Cross-border shopping ‘pales’ in comparison to ’80s: Statscan

OTTAWA — Despite weekend scenes of long lineups of cars heading southbound into the U.S., increases in cross-border shopping have been minimal relative to retail sales, according to Stats Canada.

There have been countless news reports in recent months describing how parity between the Canadian loonie and U.S. greenback has spurred carloads of Canadians across the border in search of better retail deals.

However, whether measured by the number of same-day auto trips across the U.S. border or the average amount spent on these trips or online shopping, cross-border shopping volumes in 2007 “pale by comparison with the phenomenon observed two decades ago,” Stats Canada reports in a study — “Cross-border shopping and the loonie: Not what it used to be” — released today in the Canadian Economic Observer.

A relatively small rise in the exchange rate in the late 1980s and early 1990s provoked a huge increase in same-day auto trips to the U.S., says the agency. By comparison, since 2002 the largest appreciation of the exchange rate ever has been accompanied by a relatively small rise in same-day auto trips.

It’s mostly the disappearance of American cross-border shoppers that have kept the total cross-border traffic numbers down. There were still 2.2 million more same-day trips from Canada to the U.S. between 2003 and this year.

“Often overlooked in the hype about Canadians flocking in droves to shop in the United States is that the Canadian dollar’s record rise has had a significant impact on other travel flows. Cross-border shopping by Americans in Canada has tumbled almost 50 percent, or an average 11.3 million trips, since the loonie began its rise in 2003. Overnight visits to Canada by Americans have also fallen.”

That said, the rise of southbound carloads hasn’t increased to the extent the dollar’s upward trajectory might otherwise suggest. The close relationship between the exchange rate and same-day auto trips from 1986 to 2001 weakened substantially as border security tightened following the September 11, 2001 terrorist attacks and has not been re-established since, says StatsCan.

Between 1986 and 1991, when the Canadian dollar rose 21 percent, Canadians flooded south of the border, with the number of same-day auto trips more than doubling. However, that relationship changed in 2001.

“The propensity of Canadians to make cross-border shopping trips has barely risen between 2002 and 2007. In the first nine months of 2007, there were an average of 1.9 million same-day auto trips per month, compared with 1.7 million in 2002 and the all-time high of 4.9 million in 1991. By contrast, the Canadian dollar jumped 44 percent between 2002 and October 2007.”

Moreover, much of the recent monthly growth of same-day auto trips represents a rebound from a sharp 11 percent decline last winter, when a cold snap hit in January and February 2007 and just as the US introduced new passport regulations.

More recently, the costs of trips across the border, which include gasoline consumption and waits at the border, also appear to have dampened some enthusiasm.

Regionally, Ontario was disproportionately affected by cross-border shopping. By itself, Ontario accounts for the largest share (79%) of the small increase in same-day auto trips by all Canadians since 2002. This partly reflects the short distance between major cities in Ontario and the U.S.

The remainder of the small increase in shopping by Canadians since 2002 has gone mostly through New Brunswick.

There has been almost no change recently in same-day auto trips through Quebec and Western Canada, adds Stats Canada. “Cross-border shopping has never really been significant for the Prairie provinces, partly because their large cities are not close to the United States.”


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