Rebounding truck volumes are a welcome sign of economic improvement south of the border and perhaps an indication of a ‘rebalancing’ cross-border freight market, says the president of the Ontario Trucking Association.
Trucks crossings in Detroit-Windsor alone rose 8 percent year-over-year in the fits quarter of 2016. Total U.S.-Canada truck crossings rose 3.2 percent in the first quarter, but were up 6.2 percent at the three largest border crossings.
OTA president Stephen Laskowski told the Journal of Commerce those figures should get attention from shippers increasingly using Canada as a gateway to U.S. consumer markets, and manufacturers considering locating production facilities in Canada.
“Three percent is a big number,” Laskowski said. “Even 1 percent or 2 percent is a big number.” The increase “is a reflection of the (weakness of the) Canadian dollar, and of a healthier U.S. economy.
He suggested the rebound may reflect a “rebalancing” of the market. “We may be entering a world of flatline, reverse and rebound economies that give us rebound jumps that look larger than the standard growth rates we’ve been used to. It’s a different world than we’re used to.”
The increase quarter also raises concerns about the speed and fluidity of cross-border freight traffic at busy crossings like Detroit-Windsor, reports JOC.
Construction on the Gordie Howe International Bridge, designed to relieve congestion on the 87-year-old Detroit Ambassador Bridge, I expected to start next year but isn’t expected to be open to traffic until 2020.
The 3.2 percent first-quarter increase in truck border crossings certainly looks like a rebound. Total U.S.-Canadian truck crossings rose only 0.9 percent year-over-year in the fourth quarter, after falling 1.2 percent in the third quarter and 1.6 percent in the second quarter last year.
The number of truck crossings would be even larger, Laskowski said, “if (Canadian) factories hadn’t been shut down when the U.S. and Canadian dollar hit par” a few years ago. “Rather than ramping down from three production lines to two, we went from three to none,” he said.
The loss of that manufacturing output shifted the focus of truck traffic in Canada from north-south to east-west, especially when Western Canada’s energy business boomed. That changed again as the exchange rate dropped toward 70 U.S. cents per Canadian dollar.
The JOC notes that truck border crossings also may increase as Canadian motor carriers are allowed to haul “in-transit” domestic shipments through the U.S. to save miles and time. An international pilot restoring such in-transit shipments was launched in May.
“In many cases, if you’re moving goods from Michigan to New York, it’s faster to cross the border and go through Ontario than to go a southern route through the U.S.,” Laskowski said.
The six-month pilot project, under development since 2014, could make the U.S.-Canadian border a little more “open” for truckers and shippers. “There was an awareness on the U.S. side that something needed to be done,” Laskowski said. “There needs to be a balance between security and trade, and achieving in-transit shipments reflect that balance.”
“The border is no longer looked at as an opportunity for trade facilitation, it’s looked at as a security objective,” Laskowski said. “In that reality, we will always have our challenges.”
Read the full JOC article here.