TORONTO — For the last decade or so, the three-way marriage between the NAFTA nations has basically been a cozy affair involving the U.S., and us Maple Leafers, with the Mexican third wheel holding a candle in the background.
Unlike Canadian carriers, when it comes to trucking, Mexican fleets have been blocked by protectionist rules that limit them to a 20-mile commercial zone just north of the U.S.-Mexico border. Under its NAFTA obligations, the Bush Administration has been trying to open the border to Mexican truckers for years — much to the chagrin of safety groups, anti-trade associations, independent owner-ops, and small fleets.
Pressed by big carriers, the American Trucking Associations (ATA) has lobbied for an open U.S.-Mexico border. These carriers would be able to quit interlining with Mexicans and take advantage of running unrestricted Mexican truckers back and forth between the two countries.
But at the 11th hour, opposition groups won a hard-fought battle to stop the plan from launching in July.
On May 29th, Congress and the Senate passed a funding bill that keeps Mexican truckers restricted to the 20-mile limit indefinitely. The bill — which, among other things, requires the Transportation Department’s inspector general to make sure the agency is able to impose U.S. safety rules and conditions on Mexican trucks and forces the DOT to release more of the project’s details and history records of the Mexican carriers to the public before launching — passed the House by a vote of 280-142 and the Senate by a vote of 80-14.
Although it’s now unclear when the border will open to the Mexicans, there’s little doubt among observers — even with these new delays — that the border is as close to opening as it’s ever been in the last five years.
Eventually, says Canadian Trucking Alliance (CTA) chief, David Bradley, the association would like to see the Mexicans give similar access to Canadian carriers — giving Canuck fleets “fifth freedom rights.” That means Canadians could sidestep current cabotage rules by hauling an extra load from a U.S. point into Mexico, and then taking another load back across the border to a second U.S. location before picking up a backhaul for home.
Bradley adds, though, that the run isn’t something he expects a lot of Canadian carriers would attempt on a regular basis. “No one’s deluding themselves that we’ll see a stream of Canadian trucks crossing into Mexico.”
But even assuming Mexican truckers are given the benefit of the doubt on safety and compliance, opponents say their migration north could have a devastating impact on domestic trucking rates in the U.S — and eventually Canada.
In fact, as the higher Canadian loonie dries up southbound lanes and makes U.S. imports to Canada look more like premium headhauls, the Canadian market could start to look very ripe for Mexican truckers — or more likely, U.S-owned Mexican fleets — which are operating with a fraction of the labor costs and generally a much lower cost structure.
“… If we have new competitors with a lower cost base having an opportunity to directly compete — surely it is an issue,” says Jim Mickey, co-owner and president of fresh food hauler Coastal Pacific Xpress of Cloverdale, B.C. “At least when a U.S. carrier takes our work point-to-point in Canada, their basic cost of business makes them less of a potent threat.”
Harold Heffernan of Kitchener, Ont.-based Celadon Canada admits that as part of a purely continental company complete with a Mexican-based division, the opportunity to use Mexican assets in the U.S. and Canada is too great to ignore.
“It would be advantageous for companies like ours to run those trucks into Canada. There’s no doubt about that,” he says. “Coming into Canada would definitely be easier than going [further] into Mexico. There are issues with safety and insurance going there.”
How quickly Mexicans would make ripples in the Canadian trucking pool is tough to predict, says Heffernan. “There are still a lot of complexities,” he says.
For the most part, niche sectors like tanker and hazmat would be immune from dollar-a-mile Mexican truckers, in much the same way “new Canadians” don’t venture into such demanding and high-liability operations when they first buy a truck, says Ontario owner-op Ed Wesselius.
However, sectors with razor-thin margins like seaport drayage, as well as cross-border dry box and reefer lanes in central and eastern Canada would be vulnerable to Mexican competition. And with Canadian cabatoge enforcement as weak as it is, there isn’t much stopping cheaper Mexican truckers from making a couple extra drop-offs on the way back home.
“Americans already do it with impunity. They’ll drop off a load in Montreal, and drop off another in Toronto all the time,” says Wesselius. “Now, they’ll have Mexicans moving further and further north doing it too?”
— Be sure to read the entire story in the current print June issue of Today’s Trucking magazine.
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