With all the attention that has been focused on how September's terrorist attacks have affected freight transportation in the United States, few have noticed that Canadian shippers and carriers are working under similar constraints. Canada and the United States enjoy the world's largest trading relationship, and any disruption in one economy inevitably will affect the other.

Canada's airline industry is suffering just as much as its U.S. counterpart is. Already battered by last year's consolidation of Air Canada and Canadian Airlines and the subsequent restructuring of regional airlines, that industry took a big hit when Canada closed its airspace for three days following the attacks. The country's airports, meanwhile, were swamped as they accepted 226 U.S. flights that were diverted to Canada on Sept. 11. A further blow to the industry came later that month, when international insurers said they would scale back the war-risk insurance they provide to airlines.

Early last month, Transport Minister David Collenette announced a subsidy package of C$160 million to compensate the country's 885 airlines, commuter carriers, air taxis, and specialty air carriers for their unprecedented loss of business. Faced with the possible suspension of air service, air-traffic control operations, and ground services, Collenette also took steps to address the insurance issue, announcing a 90-day indemnity for third-party war and terrorism coverage for "essential air services."

In the meantime, truck and rail carriers have also been affected by the terrorist attacks, particularly as they attempt to cross the U.S.-Canada border. Although the miles-long lines at border crossings have for the most part cleared up, the events of Sept. 11 have highlighted the longstanding problem of understaffing of agencies that oversee customs and immigration activities on the northern border. At a meeting of the Canadian/American Border Trade Alliance in Washington, D.C., just two weeks after the attacks, speakers from Congress, the Canadian Embassy, U.S. and Canadian Customs, and the U.S. Immigration and Naturalization Service (INS) emphasized the need for a significant boost in staffing. "The northern border is not undefended or unprotected; it is 'under-resourced,'" said INS Commissioner James Ziglar.

Several speakers cited the need for a more unified approach to law enforcement by Canada and the United States. Both Bertin Coté, deputy head of mission for the Canadian Embassy, and Rep. John LaFalce (D-N.Y.), chair of the Northern Border Caucus, brought up the idea of a "secure perimeter" around Canada and the United States. This concept would create a single standard for assessing security for people and cargo entering the United States and Canada. Once "inside," they could pass freely between the two countries. Achieving such a uniform system would require harmonization or even integration of policies, information systems, and procedures between U.S. and Canadian border-control agencies.

Although this approach is similar to that employed by the European Union, it is controversial on both sides of the U.S.-Canada border. In a speech at the Council of Logistics Management's annual conference last month, David Bradley, CEO of the Canadian Trucking Alliance, said that many in Canada feared such a move would compromise their nation's sovereignty and would give the United States undue influence over Canadian law. They—and many in the United States—would rather see stricter controls at the U.S.-Canada border. But simply increasing security at that border "would surely have the effect of impeding trade and over time, if unchecked, would lead to structural economic change in both our countries—this, no doubt, at a terrible cost," Bradley said. "In our view, there is no real choice at all. Canada must work with the United States on a perimeter border strategy."