Some call it the U.S.’ “little brother” and others call it “that neighbor up north,” but ever since the North American Free Trade Agreement was signed in 1994, Canada can be officially referred to as the United States’ largest trade partner. If you are still unconvinced by this title, then here are some statistics that may convince you otherwise:
- More than 9 million jobs in the United States depend on Canada
- Canada is the top export destination of 35 states
- $1.9 billion worth of both American and Canadian goods cross the border each day
- Total amount of goods exported to Canada in 2014 was $312 billion
- In 2011, it was estimated that 19% of all merchandise produced is exported to Canada
- Canada accounts for 14.3% of all U.S. imports
The statistics shown above brings to light how crucial Canada is as a trading partner to the United States. When looked at on the state level, the numbers are still staggering. Take Michigan for example. It is estimated that around 259,000 jobs rely on Canada, and that total number of jobs is only 8th most out of all the states. Furthermore, Michigan sells more goods to Canada than the next sixteen foreign markets combined. It takes up about 46% of all of Michigan’s foreign exports, and was worth about $25.4 billion in 2014.
Seizing the Opportunity
Statistics shows that trade with Canada is growing, and this is why expanding into Canada should be a primary objective for a business looking to gain more market share. With more than 33 million new potential customers within striking distance, that expansion should not be as difficult as other foreign markets. It is important to note that before 2007, trade primarily flowed from south to north. When the recession hit, however, the value of the U.S. dollar decreased, while the Canadian dollar has remained mostly undeterred. Because of this, the flow of trade has shifted more towards north to south, with America supplying the growing demand for online retail in Canada.
Trucks Trump All
With expansion being a possibility, the issue of how you should get your goods into Canada arises. What is the most efficient way of doing so? Well, it is estimated that 82.2% of all freight that passes through the border is done on land by truck, rail, and pipeline. However, it appears that trucks trump all other forms of border crossing transportation. In December of 2014 for instance, the amount of goods that flowed between Canada and the United States totaled to about $53.1 billion, and trucks handled 54.8%. The use of trucks as a means of hauling freight is expected to grow at 4.7% a year, which is more than the 1.7% expected of air and 0.7% expected of rails.
Things to Know Before Shipping to Canada
With these statistics set in place it is easy to see that expanding in Canada is a lucrative idea, and it is most dependable and affordable to export by truck. In case you are thinking of expanding and shipping freight to Canada, here are some things you should know:
- The Border is thickening– The U.S.-Canadian border is the longest and most peaceful border the United States has. However, just because it is peaceful does not mean that it is easy to cross. Post 9/11, the border is generally tighter, which causes delays, making transit time longer. This is why you have to choose a carrier that participates in U.S. and Canadian programs, such as the Customs-Trade Partnership Against Terrorism (C-TPAT).
- Not as simple as it seems– Because of Canada’s proximity, it is easy to assume that shipping goods across the border will be an effortless process. The reality is not so simple. There are numerous regulations and compliances that a company must go through in order to transport goods into or from Canada. This is why trusting a third party to handle the process is essential.
- Make sure your goods are where they have to be– Utilizing a 3PL to get your goods across the border into Canada is not the only step that has to be taken. Once the goods are in Canada, they may end up delayed or in limbo. This is also why you have to make sure that your 3PL has a dependable and experienced Canadian logistics system in place, or at least partners with one.
- Multi-functionality is also important– Building your new network or gaining more business from a new customer base will depend on how fast you can handle their goods. Since it is projected that 7% of all goods sold will be returned, it is imperative that your 3PL provider is able to quickly and dependably process reverse logistics.