US-Canada cargo barriers already free
To a considerable degree, the Canadian-United States international boundary has already disappeared for one industry - transportation. That's one conclusion of a recent study of developments in ``intermodal transport'' in North America conducted by a Transport Canada economist, Michel Archambault.Skip to next paragraph
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North America constitutes one market from the standpoint of shipping operations, he says. Intermodal transport involves the shipment of goods with different means of transport, such as ship, train, and truck, to deliver a package.
Canada and the United States signed a free-trade pact Jan. 2 which, if ratified by the legislatures of both countries, will remove most of the trade barriers between the two nations. Transport was largely left out of this deal, because American negotiators knew Congress would not permit elimination of the Jones Act, which protects American shipping companies and their employees. Regardless, ``third generation'' containerships that carry between 2,000 and 4,000 containers at a time, and other highly specialized vessels, have tended to integrate the North American market over the past seven years.
Mr. Archambault explains: ``The economics of operating these ships has required and continues to require modifications and adjustments in their itineraries, in order to ensure the most effective deployment of fleet capacity in the most profitable ocean trades.''
Moreover, these ships have produced a reorganization of the overland transportation of containerized cargo to provide high traffic density and rapid turnaround of containers, the large metal boxes that resemble truck trailers without wheels, in which goods can be packed and transported on a ship, truck chassis, or railroad car.
Until recent years, shipping companies simply transported goods from one port to another. There they were picked up by a railway or trucking company. Now the shipping companies take care not only of the water transportation but of the land transportation.
``This integrated approach, in close cooperation with railway companies, is designed to offer `door-to-door' service, the essence of continuous intermodal transportation,'' Archambault says.
Also, recent regulatory reform in both countries has provided a new market environment that gives the North American transportation industry greater flexibility in the use of cargo distribution networks by arranging for various types of agreements among corporations and by adopting new market strategies.
Canada loosened the regulations of its transportation industry in 1967, creating a National Transportation Agency to supervise all means of transportation.
Then new laws passed by Congress early this decade took deregulation further in the US than in Canada. So Canada caught up with a new transportation law that took effect starting this year. It governs air, rail, and water transportation. Another act, passed last year, covers truck and bus transportation that crosses provincial borders, delegating authority to the provinces.
Airlines are now much freer to offer new domestic air services than in the past. Except in northern Canada, an airline need only show it is ``fit, willing, and able'' to provide the service. That means it must demonstrate an ability to operate a safe air service with proper insurance coverage. It will also be easier to discontinue or reduce service on unprofitable routes.
Even before the new law came into full effect, most of Canada's smaller airlines were merging to meet the competition. Railways and shippers can now negotiate confidential contracts. Thus shippers can better shop for the rates and conditions of service that best suit their needs. Canada hopes this change and others will enable Canadian railways to compete effectively with US railroads for transborder traffic.
``In Canada, we don't have the population density you have in the United States,'' notes J.E. Campbell, a Transportation Department official here. ``We have a great many railway lines that are carrying very little traffic.'' He expects many of these lines to be closed in the years ahead, with trucks taking the cargo from the areas served by these shut-down lines to rail lines where the traffic is heavier.
In trucking, a firm need only show it can conduct operations safely and has proper insurance coverage to obtain a trucking license. Before, it had to pass a test involving ``public convenience and necessity.'' During a five-year transition period, people objecting to a license application in the name of public interest may appeal to the appropriate provincial or territorial transport board.