Thank you very much for the opportunity, Chairman and members of the committee.
Very briefly, some background: CTA is a federation of the provincial trucking associations in Canada. We represent approximately 4,500 trucking companies from all provinces of all sizes, serving every industrial sector in Canada from manufacturing to retail, agriculture, forestry, high-tech, and natural resources. Our members are involved in all facets of the business from local pick-up and delivery to long-distance, cross-border movements. Our industry is the classic derived demand industry and one of the best leading indicators of economic activity there is.
Trucking is also the preferred mode of freight transportation in Canada. We haul about 90% of all consumer products and foodstuffs. In normal times we'd employ over 400,000 Canadians, and the industry's contribution to GDP is by far the highest of all the transport modes. Trucks aren't necessarily the cheapest mode of freight transport. It's our service that really sets us apart from the other modes: door-to-door, small shipments of time-sensitive freight. It's been said that the just-in-time inventory system and time-definite logistics have been built around the trucking industry.
For the purposes of today's discussion, it's important to note that two-thirds by value of Canada's trade with the U.S. moves across the border by truck. I am often asked the question about border delays these days. Before answering that, it is important to understand that North America and especially the manufacturing regions of Canada have been in a freight recession for at least two years now. Initially the reduction in volumes was a reflection of the impact of the appreciation of the value of the Canadian dollar and ongoing problems in the auto and forestry sectors, and that had a very negative effect on southbound shipments. What had been the trucker's head-haul and the major source of the industry's growth for the previous 20 years was suddenly drying up.
The onset of the financial meltdown last fall and therefore the worldwide recession has only served to exacerbate what had already been under way for some time. A significant reduction in truck traffic across the Canada-U.S. border has occurred. For example, figures from the Public Border Operators Association show that in February of this year the number of trucks crossing between Ontario and Michigan and New York continued its downward spiral. The declines at the three busiest crossings, compared to the same month a year ago, were: Ambassador Bridge, down 35%; Blue Water Bridge, down 28%; and the Peace Bridge, down 17%. Overall, truck crossings at the PBOA facilities in 2008 were 10% below what they were in 2001. According to information provided to us by the B.C. Trucking Association, a similar trend has occurred at the three major crossings in that province.
As I said earlier, southbound freight has been particularly impacted. It's no surprise to the trucking industry that Canada now finds itself in a trade deficit situation. In 2008, U.S. imports from Canada by truck declined by 6% over 2007, according to the U.S. DOT, whereas U.S. exports to Canada by truck were actually up a modest 2.4%.
The Blue Water Bridge reports that trucks crossing into the U.S. were down 32% in January 2009 compared to a year earlier. Overall, in 2008 southbound trucks were down by over 200,000, or 22%, since the peak of 2004. In 2007, for the first time in decades, the number of trucks coming into Canada exceeded the number heading to the U.S., a trend that continues into 2009. I can tell you there is virtually no indication that a recovery in freight volumes is on the near-term horizon.
So when asked how the delays are at the border these days, we're currently not experiencing to the same degree the kinds of extended delays that have at times plagued the border over the past several years. But that should not be taken as evidence that all is well.
We have information from Transport Canada—I will pass around the charts—that despite the drastic drop-off in volumes, border processing times have barely changed. They are still hovering in a very narrow range, whereas we've seen freight coming down. Moreover, the current slowdown in trade is masking some of the problems arising out of the thickening of the Canada-U.S. border that has been occurring for the past number of years, in large part reflecting the impact of a series of measures introduced by the Department of Homeland Security and the U.S. Department of Agriculture, all in the name of enhanced national security.
No fewer than a dozen major U.S. security programs have been introduced. Other factors have also contributed, such as infrastructure limitations—Detroit-Windsor being a prime example—inconsistency between U.S. and Canadian programs, staffing issues, and no doubt an element of U.S. protectionist sentiment.
I'm concerned that when the economy bottoms out and we begin to see growth again, we will see a return to extended delays at the border. The proliferation of measures introduced in the name of security has driven up costs for trucking companies that move goods across the border. I'm referring to everything from supply chain security programs to new electronic means of submitting information to border agencies, to inspection fees for agricultural products, and to the cost of multiple security cards for truck drivers.
I'm not sure where the tipping point is, but we have to understand that if we keep heaping costs on transportation and trade, which the trucking industry inevitably passes down to its customers, there will be a serious threat to the competitiveness of North American-made goods and problems in attracting direct investment into North America. I think that's already been occurring.
Anything that impairs the efficiency, productivity, reliability of the North American supply chain will have a significant ramification for the Canadian economy, obviously, but also for the U.S. economy, given the high level of integration between the two. With the change in the U.S. administration, there may be an opportunity now to take a step back to see whether things may have gone a little bit overboard, or at a minimum, whether we can find ways to prevent yet another set of costly new requirements from being imposed.
Last week the new U.S. Secretary of the Department of Homeland Security made a number of comments regarding the northern border. Quite frankly, she didn't say anything that we did not already know: that there's a cultural change under way that will be reflected in the creation of a real border between the United States and Canada. Anyone who has been remotely involved in border issues since 9/11 knows that.
As Canadians, our concern should be what additional measures will be introduced on top of what already has been done over the past eight years to create that real border. The secretary's remarks would seem to indicate that what has been done to date is still not enough. She says that we should strive not to impact on trade, but not to “unduly” impact on trade. She talks about trying to avoid “an unnecessary division between our security responsibilities and our trade and travel desires”. What is “unnecessary”?
As I said a moment ago, and notwithstanding the above, the change in the U.S. administration still presents an opportunity for Canada. Is Canada well positioned to seize that opportunity?
In CTA's opinion, a new approach to U.S. border and trade issues is required. I do not for a moment underestimate how complex the matter of Canada-U.S. relations is. However, the Canadian approach of the past few years has in our view been too diffuse, and at times this has impaired our effectiveness in dealing with our partners to the south. Too many federal departments have had some stake or responsibility for some aspect of the border. We have found it a challenge just to find out who's who and to get the different people working together. We suggest that the federal government should consider the creation of a cabinet committee on the border and/or a specific ministerial or senior bureaucratic position with authority for all aspects of the border.
The results from the security and prosperity agenda and the North American Competitiveness Council have, in our view, been underwhelming. Perhaps the brightest period over the last eight years for advancing border issues arose out of the smart border accord of 2001; it was those few months right after 9/11. Perhaps what is needed now is a smart border accord 2009.
We should also be looking in the mirror and making sure, as Canada rolls out measures such as the electronic truck manifest, that we harmonize to the extent possible with the United States and don't impose new requirements that will complicate rather than simplify border crossing processes.
We know that the committee has an interest in the western hemisphere travel initiative. This program is but one of any number of programs that affect the movement of trucks between Canada and the U.S., and frankly, it is not the main one that causes me to lose sleep at night. The acceptance of the driver FAST card as a citizenship document was a very positive step.
The trucking industry has had ample opportunity to get the appropriate documentation. We've bombarded our members with information on the coming land border deadline, and there is absolutely no excuse, with the amount of material available from both CBP and CBSA, for a trucking company to claim it didn't know or didn't have time. Sure, there will always be those who refuse to listen, and I would not expect 100% compliance on June 1, but in terms of trucking industry readiness, I'm confident that we are well placed to meet our obligations.
Our concern over WHTI is what the impact on cross-border truck traffic will be if the general motoring public is not prepared for the new requirements. If the roads and highways approaching the U.S. border become clogged with traffic by unprepared motorists, then trucks will be stuck in the queue, unable to reach the commercial lanes and the border compounds. CTA has strongly encouraged CBP to put in place a contingency plan to address this eventuality in the days and weeks immediately following land border implementation. I can only hope that they've heeded our advice.
We've also consulted with the British Columbia Trucking Association, which has been closely following the preparations in B.C. for the 2010 Olympics. There's a common assumption that there will be high U.S. interest in attending the Olympics and that there will also be a short-term spike in cross-border truck traffic generated by higher demand for food and other products that the B.C. market obtains from the U.S.
BCTA has been working with the Vancouver organizing committee and the City of Vancouver on the Olympic transportation plan. Clearly, it will not be business as usual in the downtown area during the Olympics, but simple measures like advanced communication of road closures and greater use of off-peak pickup and delivery should help mitigate the impact. At the border it will be critical that construction at the Peace Bridge crossing be completed on time and that CBSA deploy the staff necessary to process increased volumes and conduct closer scrutiny of people crossing the border, which we assume will happen. All of this is still a work in progress and it will no doubt be refined as we get closer to February 2010. But at this stage the trucking industry is not in a panic over what might happen during that two- or three-week period.
Again, thank you for the opportunity of addressing you today. I'd be pleased to respond to any questions you may have.