Detroit’s Ambassador Bridge, the busiest U.S.-Canadian border crossing, handled far fewer trucks than usual last year, as the recession drove the number of commercial vehicles using the span down by more than 500,000 compared with 2008.
But bridge watchers counting tractor-trailers last fall would have seen encouraging signs. Month by month, the gap of 100,000 trucks counted in January narrowed, until by December truck traffic over the bridge was growing again, rising 6.5 percent from a year earlier.
In January, the number of trucks traveling between Detroit and Windsor, Ontario, jumped by 36,059 —
22.9 percent above last year’s low, though almost flat with December’s total and still 31 percent below than the 282,650 trucks that crossed in January 2007.
The activity indicates a recovery is under way in cross-border trucking, although it’s slow, and still nowhere near the peak achieved before the recession. It helps that the recession in Canada was less severe than the downturn the U.S. saw “Their economy is rebounding faster,” said Kevin Hartman, senior vice president of corporate strategy at UPS Freight. “It’s a growth market for us. Our customers are pushing us in that direction.”
Canada’s unemployment rate was 8.3 percent in January, compared with 9.7 percent in the United States. Employment numbers are growing in Canada, and the Conference Board of Canada’s Consumer Confidence Index hit 96.6 in January, well beyond the 55.9 confidence rating in a similar U.S. measure and the highest the board has measured in 23 months.
In fact, Canada may face a labor shortage if the recovery moves too quickly, warns Perrin Beatty, president and CEO of the Canadian Chamber of Commerce. “We need to expand Canada’s labor force if we want the Canadian economy to continue to grow,” he said.
“There seems to be some optimism that things actually are starting to turn up generally, including cross-border trade,” said Bob Ballantyne, president of the Canadian Industrial Transportation Association, the nation’s largest shipper group.
Shippers surveyed by CITA recently predicted modest growth in volume this year and rate increases under 2 percent for air cargo and truckload freight and less than 4 percent for less-than-truckload, intermodal and rail freight. “I don’t think anybody’s expecting a major boom, but a number of our members are seeing some growth,” Ballantyne said.
“Canada experienced a short, sharp recession,” Mark Carney, governor of the Bank of Canada, told the Winnipeg Chamber of Commerce last month. “Domestic demand, fixed capital investment and employment in Canada all held up substantially better than in the U.S. The thaw is coming. After a brutal economic winter, spring is in sight.”
A faster Canadian recovery means consumers north of the border may begin buying more goods sooner rather than later, good news for U.S. exporters and cross-border carriers. The weak U.S. dollar allows Canadians to buy more U.S. goods, according to Ernie Valdez, director of international solutions at Cookeville, Tenn.-based Averitt Express. “Canadian importers are able to buy more U.S. goods with the Canadian dollar,” he said.
That’s a boon for Averitt, which is part of the Reliance Network partnership linking several U.S. carriers with Canadian Freightways and Epic Express, both subsidiaries of TransForce, Canada’s $1.8 billion transportation and logistics giant.
For Averitt, cross-border trucking with Canada and other international trade was a source of growth in an otherwise painful business climate last year, Valdez said. “We saw a decline in less-than-truckload business domestically, but we actually saw an increase on the export side, and had growth toward the end of the year,” he said.
Throughout much of 2009, Averitt’s Canadian sales increased 7 percent year-over-year each month. “Toward the end of the year we saw a 13 to 14 percent increase in shipment count,” Valdez said.
Cross-border traffic is the fastest growing business segment at Vitran Express, a Toronto-based LTL carrier with extensive domestic operations in Canada and the United States. Vitran’s trans-border service links its Canadian and U.S. LTL business units.
“This is the company’s highest margin and fastest-growing service, achieving approximately 26.5 percent revenue growth for 2008 and a four-year compounded average growth rate of approximately 10 percent per annum at Dec. 31, 2009,” the $629 million company said in its year-end financial report.
A quick recovery could spell the return of something carriers and shippers don’t want to see: the congestion that snarled supply chains on both sides of the border in 2007.
“There are still some bottlenecks, capacity-wise,” Hartman said. “There have always been at the Ambassador Bridge in Detroit, the Blue Water Bridge (linking Port Huron, Mich., and Sarnia, Ontario) and to a lesser extent the Buffalo crossing,” the Peace Bridge.
|This may be the perfect time for the U.S. and Canadian governments to deal with those bottlenecks — before congestion returns. “If we do not resolve the costly and unpredictable border crossing experiences, when our economies recover we will find ourselves back in a situation similar to that of the summer of 2007,” the Canadian Chamber of Commerce warned in a report last year. “The effects will be felt throughout the Canadian and U.S. economies. All in all, 7 million jobs in the United States and 3 million in Canada depend on an efficiently functioning border.”
Historically, the biggest chokepoint has been in Detroit, where most traffic passes over the Ambassador Bridge, now more than 80 years old.
The governments of the U.S., Canada and the state of Michigan have been sparring in court with the bridge’s owner, billionaire and transportation entrepreneur Manuel “Matty” Maroun, over the location and ownership of a new span.
Maroun wants to build a second privately owned — he’s volunteered to be that owner — span alongside the existing bridge, while the governments favor a publicly funded span.
Regardless of where it’s located or who owns it, any new bridge between Detroit and Windsor is years away, well beyond the projected timeframe of any recovery.
Barriers to cross-border trucking transcend physical infrastructure. Since the September 11 terrorist attacks, Canadian shippers have said U.S. security regulations are “thickening” the border, making it more difficult to move goods into the United States. Business groups on both sides, led by the U.S. Chamber of Commerce and its Canadian counterpart, have called for streamlining and reform, and to an extent, the U.S. and Canadian governments have complied. But there’s still work to do, businesses say.
“The compliance side has become extremely difficult,” Averitt’s Valdez said. “In the past, shipping to Canada wasn’t any more difficult than shipping to Texas. Now they’ve really buckled down, and it’s more difficult to maintain the paperwork trail than in the past.”
Averitt and its Canadian partners share a common technology platform and exchange shipment data with U.S. and Canadian customs electronically. “But we are still checked and questioned on both sides,” Valdez said, “and we understand why.” Technology and electronic pre-clearance help keep delays to a minimum, he said.
UPS Freight fights a similar battle, and relies on its technology to speed freight across the U.S.-Canada border, Hartman said. “By the time the shipment is picked up, we’re already working with the customs brokers and customs services, so when the shipment gets to the border it’s already been pre-cleared more than 90 percent of the time,” he said.
UPS Freight can’t build bridges or add truck lanes leading up to them, but by sending electronic customs data and participating in programs such as the Customs-Trade Partnership Against Terrorism and Free and Secure Trade, it can use existing infrastructure more efficiently, overcoming physical barriers at crossing points, Hartman said. “Before we started using technology in the pre-arrival clearance process, the typical delay time for a driver at the border was 90 minutes,” he said. “Now it’s 90 seconds.”
That gives customs officials more time to focus on the exceptions. “They’re spending more time on the infrequent shipments or oddball stuff, and allowing the regular trusted individuals through, Hartman said. “And we want to put ourselves in that position.”
Contact William B. Cassidy at email@example.com.