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Canadian Border Bill Could Worsen Trucker Shortage

June 30, 2016
Legislation requiring driver biographical information at border could end up feeling like another tax.

Canadian truckers have expressed concern over federal legislation that would mandate the collection of truck drivers’ biographical information at border crossings because it could result in the United States hitting them up for more taxes.

The legislation is intended to put into place the final steps of a cross-border agreement Canada signed in 2011 with the U.S.

“It might come as a surprise to a great many Canadians that this doesn’t happen already,” Public Safety Minister Ralph Goodale told reporters on June 15. “Having this data will allow us to better respond to Amber Alerts, for example, on missing children,” Goodale said. “It will help us deal with human trafficking. It will help us deal better with illegal travel by terrorist fighters.”

The Canadian Trucking Alliance (CTA) wrote to Goodale seeking assurances that U.S. authorities won’t try to use the data to make a case that Canadian drivers are spending sufficient time in the be considered American residents for tax purposes.

“This could cause some truckers to exit the market, creating potential capacity shortages in the transborder trucking space,” David Bradley, president of CTA, wrote. “There already is a chronic shortage of truck drivers in Canada.”

The Internal Revenue Service’s rules impose a “substantial presence test” under which someone can be subject to U.S. tax on their income in both countries if it is found that they have spent more than 120 days in one year in the U.S., Bradley noted. In addition, someone spending more than 180 days in the U.S. in any 12-month period could face sanctions for being in this country illegally.

“If we count a few minutes to drop off a load and go back as a day in the United States, that could lead to some issues,” Bradley told the Canadian Press. “So it’s a matter of interpretation. And I think that we would like clarification.”

He added that the law could substantially raise administrative costs for truckers in terms of route planning to make sure Canadian drivers don’t surpass the time thresholds. “These things are all subject to appeal and to review and interpretation. But once you get into those processes, even if you’re right, it’s costly and time-consuming and really not productive.”

Bradley also says he is optimistic about obtaining a positive outcome from Canada’s federal government. “I think that, as a general rule, the government of Canada understands certainly much better than the U.S. federal government the economic imperative of trade facilitation versus security. But this is the world we live in, and we’re going to have to see how things play out.”

Driver Shortage Presses Point

The need to take steps to make life easier for truck drivers was brought home by a study of the truck driver shortage in Canada, released in June by CTA, which shows the situation is worse than was anticipated. The study forecasts a shortage of 34,000 drivers by 2024, reflecting an increase in demand of 25,000 and a decrease in supply of 9,000.

Nearly 169,000 drivers were employed in the for-hire sector of the industry in 2014. However, the average age of the drivers continues to increase more rapidly than the rest of the Canadian workforce, with the average truck driver age expected to eclipse 49 years old by 2024—up from 47.1 years in 2014 and 44.1 years in 2006.

CTA notes that there already are large numbers of drivers in their 50s and 60s, and about 17,000 drivers between 60 and 65 years of age. Between 2006 and 2011, drivers between 25 to 34 years-old dropped from 18% to below 15% of the driver force, while the share of drivers in the 55- to 64-year-old cohort, most of whom will retire over the next decade, rose from 17% to 22%.

Bradley says the study “should be a wake-up call and reminder to everyone—carriers, shippers and governments—that while the current lackluster economic activity may be taking some of the edge off the driver shortage in the immediate-term, the underlying trend points to a long-term chronic shortage of truck drivers.”

Last March when President Obama met with Canadian Prime Minister Justin Trudeau to discuss cross-border trade issues, Bradley also expressed hope that new Customs pre-clearance procedures could be adopted that will ease life for drivers in his country.

“CTA is hopeful that one day we will see true bi-national pre-clearance of commercial trucks before they reach the border, perhaps from a factory or distribution center, so they won’t have to stop at inspection booths at the border,” he says, “but we’re far from that today.”

A month later the U.S. Customs & Border Protection introduced a pilot program intended to be the first step towards restoring Canadian carriers’ ability to haul in-transit shipments through the U.S. using a limited set of data when crossing the border.

Before the 9/11 terrorist attacks Canadian shipments not intended for U.S. consumption (or offloaded or stored) were considered domestic Canadian loads and could enter with minimal documentation. After 9/11 Canadian in-transit shipments were treated as international loads by U.S. Customs and were subject to full documentation.

Initially the pilot program will involve up to nine trucking companies who will begin by moving goods in-transit through designated U.S. ports. It may be expanded to include additional carriers in the future.

“Ever since 9/11 we have been working to restore in-transit shipments,” Bradley points out. “We stuck with it and we were rewarded for all the hard work.”

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