There can be too much of a good thing—even truck freight. Cross-border truck freight between Canada and the U.S. is rapidly growing despite low equipment capacity. However, a recent study shows the flow of that freight is heavily unbalanced. The key issue is many U.S. trucks return from Canada empty—wasting fuel as well as pointlessly generating greenhouse gases (GHGs). And, thanks to the near parity of each country’s dollar, the situation is also impacting rates for Canadian carriers that cross into the U.S.
The University of Manitoba Transport Institute (UMTI) and TransCore Link Logistics undertook the study to find better ways of “re-balancing” this cross-border freight flow to cut those woefully inefficient empty miles.
Over 61% of total cross-border freight volume originates in the U.S. and flows to Canada according to the study, said Paul Larson, director of UMT director, and this “imbalance” has existed for some time.
“There is a traditional freight imbalance in North America, with trains filled with Canadian commodities going south and returning empty, and trucks filled with American goods going north and returning empty,” he told Fleet Owner. “The strong Canadian dollar increases the northbound flow of goods and the number of trucks going back empty. Unless they have southbound loads to carry, the Canadian carriers may think twice about crossing the border in search of freight.”
The Canadian and U.S. dollars being almost at parity has impacted U.S. purchasing from Canada as well, said Claudia Milicevic, gm of TransCore Link Logistics’ Canadian operation. Canadian exports are down while more products are being shipped to Canada from the U.S..
“There is an abundance of freight returning to Canada, however the majority of cross-border loads are handled by Canadian-based carriers and many are having a difficult time finding outbound freight to get down there and pick up the inbound loads,” she told Fleet Owner. “It is really impacting rates.”
Interestingly, the study found that cross-border loads have increased 29% to 55% while equipment capacity has decreased from 12% to 20%. “We’ve been hearing about a pending capacity crunch in the market for quite awhile and these numbers help substantiate that there is a substantial reduction from only a year ago,” Milicevic said.
UMTI’s Larson noted that the goal now is to take the study’s information and find ways to help “re-balance” the smaller pool of available capacity to maximize usage.
“Observations that in the past might have been more intuitive in nature are now backed with qualitative and quantitative assessment, both confirming and expanding our understanding of the dynamics at play in the Canadian market,” Larson said. “This information also supports UMTI’s Innovative Freight Practices project to reduce empty backhaul miles and GHGs. Freight-matching can enhance service, reduce costs and make freight movement more sustainable in the long-run.”
“By identifying patterns of freight movement within Canada and across the U.S. border, Canadian transportation companies can make valuable insights to improve their operating efficiencies,” added TransCore’s Milicevi . “It can also assist carriers with better load planning by optimizing their trip scheduling and reducing empty miles.”