Shipping costs seen rising
By PETER KENNEDY
Thursday, September 13, 2001
VANCOUVER - Tighter border security in the wake of deadly terrorist attacks in the United States is expected to lead to sharply higher costs for Canadian companies shipping everything from auto parts to softwood lumber into the key U.S. market.
"I think we are all in for a very rough time," said Martin Merritt, a director with Hamilton, Ont.-based Cargo International Logistics Inc.
A ban on air traffic in North America imposed in the wake of Tuesday's attack was already having a major impact on world trade as one-third of international air cargo business is with North America, international aviation sources said Wednesday.
While major border crossings remained open, companies aiming to ship goods by road were also facing delays of between a few hours and one day as U.S. customs officials conducted thorough checks.
"We're telling all our clients to expect major slowdowns at crossing points all along the U.S.-Canada border," said Dawneen MacKenzie, a spokeswoman for Livingston International Inc., a major customs broker that facilitates commercial trade in both directions across the border.
Congestion at the Niagara Falls border crossing between Ontario and New York state has caused waits as long as 12 hours, while a 25-kilometre line of trucks and cars had formed at the Sarnia, Ont. border with Port Huron, Mich., Ms. MacKenzie said.
Drivers at a border crossing from British Columbia to Blaine, Wash. were waiting as long as six to eight hours, she said.
Vehicles are being thoroughly inspected and drivers face intensive questioning by border officials, Ms. MacKenzie said.
Export industry officials are still trying to assess how the attacks will affect about $700-billion worth of two-way trade between Canada and the United States. But they fear the long-term impact will be higher costs for Canadian importers and exporters wanting to do business in the United States.
Mr. Merritt said the longer that drivers have to wait at the border, the more it will cost to ship goods.
A key concern is that the political impact of the terrorist attacks may drive up the cost of fuel, if the United States decides to retaliate by attacking countries aligned with major oil producing countries in the Middle East.
Even if fuel costs don't go up immediately, the very prospect of higher prices may lead shipping owners to boost prices in a bid to cushion against any increased costs they believe are on the horizon.
"They can do that at a whim if they feel there are going to be increased costs," said Mr. Merritt, who believes that shippers of manufactured goods and machinery may suffer the most if there is a slowdown in cross-border trade.
"This is pretty depressing," he said.
The situation is being closely watched because shipments of goods and services into the United States represent 87 per cent of Canada's total exports, accounting for $1.9-billion worth of business per day.
"The issue I would worry about is the impact on consumer confidence in the U.S. and whether it will be negatively impacted by the terrorist attacks . . . hence lumber," said John Allan, president of the B.C. Lumber Trade Council, which represents the majority of producers in British Columbia.
Before Tuesday's terrorist attack, the Canadian lumber industry was reeling from the impact of the U.S. Department of Commerce's decision to slap a 19.3-per-cent countervailing duty on wood imports from Canada.
Now industry leaders are waiting to see how the U.S. government's renewed focus on security affects attempts by Ottawa to fight the duty either by legal means or though a process of negotiation.
"This might slow things down for a few days," said Mr. Allan.