Transport Canada study says U.S. regs taking toll on Canadian truckers

OTTAWA — A Transport Canada study released last week concludes that the myriad of U.S. cross-border regulations is costing Canadian for-hire carriers about $290 million per year and drivers about another $5 million.

The purpose of the study — entitled “The Cumulative Impact of U.S. Import Compliance Programs at the Canada/U.S. Land Border on the Canadian Trucking Industry” — was to assess the impact of U.S. land border customs and security measures on Canadian motor carriers operating into the U.S. The study measured the impact of the overlapping regs by surveying various trucking industry segments, including for-hire carriers, private carriers, owner-operators, as well a handful of shippers and other stakeholders.

The Canadian Trucking Alliance and the Owner-Operators’ Business Association of Canada also participated on the Steering Committee established for the study.

By analyzing the cost impact of customs and security programs such as Advanced Electronic Presentation of Cargo Information; Customs-Trade Partnership Against Terrorism (C-TPAT); Free and Secure Trade (FAST); United States Food and Drug Administration (FDA) prior notice arrival; Transportation of Dangerous Goods; and the upcoming Automated Commercial Environment (ACE) Program, Transport Canada estimates the Canadian trucking industry’s compliance bill was anywhere between $179 million to $406 million in 2005. A mid-range number would be in the order of $290 million per year. Driver costs due to the U.S. border security measures are at a minimum $3.4 million/annum to a maximum of $6.8 million/annum.

Border problems exasperating driver shortage: Study

The study also states that Canadian carriers have yet to perceive any concrete benefits from the U.S. security measures. “There is some light at the end of the tunnel but a number of challenges must be overcome before these benefits become material,” the study notes.

According to the report, the major problems associated with cross-border operations since Sept. 11 include:

— Increased truck delay is the key factor in the cost impact of the U.S. security measures on Canadian trucking operations.
— A serious lack of FAST approved shippers that are hindering the ability of Canadian carriers to take advantage of potential benefits from the U.S. Security regime.
— The U.S. security measures are exacerbating the driver shortage for transborder traffic.

On this latter point, the study says that practically all carriers in the survey were very concerned about the future supply of qualified drivers to serve the transborder lanes. “There is a general reluctance for many drivers to cross the border due to the U.S. security measures (e.g., the potential for fines if noncompliant, delays at the border that cut into driving time). The long-haul nature of many U.S. routes also has quality of life implications for many drivers who wish to remain closer to home for family reasons,” the study says.

Furthermore, the study notes that several “owner-operators were very emphatic in their intention to get out of the transborder business.” The main reasons given were: The costs related to becoming FAST approved; the private information that had to be submitted to become FAST approved; and receiving no compensation by carriers for increased costs due to FAST and/or for increased delays at the border.

When asked for the reasons behind the increase in waiting time, half the carriers felt it was attributable solely to the new U.S. security measures, the other half felt it was a combination of the security measures and other factors such as the lack of roadway or bridge capacity and too few processing stations open. About half the carriers who experienced an increase in waiting time, could actually provide an estimate of the increase in time. On average, this increase was approximately one hour although the range varied from 15 minutes to 3 hours at the extremes.

“It comes as no surprise to anyone in the trucking industry” said Canadian Trucking Alliance CEO David Bradley in response to the study’s findings. “The industry has worked hard and made significant adjustments to comply with requirements under U.S. laws such as the Patriot Act, Trade Act and Bioterrorism Act. But there is a cost to higher security, and this study, in which CTA participated as a member of the steering committee, validates much of what industry leaders have been saying over the past couple of years.”

Close to 60 percent of the for-hire carriers in the sample felt that the U.S. security measures were causing some structural change to the Canadian and North American trucking industry. The majority of the comments mentioned that the smaller Canadian carriers were to some extent leaving the transborder market due to the administrative complexities of the new U.S. border security measures that they faced. The larger Canadian carriers for the most part were taking over this traffic.

However, the carriers surveyed say they have not noticed any shift in modal choice since the implementation of the U.S. border security measures. Although Canadian food manufacturers have had to shift significant traffic volume from rail intermodal to truck due to the inspection requirements for meat-based food products that are now a regulated product due to the BSE situation.

In typical government style, many of the study’s final recommendations suggest, well … more studying and further recommendations.

“It is highly recommended that an update of this study be undertaken in late 2006 once ACE has been implemented and the “dust has settled.”

… “It is also recommended that further research be carried out on a more rigorous basis to: measure time delays that are actually being incurred by trucking companies crossing the border; and determine the true economic costs of these delays.”

In the meantime, aside from the need to still improve infrastructure and processing facilities at the border, the study recommends that the pre-processing initiatives already commenced be encouraged and expanded for other gateways across the country where feasible. And the customs broker industry continues to improve and standardize the procedures for the processing of invoices and its communications with carriers.

Transport Canada, has also joined the Canadian Trucking industry is lobbying for improved strategies and programs between industry and government to encourage, train, and assist small and medium size businesses to become C-TPAT compliant and FAST approved.

The study suggests that carriers and the government accommodate the busy schedules of truck drivers who must be interviewed at specific border crossings to become FAST approved. Also, the report wants to see training schools educate drivers on border and customs procedures.

“Every effort should be made by all sectors of the Canadian economy to become C-TPAT compliant and FAST approved to the U.S. security measures as soon as possible,” the study states.

For the complete report go to www.tc.gc.ca/pol/en/Report/BorderStudy/Main.htm