US / Canada Border Issues

US / Canada Border Issues

William CookSenior Manager, Corporate CustomsDaimlerChrysler CorporationApril 30, 2004

2

Agenda

1.1. Automotive Industry OverviewAutomotive Industry Overview

2.2. Automotive Trade OverviewAutomotive Trade Overview

3.3. Automotive Border ExpectationsAutomotive Border Expectations

4.4. RecommendationsRecommendations

3

Automotive Industry Overview

US In 2002• Built 73% of NAFTA vehicles• Built 12 million vehicles• Sold 16.8 million vehicles• Employs

• 770,000 directly• 1,001,000 indirectly

• Spends annually• $500 Billion in US on parts• $21 billion on R&D• 7.5 billion on health care

CanadaIn 2002• Built 16% of NAFTA vehicles • Built 2.6 million vehicles• Sold 1.7 million vehicles• Employs

• 50,000 directly• 550,000 indirectly

• Accounts for• 16% of manufacturing• 20% of all exports• $27 billion in trade

4

Automotive Trade Overview

• $18.1 B cars & trucks• $26.5 B parts & engines

• $46.8 B cars & trucks• $16.6 B parts & engines

Source: Statistics Canada, DesRosiers 2003Figures are in $US

5

Major Automotive Border Crossings

Bluewater Bridge

Ambassador Bridge& Detroit/Windsor Tunnel

Peace Bridge

Queenston-Lewiston Bridge

6

International Highway Traffic Volumes between US & Canada

• 43% of total volume between S.W. Ontario and S.E Michigan• 26% of total volume at Ambassador Bridge in Windsor/Detroit

• DCX is 14% of volume with approx 1000 truckloads daily

Automotive Sector Traffic Volumes• 34% of total volume• 68% of shipments occur at Detroit or Port Huron

Automotive Cost Implications• Plant shutdowns costs $1.5 million/hour in lost revenue

Automotive Trade Overview

7

Just-In-Time Delivery Process

Kautex Textron

Jefferson North Assembly Plant

OntarioMichigan

Daily Ship WindowsMON 04:00MON 07:00MON 10:00MON 13:00MON 16:00MON 19:00

Delivery WindowsMON 06:00MON 09:00MON 12:00MON 15:00MON 18:00MON 21:00

15 Minutes15 Minutes 90 Minutes

Ambassador Bridge

• Supplier located in Windsor, Ontario• 6 daily shipping windows• 2 hours total transit time• Supplier submits ASN upon shipment

• JNAP located in Detroit, Michigan• 3 hours total inventory on hand

Supplier issues 856 Advanced Shipping

Notice (ASN)

CHAMPS monitors, analyzes and updates

supplier shipment / delivery performance

CHAMPS data populates CNACS

and UPIPS with import shipments

Broker accesses USIPS to retrieve shipment data for entry information

Broker sends pre-shipment and

entry information to US Customs

8

Automotive Border Expectations

JIT (just in time) inventory requires:

• Seamless border crossingsSeamless border crossings (i.e. minimal paperwork and crossing delays)

• Consistent treatmentConsistent treatment of shipments at every port

• Predictable border crossingsPredictable border crossings necessary to meet JIT delivery

• Expedited low risk shipmentsExpedited low risk shipments for qualified importers

• Improved infrastructureImproved infrastructure to manage traffic efficiently and allow clear access for authorized traffic

• Modern technologyModern technology to enhance and simplify processes

9

Border Delays Do Not Support JIT!

10

Automotive Border Expectations

DCX has been a leader in developing and promoting the use of optimal border management systems

• Examples::

• CSA/FAST CSA/FAST • NEXUSNEXUS• Partners in Protection/CTPATPartners in Protection/CTPAT

DCX needs recognition that:• We are low risklow risk

• Our shipments, drivers and carriers are securesecure and compliantcompliant

Efficient Borders are critical critical to our business

11

Recommendations

Border ManagementBorder Management• Improve efficiency of driver registration process• Clarify benefits for CBP/CBSA programs to promote

participation• Increase focus on unknown or high risk freight• Simplify requirements with common US/Canada

processes

TechnologyTechnology• Optimize technology to improve operations and

integrated solutions• Implement intelligent transportation systems

12

Recommendations

InfrastructureInfrastructure• Improve facilities to optimize capacity• Improve border access for low risk importers• New border crossing to meet increasing demands

FundingFunding• US

• Establish separate border program as part of the reauthorization of the Surface Transportation Bill

• Allocate funding to border states based on relative volume of trade

• Canada • Proceed with prioritizing and spending of $300M allocated