In-transit shipments closer to reality

by MM&D Online Staff

Toronto, Ontario—The ability for carriers from both Canada and the US to conduct in-transit shipments through the other country – is close to being achieved.

The Canadian Trucking Alliance, a federation of the provincial trucking associations representing over 4,500 trucking companies from across Canada, has been involved in intense discussions with Canadian and US government officials and the American Trucking Associations in an attempt to break a log-jam that threatened to scupper any prospect of in-transit moves in either country.

Last spring, the Canadian and U.S. customs agencies appeared to reach a harmonization agreement on the data required for domestic goods transiting through the other country, but then went offside when US Customs and Border Protection (CBP) subsequently insisted that the “value” of the in-transit goods remain on the list of required data elements for electronic submission, which CTA argued, would be practically impossible for carriers to provide for what is a domestic shipment.

For decades it had been common practice for Canadian carriers moving loads, say from Toronto to Calgary, to transit through the United States as opposed to crossing the top of the Lakehead in Northern Ontario in order to take advantage of the superior multi-lane divided interstate highways which offer safer conditions, less wear and tear on vehicles, access to rest stops, etc. Since the goods were not entering the US for consumption or being offloaded or stored, they could enter with minimal documentation.

US carriers made similar in-transit moves taking Canadian highways between points like Buffalo, NY and Detroit, MI.

However, US changes to the cross border process in the aftermath of 9/11 led to in-transit shipments treated as international loads, subject to full documentation, including the problematic requirement for “value data,” effectively ending in-transit shipments through the US for Canadian carriers. Canada did not adopt the US approach and therefore US in-transit shipments were able to continue, creating an uneven playing field.

In meetings last week, CBP accepted a CTA proposal to allow Canadian carriers who are not able to provide a value for the shipments to designate a default value of $95,000.00 to the shipment – a figure that is based on contract of carriage rules where for claims purposes a default value is based on $2/pound for 45,000 pound load.

Value and estimated value of goods will remain a CBP requirement (and must be provided) where it is obtainable by the carrier. However, in cases where it is not obtainable, CBP has agreed that the default value will be acceptable. Additionally, if the goods are not properly repatriated back to Canada, the existing process – where a penalty will be issued based on the declared value of the load, whether it is actual, estimated or default – remains in place.

The next step, likely to occur during the summer of 2015, is for CBP to launch a short-term pilot involving no more than nine carriers to begin moving goods in-transit through designated US ports.

“The agreement is the product of a lot of hard work by government and industry officials on both sides of the border,” says David Bradley, president and CEO of CTA. “It was tough sledding at times, but ultimately the process worked and while there is still work to be done the outcome on in-transits is consistent with the vision both the Prime Minister of Canada and the President of the United States had for the Beyond the Border initiative.”

Bradley said a number of individuals deserve credit for the agreement: From Canada:  Public Safety Minister Steven Blaney and his staff; David McGovern and officials from the Privy Council Office and the president of the Canada Border Service Agency, Luc Portelance and his staff.

In the United States: Department Homeland Security Deputy Secretary Mayorkas and his staff; the Canadian Embassy staff; and US Customs and Border Protection Commissioner Gil Kerlikowske and his staff who were instrumental in the process.