TORONTO, Ont. - The mounting costs of border security programs and audits require carriers to become more "surgical" in how they run their transborder networks to ensure they're taking full advantage...
TORONTO, Ont. – The mounting costs of border security programs and audits require carriers to become more “surgical” in how they run their transborder networks to ensure they’re taking full advantage of all the programs have to offer, says John Ferguson, general manager for Schneider Canada. But that’s proving hard to do given the slow pace among many shippers towards involvement in border security programs.
Customs expertise is critical but not easy to find or cheap to finance. Technological systems that can communicate effectively with both shippers and Customs are costly to install and require changes every time the regulations are updated.
And since carriers carry a certain amount of liability for the audit trail under the new border security regulations, Ferguson said many had to rethink their whole process for the international market to make sure their systems could handle an audit.
“I was stunned to see how much the carrier is doing in an international transaction,” said Ferguson who came to Schneider from the 3PL side after many years with PBB Global Logistics.
“We had to start thinking like the importers had in the past. We’ve gone out and invested in systems and we can’t take advantage of them if our clients are not part of (these border security programs). For carriers dealing with mid-tier companies, that’s a lot of investment for waiting around for something to happen,” Ferguson told buyers of transportation services attending a recent Infonex Conference on Customs Compliance sponsored by Canadian Transportation & Logistics.
Ferguson said a much more integrated approach is required, particularly in information sharing between carriers, Customs brokers and shippers, adding that the current relationship among the three parties appears to be more linear than integrated.
“If we don’t have access to your supply chain partners, that’s when problems start to happen. The carrier is often left out,” he said, pointing to an example of a company that had been working for a year on achieving Customs Self Assessment for its goods crossing the Canadian border but did not inform its carrier about its plan until the last minute. “To get everyone sharing data is a significantly monumental task at this point.”
Getting executive management buy-in is critical to getting the necessary resources in place for both shippers and carriers but Ferguson acknowledged that shifting governmental deadlines for programs such as ACE and ACI are making that difficult. The ACE implementation deadline, for example, has been repeatedly bumped back by US Customs and Border Protection.
“As a company trying to make a profit, it’s hard for us to say we know this will take a lot of investment but we don’t know when it will happen,” Ferguson said.
The new border security programs are also adding to motor carriers’ already difficult challenge of finding suitable drivers. When crossing the border, the reputation of both the shipper and the carrier are in the hands of the driver so carriers are tightening their recruitment standards, an uphill battle in a sector of the industry plagued by an acute driver shortage for more than a decade.
“It’s a world of acronyms. The level of knowledge the driver needs to have – it’s risky. And the penalties are real. It’s a real vulnerability,” Ferguson said. “There’s no room for error anymore.”
And Canadian carriers, and their customers, may find themselves alone in dealing with the border issue. US fleets, particularly the unionized ones, are reluctant to send their drivers across the border. With US freight volumes forecasted to remain decent, there’s little incentive for them to do so. Canadian carriers already control about three-quarters of the transborder market.
“US drivers don’t really want to come here. Plus it’s costly for US fleets to pay for a certification of a driver that only comes up here once in a while,” Ferguson said.
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