Lack of Carriers keeping US Businesses out of Export Market

A not so well kept secret – less than one percent of U.S. businesses engage in some type of export activity.  This is despite the fact more than 95 percent of the world’s consumers live outside the U.S. borders.

Then-Secretary of Commerce Gary Locke addressed the issue, in a series of speeches he made to regional business audiences.  The purpose of Secretary Locke’s tour was to (a) remind businesses of the potential of the international market, and (b) to extend the federal government’s helping hand to businesses interested in expanding their businesses to outside markets.

The Secretary also laid out a few reasons why businesses are reluctant to export:

  • Trouble getting the necessary working capital;
  • Concern about receiving timely payments from foreign customers;
  • Difficulty navigating foreign customs and regulations; and
  • Lack of networks necessary to make proper contacts and identify plausible business partners

But a concern Secretary Locke didn’t cite, and one that is of concern to businesses interested in exporting to Canada, is the lack of qualified carriers to transport goods from the U.S. into the Canadian market.

This fact surprises people, since the presumption is since Canada and the U.S. share so many cultural and geographical similarities, it would be relatively easy to transport goods into Canada.

But the fact is, there are a lot of nuances about doing business in Canada, including a complicated border compliance process, different taxing authorities, language issues, and the vastness of the Canadian landscape.

Doug Kroll, National Traffic Service’s director of consulting gave Canadian Transportation & Logistics a frank assessment:  “On the LTL side, there’s a limited amount of carriers available to US shippers who can serve Canada.  They’re actually interlining with a Canadian carrier,” he said.

A May 2012 report by the Journal of Commerce seems to support this notion.  JOC reported that, because the strong Canadian dollar is fueling a demand for U.S. imports, trucks are actually being diverted from intra-Canada shipping to help handle the need for cross border service.

And this, says Kroll, is not necessarily a good thing.  “You actually lose custodial care of the shipment,” Kroll added.  “There’s concern around tracing the shipment, loss or damage, and filing a claim.”

U.S. businesses need to choose wisely when selecting a logistics partner to handle their cross border shipments.  Many carriers claim to have expertise in the Canadian market when in fact they do not.  Take the time to find out exactly what a carrier’s qualifications are:

  • Does the carrier have a network in place to ensure delivery to Canadian addresses?
  • Is the carrier a participant in U.S./Canadian “trusted shipper” programs?
  • What is the carrier’s expertise in understanding the border compliance process?
  • How flexible is the carrier in offering pickup/delivery times that meet your needs?
  • Will the carrier maintain control of the shipment throughout the entire cycle?

As the above discussion indicates, there is a lot of opportunity beyond the U.S. border.  It’s important though, to do your due diligence and make sure you enter the export market smartly, and with the right logistics partner on your team.