Land transportation and border securityA dead end for free trade? I

Published 23 May 2008

Tightening border security along the U.S.-Canada border is hampering trade, experts say; delays owing to security checks have cascading effects, as supplies and raw materials are late arriving at manufacturing plants

Peter Durant is getting edgy. The Ontario trucker should be on his way to Toledo, Ohio, to pick up a load of Oreo cookies for Kraft Canada. Instead, he is stuck at a truck stop outside Windsor, Ontario. The U.S. Customs computer system that handles freight has crashed and can not read his electronic manifest. By the time the all-clear sign comes from his dispatcher an hour later, about 100 trucks are lined up on the U.S. side of the Ambassador Bridge. It will take him another hour-and-a-half to navigate the 13-kilometre drive through Windsor and clear customs on the U.S. side. Barrie McKenna writes in the Toronto Globe and Mail that it is another day at the busiest trade gateway on the planet — not a bad day; not a particularly good day. Just thick. Dense layers of security, designed to shield Americans from a world full of threats, have conspired to make life enduringly less predictable for everyone else. “I can’t see this is an efficient way to move things across the border,” observed Durant, who has hauled cargo across the border once or twice a week for the past fourteen years. “This isn’t it,” he said as he guided his rig through winding, rutted lanes beneath the bridge.

For the people and companies who ply the border trade, the new reality is an increasingly complex, time-consuming and costly experience. And we’re all paying the price. The long-ago promise of the Canada-U.S. free-trade deal was about dismantling barriers — tariff and otherwise — along the world’s longest undefended border, but those benefits are being slowly eroded as companies absorb ever greater costs — anything and everything to keep trade moving. Just-in-time inventory management has evolved into just-in-case. Companies are stockpiling inventory in both countries to cope with the increasingly unpredictable border, wiping out many of the efficiencies of integrated supply chains, according to recent studies by the Conference Board of Canada as well as the Canadian and U.S. Chambers of Commerce. Stockpiling is not the only coping mechanism seeping into everyday business. Disturbingly, businesses are reverting to behaviour that was common before free trade, a trend that is eroding the benefits of Canada’s open access to the U.S. market, the Conference Board concluded. Companies now routinely preship orders, cross at night or on weekends, send empty trucks to make pick-ups or ship duplicate orders — anything to make sure a delivery arrives on time. All at a cost. A load that does not get to a customer can shut down a manufacturing plant, explained Robert Kee, managing director of Casco Inc., an American-based maker of corn-based sweeteners with several plants in Canda. “It’s a big deal,” he explained. “A customer isn’t going to shut down their plant just because they feel bad for us. They are not going to tolerate that.” So when a shipment occasionally gets hung up en route by an inspection or some other glitch, Casco sends a second one, while eating the extra cost.

On Monday: What American and Canadain companies do to cope with the new security regulations along the U.S.-Vandian border