Market Overview

US-Canada Border Closure Has Silver Linings, Customs Broker Says

Share:
US-Canada Border Closure Has Silver Linings, Customs Broker Says

Since the United States-Canada border closed to nonessential travel in March, trucks have continued to move goods between the countries freely, even benefiting from the drop in car traffic. But one particular corner of the supply chain stopped in its tracks: the informal cross-border logistics of ordinary Canadians and small businesses.

"When the borders closed, getting those items across got more difficult," Graham Robins, president and CEO of Vancouver-based A & A Customs Brokers, told FreightWaves. "Businesses and individuals had all these hacks to get their products and then ship it to a northern border point. Now they can't do that."

On Tuesday, Canadian Prime Minister Justina announced that the closure will extend until at least July 21 because of the COVID-19 pandemic. The challenges at the border are likely to remain as long as the pandemic persists.

Robins recently discussed the changes taking shape in cross-border trade in an interview with FreightWaves. Founded in 1979, A & A has offices in Canada and the U.S.

‘Oh my God, my items are now trapped in the U.S.'

Canadians have a long tradition of buying items in the U.S, usually in search of lower prices and a larger selection. Canadian residents made 27.7 million trips to the U.S. in 2018 and spent C$20.2 billion, according to Statistics Canada.

The practice includes quick hops across the border to buy everything from cheaper milk to pieces of machinery. Even a cottage industry exists devoted to providing Canadians with U.S.-based post office boxes to receive parcels, including Amazon purchases.

Since the closure, A & A has dealt with a jump in requests from individuals and businesses seeking help with customs clearance.

"We've had a huge uptick in calls from customers saying, ‘Oh my God, my items are now trapped in the U.S.,'" Robins said.

A & A serves consumers and small businesses through its Border Buddy platform. While it remains a small piece of their business, Robins anticipates the growth will accelerate.  

‘Removing friction from the supply chain'

Robins sees the disruption as having a positive effect by forcing consumers and small businesses to embrace cross-border e-commerce for items they can't source in Canada. Or in the case of businesses, using a logistics provider and a customs broker instead of renting a truck and driving it across the border.

"It's removing friction from the supply chain," Robins said.

Even without the COVID-19 border closure, the July 1 implementation of the United States-Mexico-Canada Agreement (USMCA) is set to accelerate cross-border e-commerce. The deal raises the duty-free allowance for shopping to C$150 from C$20.

Robins also foresees U.S. merchants turning their attention to Canada as a result.

"Canada is a massive market, and it's a lot easier to ship to than most people give it credit for," Robins said. "It's like not selling in California."

The improvised approach that consumers and small businesses have embraced had already been showing its age. While 90% of the population lives within 100 miles of the U.S., hopping across the border can be time-consuming, particularly with customs clearance — and costly.

With COVID-19, getting across the border itself also is more difficult.  

"People don't want to go down to the border and deal with temperature checks and things like that," Robins said.

Photo: Customs and Border Protection

 

Related Articles

View Comments and Join the Discussion!

Posted-In: FreightNews