A gentle surge in U.S. manufacturing and more emphasis on “near shoring” indicates that trade with Canada will continue to grow this year, major forwarders say. This is a trend confirmed by economists at the Toronto-based CIBC World Markets who report that Canada will remain the biggest trading partner for the U.S. for years to come.
Demand for U.S. goods is surging, says CIBC, with wholesale trade inventories climbing 1.7 percent to $52.4 billion this past May—the largest percentage increase since January 2007. “The volume of cross-border growth is impressive,” says CIBC analyst Rob Shotte. “The inventory-tosales ratio is a measure of the time, in months, required to exhaust inventories if sales were to remain at their current level. Overall, 16 of the 25 wholesale trade industries reported higher inventory levels.”
The impact of the current environment for U.S. shippers has been significant, Shotte adds. U.S. wholesalers in construction, forestry, mining, industrial machinery, equipment, and supplies posted the biggest inventory gains in dollar terms, followed by agricultural wholesalers when shipping into Canada, CIBC notes in a recent report.
One of the world’s premier trade services companies concurs with this observation. “A combination of forces are at work when examining this uptick,” says Amy Magnus, district manager for A.N. Deringer. “Business has been good, and seems to be getting better. But U.S. exporters trying to go it alone may still find some unexpected barriers and choke points.”
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The Department of Commerce reported that January retail sales were up 0.2 percent compared to December and up 3.7 percent annually at $449.9 billion, and the NRF reported that January retail sales, which exclude automobiles, gas stations, and restaurants, rose 0.6 percent over December and 1.4 percent compared to January 2015.
On the freight shipments side, Cass reported that January shipments––at 1.025––trailed December by 1.3 percent and January 2016 by 0.2 percent. These declines were less than the 4.9 percent drop from November to December, though, and January shipments still topped the 1.0 mark for the 65th straight month in December.
The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that its Freight Transportation Services Index (TSI) saw a 0.4 percent decline from November to December, its second straight decline on the heels of a 1.0 percent decrease from October to November.
Carloads saw a 11.7 percent annual decline at 241,680, and intermodal containers and trailers rose 10.5 percent to 262,830
An amendment to the International Maritime Organization’s Safety of Life at Sea convention will go into effect requiring all shippers (importers and exporters) to certify and submit the Verified Gross Mass – the combined weight of the cargo and the container – to the steamship line and terminal operator in advance of loading the container aboard a vessel.