The FX Effect: Navigating the Volatile World of Cross-Border Trade
Canada and the United States share the world’s longest border, stretching 8,891 kilometers across land and water. They also share what is perhaps the world’s largest bilateral trade relationship: in 2014 bilateral trade of goods and services totaled just over C$800 billion dollars, equivalent to C$2 billion crossing the border or C$1.4 million every minute, according to the Canadian Federation of Independent Business’ Beyond the Big Border survey.
After previously falling behind Mexico, Canada has regained its historical rank as top trade partner with the U.S. U.S.-Canada freight was valued at $45.1 billion in November 2015.
This was down 13.8% from a year earlier as all modes of transportation also carried a lower value, noted the Bureau of Transportation Statistics at the U.S. DOT.
Lower crude oil prices contributed to the year-over-year decrease.
Trucks carried 60.4% of the freight to and from Canada, followed by rail at 16.3%.
The top commodity category transported between the U.S. and Canada by all modes was vehicles and parts, of which $5.4 billion, or 59%, moved by truck last November.
Increases in the value of the U.S. dollar against both Mexican and Canadian foreign currencies has contributed to year-over-year declines each month through 2015’s reported numbers, and the exchange rate challenge could well rate as the top issue for cross-border players in 2016.
The foreign exchange rate has been a huge economic change factor for trade and for freight in general, said Rick Heywood, Ryder System Inc.’s Director of Customer Logistics in Canada.