower in Mexico.

Automotive shipments were disproportionately affected, which presented particular challenges at the U.S.-Mexico border for Werner. The northbound demand that existed was hard to service because of a lack of trailers. But Leathers says that is recovering, too.

The Werner executive asked how troublesome Covid-19 would have been in the absence of a new trade deal. CUSMA offers a framework to reestablish supply chains and bring manufacturing back to North America, he said. “You’re going to see more supply chain changes. You’re going to see more near-shoring.”

“Near-shoring is definitely going to play to our advantage,” Einwechter added, referring to the business that would move by truck in North America.

“The near-shoring is a reality that we need to make sure happens. It needs to come to the North American block so we can be the most important block in the world when it comes to manufacturing,” Lopez said. “We are obviously aligned with that plan. We need to have clear, direct foreign investment in Mexico with clear rules.”

But while there is a push to ensure a more seamless move of trucks across borders, Leathers noted that carriers can still be better off running trucks within their respective countries, and partnering with other operations.

“There’s many provinces in Canada where I would much better work with a partner for the final delivery,” he said.

In the midst of it all, Einwechter stressed the need for the trucking industry to remain engaged with regulators now the new trade deal is in place.

“We need to stay engaged with those regulatory authorities,” he said. “They have just enough information to be dangerous, and we can’t assume they have our best interests at heart.”