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Editorial Director’s Comment: In, and out, like a lion

This month came in like a lion for truckers but, unfortunately, I don't think it will go out like a lamb.In the first week of June the industry received warning it may not get its way on the issue of ...



This month came in like a lion for truckers but, unfortunately, I don’t think it will go out like a lamb.

In the first week of June the industry received warning it may not get its way on the issue of pre-notification standards for shipments crossing the border (see our cover story). U.S. Customs and Border Protection (CBP) Deputy Commissioner Doug Browning reportedly told the Washington International Trade Association that one-hour pre-arrival notice is insufficient to allow U.S. officials to analyze entry data and assess risk.

The Canadian Trucking Alliance worked hard to persuade CBP to abandon its initial “strawman” proposal, which had called for truck shipments crossing the border to be reported to customs four hours prior to loading. Do Browning’s comments reflect a shift in CBP thinking back towards its initial proposal? If that’s the case, it could prove disastrous for the Just-in-Time industries that drive the North American economy, and the carriers and owner/operators that serve them.

While it’s admittedly difficult to get an accurate gauge of CBP’s intentions, there were two competing theories explaining the U.S. agency’s sudden move earlier this year to pull its “strawman” pre-notification proposal off the table.

Some, including the well-connected Jim Phillips, president of the Canadian/American Border Trade Alliance, saw the severity of the “strawman” proposal as merely a ploy to get the industry’s attention. It was intended for eventual removal with CBP then settling down and listening to industry concerns. That seemed to be the way things were going, particularly after the head of CBP, Robert Bonner, said he was looking to the commercial operations advisory committee for help in drafting a better plan.

But some industry observers saw a more sinister plan in the removal of CBP’s “strawman.”

They considered it a shrewd tactical withdrawal – an attempt to let things cool down before CBP brought in similarly tough rules.

Long waiting times are not the only potential problems at the border. There may also be cause for concern over shipment volumes – which leads me to the second bit of bad news to hit truckers this month. The latest data from Statistics Canada showed that Canadian exports suffered their worst decline in more than two years (the data is for April).

While a 30 per cent drop in exports of energy products (much of which is not moved by truck) accounted for the largest chunk of the decline, the energy sector was one of many to suffer a setback.

Imports – the important backhauls for our carriers and owner/operators – were also down. The decline was led by a 3.6 per cent drop in machinery and equipment, the largest import sector and a significant user of trucking services. Manufacturing activity in the United States fell 2.2 per cent during the same time period, the largest per cent decline in 14 months.

Widespread decreases in manufacturing activity – 15 of 21 industries, representing 68 per cent of total shipments, pulled back production in April – contributed to a 3.4 per cent decline in shipments.

And things may get worse before they get better. Manufacturers’ inventories are now at their highest levels since August 2001, when our economy was feeling the brunt of the high-tech crash and general economic malaise. Unless demand spikes upwards significantly, manufacturers are likely to sit on their inventories and that will have a negative impact on inbound freight.

Of course, CBP could end the month on one bright note by taking into account industry concerns when it formally announces its intentions for pre-notification. But I won’t be holding my breath. n

– Lou Smyrlis can be reached at 416-442-2922 or lsmyrlis@businessinformationgroup.ca


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