US-Canada cross-border truck rates still affected after protests
Protests by Canadian truck drivers that blocked trade and traffic at several points on the US border may be over, but cross-border shippers are still taking a hit to their budgets from trucking rates that soared during the protests.
Spot dry-van rates from Phoenix to Windsor, Ontario, are $0.99 higher than their January average, hitting $3.35 per mile Friday, according to DAT Freight & Analytics.
That is just one lane, but spot rates to Canada and points near the border such as Detroit and Buffalo are elevated in many markets, according to data from DAT. Higher transportation costs may be a longer-term legacy of the disruption in cross-border trade. Shippers also are being warned to prepare for additional disruptive protests, including potential copycat trucker-led protests in the US.
“At a macro level, supply chain disruptions are the norm right now,” Ron Greene, head of business development for Austin, Texas, shipper risk management company Overhaul, said in an interview. “The border crossings are open and freight is flowing, but there’s still a chance for additional protests and disruptions.”
“After having our Ambassador Bridge shut down for a complete week when it’s never shut down for half a day in the last 90 years, it would be foolish for me not to say I would be on my guard,” Matthew Moroun, chairman of the Detroit International Bridge Co., said during an online interview Monday with Mike Regan.
In Buffalo last weekend, protesters gathered on the US side of the Peace Bridge but did not attempt to block the international crossing. Among the organizers was a group calling itself “Convoy to Save America.” More than one group is contemplating sending truck convoys to Washington, DC, although the goals of those protests and the likelihood of any convoys hitting the road are unclear, at best.
“I definitely think there’s going to be some rethinking and planning among shippers in certain situations, especially if there are just-in-time manufacturing constraints,” Greene said. That is certainly the case among automotive manufacturers; several plants in Michigan and Ontario were idled last week.
During his interview with Moroun, Regan warned that protesters could target critical US infrastructure. “Shippers could see potential turbulence in March or April if anything even remotely like a people’s convoy gets off the ground,” he said.
“Shippers need to have a Plan B,” said Moroun.
Recognizing the need for a Plan B, however, is easier than drafting or implementing a Plan B. “I’m scratching my head at some of the options,” Overhaul’s Greene said. “Sometimes there’s not a lot of planning that can be done. It’s more about reacting to mitigate the impact.”
Assessing the impact
The financial and supply chain impact of border blockades in Windsor and in Coutts, Alberta, where a truck crossing to Montana was blocked on and off for two weeks, are still being calculated. Anderson Economic Group this week pegged the cost of the Ambassador Bridge closure to automakers alone at $299.9 million in lost production and wages.
There is certainly pent-up demand. About 10,000 trucks cross the Ambassador Bridge in both directions each day, Moroun said. That means more than 50,000 shipments were affected last week during the protest. Those shipments had to be rerouted, “or most likely just didn’t go,” he said.
“It will take weeks and weeks to work through the backlog,” Jim Nicholson, vice president of operations for native digital broker Loadsmart, told JOC.com Friday. “We had a customer that barged some containers over the Detroit River to avoid the bridge.”
Data from supply chain visibility providers showed delays were common during the bridge blockade as trucks were rerouted to the border crossing at Port Huron, Michigan, and Sarnia, Ontario, about 55 miles away. Delivery delays rose between 1 and 9 percent, depending on destination, according to freight visibility provider project44.
FourKites, a rival visibility provider, reported double-digit leaps in wait times at some border crossings during the Ambassador Bridge shutdown. US shipments to Canada dropped about 10 percent in the first two days of the shutdown, according to the company, perhaps due to delayed orders.
Limited cross-border capacity
The fact that protesters in trucks and other vehicles could effectively close the Ambassador Bridge for a week came as a shock, Moroun said. “We made many phone calls…but truthfully, we were quite helpless onlookers through the whole matter,” he said.
The blockade exposed another weakness in cross-border trucking: the limited and inflexible amount of capacity in the form of truck drivers qualified to cross the border. Since the terrorist attacks of Sept. 11, 2001, “we’ve limited the number of truck drivers who can cross the border,” Moroun said.
Those drivers are now “professional border crossers” who have met immigration and security requirements set by both countries, he said. “There’s no elasticity in that capacity. If there’s a supply chain backlog, you can’t source additional drivers to fix it,” said Moroun. “There’s no quick way to get more of them.”
by William B. Cassidy at joc.com