2. In brief
This white paper explains the top
three issues unique to trade between
Canada and the United States, and offers
tips that can help streamline cross-
border shipping.
Contents
The Exchange Rate 3
Preventing Delays 3
Carrier Capacity 4
Fast Facts about Canada and U.S. Trade 6
Three Tips for Canada-U.S. Trade 7
3. C.H. Robinson | Removing Barriers to Canada-U.S. Shipping 3
Canada and the United States are strong, cooperative trading partners.
Companies that ship across the border should understand the top transporta-
tion issues unique to the Canada-U.S. trade.
1 The Exchange Rate
What happens in the market heavily relies on the changing exchange rate of
the Canadian dollar relative to the U.S. dollar. As exchange rates change, so do
trade patterns and costs.
2 Preventing Delays
Shipments between Canada and the United States are international transactions
and subject to government entry and admissibility regulations, trade agreements,
security mandates, and the assessment of duties, fees, and taxes.
Cargo may be held at the border for a number of reasons. Common reasons for
delay include:
1. Insufficient documentation. Port directors at all major border crossings
report that about 35% of drivers show up at primary inspection without
having properly completed paperwork, such as the carrier manifest and
shipper’s documentation.2
If drivers lack the proper documentation from the
shipper, they will be stopped from crossing the border until the paperwork is
completed and resubmitted for review by the customs agencies.
2. Cargo examinations. Risk-based supply chain security, trade, contraband,
and agricultural examinations are performed by government agencies.
Although the frequency, duration, and type of examinations are determined
by the government agencies, an experienced in-country customs broker can
help facilitate a timely release through close coordination with the government
inspectors, carriers, and bonded facilities. Most border examinations are
resolved within 24 to 48 hours.
The world’s largest trade
relationship: Canada and
the United States1
#1
1 Government of Canada. “State Trade Fact Sheet: Canada and the United States.”
Accessed October 22, 2014.
2 Ministry of Transportation, Ontario. “Canada-U.S. Border Crossing Checklist.”
Accessed November 5, 2014.
When the Canadian
dollar increases vs.
the U.S. dollar
Changes occur in
When the U.S. dollar
increases vs. the
Canadian dollar
U.S. products cost
less for Canadian
consumers
The value of products
Canadian products
cost less for U.S.
consumers
Costs more
Hiring inbound
carriers to Canada
Costs less
Costs less
Hiring inbound
carriers to the United
States
Costs more
4. C.H. Robinson | Removing Barriers to Canada-U.S. Shipping 4
3. Drivers who are unprepared when they reach the border. All drivers who
cross the border must have not only the necessary documentation, including
a valid passport, but a record-in-good-standing with the customs authority.
Drivers with criminal records, previous border infractions, multiple convictions
for driving under the influence (DUI), or other misdemeanors that disqualify
them to haul cross-border freight may be turned away by the customs
authorities. Using a vetted carrier pool that is experienced in cross-border
transportation can help reduce the risk of holds and delays at the border.
Customs brokers file a profile and bond with the Canada Border Services
Agency (CBSA) or the U.S. Customs and Border Protection (CBP). The customs
broker provides forms the shipper needs to complete; advises on how to prepare
customs invoices and determine all duties, fees, and taxes; and reviews import
restrictions to help ensure that other requirements can be resolved.
3 Carrier Capacity
It isn’t always easy to identify carriers who are willing and able to cross the
border. Many carriers in Canada and the United States choose to serve specific
lanes and regions within their own country. This narrows the number of carriers
available for cross-border shipments.
Complicating this, the ratio of inbound to outbound trucks between the two
countries is far from ideal. The top Canadian exports to the United States are
transported by pipeline, but U.S. exports go into Canada by truck. This disparity
means more trucks go into Canada than return to the United States. When U.S.
carriers think they may not be able to locate a return load for their equipment,
they may be reluctant to haul shipments into Canada.
NAFTA restrictions also come into play. By law, options are limited for carriers
once they cross the border. Canadian carriers can deliver in the United States,
but cannot pick up and deliver within the United States before returning home.
They can either drop off a Canadian load and pick up a load bound for Canada,
or drop off and return home empty (deadhead)—a very unprofitable prospect for
any carrier. The same rules apply in reverse for U.S. carriers.
The Impact of Customs-Trade Partnership Against Terrorism (C-TPAT) on
Capacity and Pricing
CBP established C-TPAT in November 2001 “to safeguard the world’s vibrant
trade industry from terrorists, maintaining the economic health of the United
States and its neighbors…By extending the United States’ zone of security
to the point of origin, the customs-trade partnership allows for better risk
assessment and targeting, freeing CBP to allocate inspectional resources to
more questionable shipments.”3
3 C-TPAT: Customs-Trade Partnership Against Terrorism. U.S. Customs and Border Protection
site, www.cbp.gov.
5. C.H. Robinson | Removing Barriers to Canada-U.S. Shipping 5
Today, more than 10,000 certified partners have been accepted into the
C-TPAT program, including Canadian and U.S. importers, highway carriers, rail
and sea carriers, licensed customs brokers, marine port authority/terminal
operators, freight consolidators, ocean transportation intermediaries, and non-
operating common carriers. These organizations have agreed to work with
CBP to protect the supply chain, identify security gaps, and implement specific
security measures and best practices. Participating in C-TPAT and related Free
And Secure Trade (FAST) programs helps carriers expedite the clearance of
legitimate goods across the border.
Out of obligation to the program, C-TPAT members require the use of C-TPAT-
certified long haul cross-border carriers to handle their business. It requires
extensive understanding of the carrier community to know which providers
are actually signed up with the program. And because choosing only C-TPAT
carriers narrows the number of available carrier options, it can increase trans-
portation costs.
LTL Pricing
Canadian LTL carriers price their service based on freight density; some
providers offer both density and per pallet pricing, charging the customer
whichever of the two figures is less. Clear pricing arrangements make it fairly
straightforward to compare one Canadian LTL carrier’s rates with another’s.
For now, U.S. LTL pricing is based on a number of factors: the National Motor
Freight Classifications (NMFC), established in 1936; the carriers’ tariff and
discount by lane; the bill of lading terms and conditions; and existing fuel
charges at the time of shipment. With so many variables in play, it can be
difficult for companies to directly compare rates from multiple U.S. LTL carriers
without advanced technology.
An LTL specialist who understands freight classifications and hundredweight
basis can assist with pricing questions on either side of the border.
4 Trunick, Perry A. “Will We Shift to Dim Pricing?” World Trade 100, August 1, 2014.
6. C.H. Robinson | Removing Barriers to Canada-U.S. Shipping 6
Fast Facts about Canada and U.S. Trade
5 United States Census Bureau. “Trade in Goods with Canada,” accessed June 30, 2014.
6 Statistics Canada. “Population by year, by province, and territory.” 2013.
7 Government of Canada. “State Trade Fact Sheet: Canada and the United States.” Accessed November 4, 2014.
8 Ibid.
9 United States Census Bureau. “Trade in Goods with Canada,” accessed June 30, 2014.
Manitoba
Saskatchewan
Alberta
British
Columbia
Quebec
Ontario
Vancouver Calgary
Toronto
Montreal
86% of Canadians
are concentrated
near the U.S.
border.6
The top four
border crossings
are Vancouver,
Calgary, Toronto,
and Montreal.
Canada is the top
export destination
for 35 states.7
Top Canadian Exports to the
United States
• Mineral Fuel and Oil (crude
and natural gas) $109.4B
• Vehicles $55.7B
• Machinery $19.8B
Top Canada Agricultural Exports
to the United States
• Snack foods
(including chocolate) $3.2B
• Red meats, fresh/chilled/frozen $1.9B
• Other vegetable oils $1.7B
Top United States Exports
to Canada
• Vehicles $51.7B
• Machinery $45.3B
• Electrical Machinery $26.8B
Top United States Agricultural
Exports to Canada
• Prepared food $1.9B
• Fresh Vegetables $1.8B
• Fresh Fruit $1.8B
THE UNITED STATES TRANSPORTS ITS TOP
EXPORTS TO CANADA MAINLY BY TRUCK.9
CANADA’S TOP EXPORTS TO THE UNITED STATES ARE
MOVED PRIMARILY BY PIPELINE AND RAIL.5
Windsor-Detroit Border
About 30% of total
U.S.–Canada
trade crosses the
Windsor–Detroit
international
trade corridor.8
