World Trade - February 2009 - (Page 23)

U.S.-Canada Trade Still Going Strong Despite weaker trade flows in most major trade lanes, bilateral trade between the U.S. and Canada remains relatively strong. That’s the good news for Purolator USA (www.purolatorusa.com), a wholly owned subsidiary of Purolator Courier Ltd., which boasts the largest dedicated air ﬂeet and ground network in Canada and more guaranteed Canadian delivery points than any other competitor. Its shippers represent a number of key sectors, including electronics, consumer goods, manufacturing, and medical devices, explains John Costanzo, President of Purolator USA. The company’s Canadian network is certainly a strong point, but so too is the U.S. dollar, which is strengthening again compared to the Canadian loonie. “That helps us buy services for our U.S. customers at much better rates than we’ve been able to in the past,” says Costanzo. The economic outlook, however, remains mixed. According to the Bank of Canada, the country’s economy will contract by 1.2 percent this year. “Canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and consumer and business conﬁdence,” the Bank stated in late January. Nonetheless, the Bank predicts a substantial economic recovery for the Canadian economy in 2010. “Widespread” economic weakness in the global economy will give way to economic expansion, and the weak Canadian dollar will allow exports to grow and the Canadian economy to expand by 3.8 percent in 2010, the Bank of Canada added. Costanzo also believes that an adherence to fundamentals, speciﬁcally giving the customer ‘value,’ is the way to survive in the current business climate. A recent study by the Conference Board supports his assertion. “The study asked customers what they valued the most. And most said that it wasn’t low prices, and it wasn’t even service. Rather, customers said they most t valued a carrier who was sensitive to their eir e business needs, who understood what issues sues were important to them and understood their heir h business. That’s what we emphasize to our sales team—not to push products, but to try and understand the space our customers are in. Right now, what customers want most from us is value. They want to know that we can help them get through this tough time.” “We send over 200 trailers a week up to Canada and 50 airline segments on top of that. Customers rely on us for consistency and reliability and to get them over the border efﬁciently. We occasionally run into a problem where a customs manifest or commercial invoice that the customer provided is missing some information, which could result in a delay, but it’s very rare, because we screen the manifest extremely closely before it leaves the U.S.” The electronic transmission of manifests to customs prior to the shipment reaching the border also allows Purolator USA to resolve most issues before the truck reaches the border. “Our on-time performance at the border is between 98 and 99 percent. That is what we sell, so it has to be that good,” says Costanzo. Although truck traffic along the U.S.Canada border moves fairly well, there are occasional delays at major crossings. Plans to build a new bridge between Detroit, Michigan Port of New York/New Jersey and Windsor, Ontario would help relieve trafﬁc, say supporters. The plan cleared a major hurdle last month when the U.S. Department of Transportation gave a ﬁnal environmental clearance to the proposed bridge, which would be built about a mile downriver from the Ambassador Bridge. If the project gets ﬁnal approval, construction would begin in 2010 and be completed in 2013. “This is a significant milestone,” said Michigan State Transportation Director Kirk T. Steudle. “Once built, the new crossing system will boost U.S. and Canadian trade by expanding the busiest trade corridor in the western hemisphere. Activity on the Michigan side of the border will create 10,000 construction jobs and more than 30,000 indirect jobs during the construction period. This project is needed to transition the border crossing into a modern, multimodal network to securely move people and goods between the United States and Canada and make Southeast Michigan an even more prominent gateway for global commerce. We will be building the most modern border crossing system in the world.” “Exports won’t be doing as well this year as they did in 2008,” acknowledges Zantal. “We have kind of a virtuous cycle here at the port, and wastepaper is one example. We export wastepaper to China and they turn it into packaging, which gets turned around and shipped back to the U.S. Obviously, we’re buying less from China right now, which ultimately means we’re exporting less to them.” It’s not just wastepaper exports either, says Zantal, but also scrap metal and some chemicals that are in decline. Grain exports, which were particularly strong last year, are also falling. A drought in Australia that severely hurt that country’s production along with the rapid expansion of Asian economies was a boom for U.S. grain exports, says Zantal. “There was a shortage of bulk vessels, but that’s not the case now,” he says. Not surprisingly, another export sector that faces considerable uncertainty is automobiles. It’s one of four “cornerstone sectors” for the Port of Baltimore, notes Jim White, Executive Director, Maryland Port Administration (www.marylandports.com). “We’re the number one port in the nation for auto exports,” he says. The Port beneﬁts from its geographic proximity to the Midwest. And while auto exports have reached record-breaking numbers in recent years, White expects the Port of Baltimore to post a “fall-off ” in 2009. Compounding the problem is that shipyards are continuing to build new container ships, which will aggravate the supply-demand imbalance and add even more capacity to an already saturated market, says White. “If they can’t ﬁll them today, how are they going to ﬁll them once additional capacity comes online?” he asks. “It puts more pressure on freight rates, and when freight rates go down it’s bad for the entire industry. Carriers have less money to pay port authorities, truckers, and stevedores.” Although the present seems decidedly dismal, port executives are steadfast in their belief that global trade WWW.WORLDTRADEMAG.COM 23 http://www.purolatorusa.com http://www.purolatorusa.com http://www.marylandports.com http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - February 2009

World Trade - February 2009 Contents Taking Stock in America Confronting Corruption in Latin America Supply Chain Watch Tradewinds Where's the Goods? Where's the Money? Hope on the Horizon Managing Fleets in Turbulent Times The Impact of China's Economic Slowdown on U.S. Supply Chains The Fuel Volatile Supply Chain Getting the Most from On-the-Fly Transactions Managing Supply Chain Risk by Managing China Sourcing Capacity OECD Global Economic Outlook for 2009 'Natural' Agricultural Monopolies No More

World Trade - February 2009

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