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Law and the Border: A call for cabotage reform

It has been almost 10 years since the joint efforts of the Canadian Trucking Alliance and provincial trucking associations made some initial headway into a relaxation of the U.S. cabotage laws by gain...

Daniel Joyce

Daniel Joyce

It has been almost 10 years since the joint efforts of the Canadian Trucking Alliance and provincial trucking associations made some initial headway into a relaxation of the U.S. cabotage laws by gaining some important changes in the U.S. Customs laws. Unfortunately, the quagmire of the immigration laws has impeded further developments in any meaningful way. Now, almost 10 years later, we see more evidence of confusion than reform.

The confusion arises from a two-sided regulatory regime that can look at a U.S. movement of cargo by a combination of Canadian-based equipment and driver, and find the driver guilty of an immigration law violation, while finding the use of the equipment fully compliant with U.S. Customs laws.

Both U.S. Customs and immigration laws start the analysis by looking at the point of pick up and the point of delivery to determine if any illegal “point-to-point” or “interstating” violation has occurred. The Customs laws carve out an exception for use of the equipment in a domestic point-to-point repositioning movement so long as it is incidental to, and immediately before or after, an international movement of merchandise. The Customs laws make an even further departure from the immigration laws by considering a movement to be international in character if the merchandise has an origin or destination in a country other than the U.S., regardless of the points of pick up and delivery. In contrast, no such exceptions exist under the immigration laws, and any pick up and delivery between two points in the United States is illegal with respect to a Canadian-based driver with no U.S. work authorization.

We believe that the impediment to further change is as much a technological problem as it is a political one. From a political standpoint, the U.S. trucking industry clearly does not want to allow foreign competitors to compete freely for any and all domestic U.S. business. The so-called “gypsy” drivers that do compete with U.S. carriers for purely domestic point-to-point business are violating the law and should face the consequences.

But no one is suggesting an open market within the context of cabotage reform. Merely applying the Customs law exceptions to the immigration laws would provide relief for Canadian carriers in most cases. But that is where the technological problem comes in.

There is no good way under the current system for U.S. Customs and Border Protection (CBP) to monitor a carrier’s activities within the United States. The most common scenario for a cabotage violation is for a CBP officer to inspect a driver’s logbook and discover evidence that a point-to-point violation occurred on a prior trip to the U.S.

At that point, the driver is not likely to have sufficient evidence with him to demonstrate whether that trip falls into a permissible exception to the rule. And, as the volume of “legal” point-to-point activity increases, so may the illegal activity, requiring the CBP to develop a monitoring and enforcement process that is both fair and efficient.

This is just one person’s opinion, but I believe the inability to monitor, screen and verify the legality of point-to-point activities, using current technology and procedures, is a greater barrier to cabotage reform than from any political or ideological barrier.

The cabotage issue has two sides to it. We tend to focus almost exclusively on what constitutes improper or unfair competition with U.S. carriers for purely domestic U.S. business. But the real issue in cabotage reform is the fair ability to compete for international business.

The cargo that originates in one NAFTA country and has a destination in a second NAFTA country, is an international shipment. The motor carrier that wins the contract to pick up the goods in country A and deliver them to country B should be allowed to do so with its own drivers and equipment, in the way that best achieves the most safe, practical, economical and efficient result.

If a driver is taking a load from Canada into the United States and is running out of hours, that may mean that a second driver has to switch trailers with the first, and continue with the load. If Mexican-bound goods are picked up in the United States, the Canadian carrier should have the discretion to use a relay driver in order to transport the trailer across the Mexican border.

In both cases, a single carrier has custody and control of the shipment in one continuous flow from an origin in one country to a destination in another, and should not be constrained by the technicalities of the cabotage laws to prevent it from doing so. Perhaps exceptions will have to be carved out to prevent abuses in special situations that depart from this underlying logic, but the fear of abuse should not be a stumbling block for cabotage reform that is sorely needed to allow Canadian carriers to compete fairly in the arena of international transportation.

– Daniel Joyce is a partner with the Buffalo N.Y. law firm Jaeckle Fleischmann & Mugel LLP. He can be reached at (716) 843-3946.

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1 Comment » for Law and the Border: A call for cabotage reform
  1. I have a sweep run with a Canadian driver picking up in various locations in the USA and final delivery to Canada. However at one of the US vendors, we pick up the Canadian shipment as well as the US shipment. We stop at a cross-dock facility in Romulus, MI to pick up freight destined to Canada. We also drop off the US shipment at the cross-dock that was picked up at the same time as the Canadian shipment. A US carrier will pick up that shipment to deliver within the USA.

    I have been told from the Border Patrol that this is not interstating as it is enroute to Canada.

    a) is this true?
    b) is there an article on this.

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