August 19, 2015

Exports to U.S. from Canada booming

It now costs about $1.30 Canadian to buy one U.S. dollar OR it now only costs a U.S. buyer .70 cents to purchase what cost $1.00 U.S. less than year ago!  Check out the historic graphs and data on the Bank of Canada website.

What does this mean for LTL (less-than-truckload) trucking companies involved in shipping between the U.S. and Canada?  What does it mean for a shipper in Canada?  And what does it mean for a shipper in the U.S.?

A shipper in Canada who is manufacturing a product he is trying to sell in the U.S. is now effectively offering his U.S. customer a 30% discount — so now it is making more sense for the American purchaser to “Buy Canadian”.  This will result in more cross-border LTL and truckload shipments moving to the United States for Canadian based trucking companies.  This also puts LTL space on the same amount of trucks more at a premium.  And full truckload availability also becomes scarcer because of the increased volumes caused by more U.S. purchasing of Canadian manufactured goods.  This is great for the Canadian export market and outbound trucking industry.

But every economic story has two sides.

The lower purchasing power of the Canadian dollar just made it more expensive for Canadian purchasers to “Buy U.S.A.” — in fact it’s now 30% more expensive than a year ago.  So the inbound trucking market for LTL and truckload has and will continue to slow down because of relatively lower demand for American products.  Truckers will be more careful in selecting export shipments from Canada to the U.S. keeping a special eye on destination — asking the question: “How easy will it be to find a load coming back from that U.S. city to Canada?”

The bottom line — watch for higher LTL and truckload rates from Canada to the U.S. and possible savings on shipments moving from the U.S. to Canada.

By John Tittel, Hot Freight