Examining the business case for shipper participation in Canada–USA trade security programmes

Abstract

Among Canadian shippers involved in Canada–USA trade, uncertainty about costs and benefits has been cited as a possible explanation for the relatively small number of them that have sought approval to participate in Free and Secure Trade (FAST), a central bilateral trade security programme between the two countries. This study addresses this uncertainty with quantitative analysis to examine the business case for an individual Canadian shipper’s participation in FAST. The study shows how a shipper’s operating parameters influence the strength of the business case. A key study finding is that unless the needless costs that carriers incur from serving non-participating shippers are passed back to those shippers, the business case is significantly weakened. The study also finds that, like cost transfers from carriers, the rate of FAST approval of competing shippers is a very powerful economic incentive for an individual shipper to subscribe to the FAST programme.

Keywords:

• International supply chain security
• Import/export logistics
• Customs
• Cost-savings analysis
• Business case analysis

Notes

^†The Industry Canada web site states Canada’s top 25 exports, and The Financial Post (http://www.FPinfomart.ca) provides information on market shares within the different industries.

^†CBP officers have the discretionary power to impose a more lenient version of the penalty: a single $5,000 fine even if more than one non-compliant shipment is on board (a situation that would enable the carrier to split the fine among the non-compliant shippers). However, given the CBP’s philosophy that the fines should be stern enough to encourage compliance, this study uses the more stringent version of $5,000 per shipper for each instance of non-compliance.

Additional information

Notes on contributors

M. A. Haughton

Email: [email protected]