North American Cross-Border Shipping Challenges & Future Solutions

Since the enactment of NAFTA in 1994, trade between the United States, Canada and Mexico has increased almost 200 percent to an estimated $930 billion. The cross-border flow of goods between the U.S. and Canada has grown to $400 billion.

There’s no doubt that free trade has made a positive impact on cross-border shipping. As goods flow more freely and the speed of transit increases, shippers will be able to enjoy reduced risk. But the traffic lanes aren’t completely clear yet.

Security Challenges
Though NAFTA made great strides in security by reducing drayage needs and smoothing out processes, keeping loads secure remains a challenge for many shippers. In fact, recent escalations in violence have made the direct routes into Texas from the interior of Mexico the most dangerous lanes to ship along.

Also at the top of shippers’ security concerns is metal theft, a market-driven crime that rockets up as the price of metals like copper increases. Though often stolen in smaller quantities, security experts estimate that the amount of metal stolen in North America is likely more than double the FBI’s estimate of $25 billion.

Though often stolen in smaller quantities, security experts estimate that the amount of metal stolen in North America is likely more than double the FBI’s estimate of $25 billion

The largest in-transit theft on record is a $67 million pharmaceutical load, stolen as a husband and wife team left their truck running. In another example, a pharmaceutical company had three trucks stolen over six weeks – by thieves who were receiving inside information about the freight from an executive at the company.

These examples are evidence that security challenges can come from anywhere. As criminals get more sophisticated and employ legitimate logistics to traffic their stolen goods, shippers will need to adapt in order to meet security issues head-on.

Economic Challenges
Canada’s economy, reeling from the impact of the recession in the U.S. and the resulting manufacturing job losses, has in turn affected the amount of freight headed south. Southbound freight costs are depressed, while northbound freight costs have skyrocketed. The Canadian GDP for 2013 is expected to grow by only 1.5 percent. This economic imbalance creates capacity issues for trucks coming back to Canada.

In Mexico, the demand for companies to be nimble enough to deliver goods to customers within 24-48 hours, coupled with rising wages in countries like China, has fueled a shift toward shipping further into the south. With nearsourcing comes a shrinking trade deficit between the U.S. and Mexico, but it’s yet to be seen whether this will have a negative or positive impact on the balance of northbound and southbound traffic or capacity issues.

Regulatory Challenges
From paperwork to inadequate resources at border crossings, shippers continue to face regulatory challenges. Mexico, for example, has 44 different free trade agreements that make paperwork cumbersome and time-consuming.

In addition, C-TPAT and NEEC certifications can be confusing to navigate for those shippers not well-versed in regulatory requirements. If everything isn’t in order though, shippers face delays at border crossings or—even worse—hefty penalties.

How Shippers Can Address Cross-Border Challenges
The advances in logistics and innovation in supply chain management related to cross-border shipping have come a long way to address the challenges that shippers face. There are a number of steps that shippers can take to meet these challenges and prepare for the future of cross-border shipping.

No part of the shipping industry has been more radically affected by technology than security. With the advent of tools like embedded covert cargo tracking, shippers have been able to secure and track truckloads of valuable cargo and ensure on-time delivery — even when theft does occur. And it will occur.

“It’s true that when the U.S. sneezes, Canada catches a cold”Angelo LaMantia, President, Transplace Canada

The best way for shippers to approach security is from a risk-based perspective, knowing who’s moving their product and how is it moving, with a matrixed or layered process for responding to and preventing loss. Only then should they invest the capital in technology, and only where it makes the most sense and impact.

Another vital step in managing risk is working with reputable service providers. Though C-TPAT is a start when it comes to working with trusted providers, experts advise taking it further than paperwork. It’s critical for companies to mitigate as much loss as possible – and know what to do when loss happens.

Economic challenges, while mostly dependent on a company’s ability to recover from a recession, can be faced by taking steps to manage costs as effectively as possible. From benchmarking and optimization to co-load collaboration for cost savings, shippers must analyze and optimize their transportation expenses.

To navigate regulatory bodies in Canada, carriers, drivers and importers can participate in Customs Self-Assessments. CSA facilitates moving freight more freely through border crossings by getting goods and freight pre-approved and stickered.

The shipper’s role in CSA is to make sure information on the bill of lading is accurate. In addition, programs like e-manifest for the electronic submission of conveyance and crossing information will help move goods more quickly.

Knowing the security challenges, economic environment and regulatory issues that lie ahead - and how to address them - is critical to cross-border shipping success.