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NAFTA eases cross-border shipping in North America
The United States, Canada, and Mexico are three of the largest countries in the world. The vast distances within these countries mean that a buyer may be closer to a supplier over the border than to one in their own country. This simple fact is one of the reasons these three countries decided to create a trade pact, called the North American Free Trade Agreement (NAFTA) in 1994. Despite the fact that NAFTA is now 20 years old, many companies still don’t realize how much easier the agreement makes cross-border shipping. Shipping products such as fabricated and anodized aluminum extrusions into the United States has never been easier.
Proximity to the United States
A quick look at the map shows that many cities in the US are closer to Canadian cities than to most of the other cities in the same country. For example, Detroit is only separated from the Canadian city of Windsor by a bridge. The great cities of southern Ontario are closer to Buffalo, New York than New York City.
The cost of middle men minimized with NAFTA
When sourcing supplies, equipment or materials, a business in the US is more likely to be drawn to look for those goods in its own country. No one wants the administrative headache of filling out import forms, so many foreign countries set up dealerships in the US to make their products available locally. However, setting up dealerships increases costs and added complexity to the cross border shipping process. NAFTA eliminates the need for complicated forms and import duties, which makes cross-border shipping between the US and Canada a more viable and cheaper option.
Sourcing world-class goods directly from suppliers over short distances has obvious benefits. The reduction in transport costs means cross-border shipping can reduce the buyer’s costs. When trucks travel shorter distances, they burn less fuel, which benefits both the economy and the environment. The proximity of supplier and customer also means that lead times are reduced and maintenance calls are cheaper. These clear benefits were aims of NAFTA, and greatly improved the ease of shipping products like aluminum extrusions across the border into the US.
NAFTA was designed to eliminate the borders between the US, Canada, and Mexico as barriers to trade. However, the psychological effects of those lines on the map mean that many companies in North America are reluctant to exploit the efficiency savings that cross-border shipping offers, such as the procurement of extruded aluminum profiles.
The benefits of NAFTA lie in the ability of US and Canadian companies to deal directly with each other without the overhead of dealerships. US goods and services became cheaper than those provided by other countries, such as China, because the two countries have scrapped import duties on cross-border trade. The improved sales opportunities have encouraged manufacturers in accessible border locations such as Dajcor Aluminum to acquire competence in dealing with customers in neighboring countries.
Dajcor Aluminum, based in Chatham, Ontario, is a good example of a business that benefits from NAFTA and cross-border shipping. The Dajcor location is only a little over 50 miles from the US border, with the city of Detroit immediately on the other side of the border. This places Dajcor closer to Detroit, Toledo, and Ann Arbor in the US than to Toronto in Canada.
Any freight operation should carry a bill of lading along with the goods. This document is basically a list of everything on the truck. In addition to that document, the truck driver should also transport a packing list, or packing slip, for each customer that has goods on board the truck. A domestic sales transaction might be carried out with an electronic or faxed invoice sent directly from the seller’s office to the buyer. However, on NAFTA cross-border shipping, the invoices for all the goods on board have to be carried on the truck. For most goods, those three types of documents are all you need to cross the US/Canada border.
NAFTA makes cross-border shipping a viable option. When you consider putting bids out to procure components such as extruded aluminum profiles, don’t be concerned if those goods will have to cross a NAFTA border. You may be increasing your costs if you rule out cross-border shipping entirely.