Severe disruption of cross-border supply chains feared
- January 6, 2022
Supply chain disruptions could get progressively worse in a little more than a week from now.
That’s because the Canadian and U.S. governments have announced that truck drivers crossing the border must be fully vaccinated. The new rules go into effect January 15 for those entering Canada and about a week later for those entering the U.S.
Both motor carrier and shipper groups in Canada anticipate the regulations will cause severe disruptions to the cross-border supply chains handling the more than $650 billion in trade between the two countries. Those supply chains are already struggling to get back to normal capacity due to the global impact of the pandemic as well as infrastructure-related issues.
“While there’s reportedly a modest uptick of drivers getting vaccinated at some companies, there are substantial reports of higher-than-normal turnover and others declaring their intention to leave the industry or seek employment in the provincially regulated sector over the impending mandate at the border,” said Stephen Laskowski, head of the Canadian Trucking Alliance (CTA).
That’s sobering news for Canada’s metalworking industry. Supply chain disruptions were already considered “the biggest obstacle to recovery,” as Marc Hasrouny, president of the Canadian Machine Tool Distributors Association, noted in December.
To date, essential workers, including professional truck drivers, have been exempt from such regulations and land border closures put in place in response to the Covid-19 pandemic. They were exempt in acknowledgement of their critical role in ensuring supplies continued to be delivered across the border.
The vaccination rate within the Canadian trucking industry is similar to the Canadian national average, which is one of the best in the world. Still the industry is expecting a loss of 12,000 to 16,000 (10-15%) cross-border commercial drivers if the mandate takes effect this month, according to Laskowski. And if Ottawa continues to pursue plans to also mandate vaccinations for drivers involved in federally regulated domestic transport that figure could jump to as high as 30,000 losses.
The concern is high on the shipper side as well, as attested by a recent letter by the Freight Management Association (FMA), a prominent group representing some of the largest shippers in Canada, to government officials in Canada and the US.
“FMA is concerned that this policy will cause severe shortages in an already depleted workforce, on both sides of the border and delay the economic recovery that is essential for North American citizens and businesses,” wrote John Corey, FMA president.
A recent Trucking HR Canada survey shows Canadian trucking is already suffering from 18,000 driver vacancies. A similar study by the American Trucking Associations indicates a shortage of 80,000 drivers in the US.
“Any further reduction in the workforce would be extremely problematic…Losing more drivers would have a significant effect on supplies and services reaching their destination to those who need them, ” Corey wrote government officials.
CTA’s Laskowski confirms the existing driver shortage combined with the impending mandates has left shippers scrambling for truck capacity.
“Some of that demand in certain regions or types of sectors simply cannot be met by fleets already struggling to fill seats and who are losing more drivers in reaction to the mandates. Certain sectors and regions of the Canadian economy will be disproportionately disrupted once those mandates are in effect,” Laskowski said.
Laskowski and Corey have requested the Canadian and US governments meet and consult with key members of the supply chain to determine a more suitable date for enforcement which would be less disruptive. However, neither government has given any indication to date that they would reconsider enforcing the mandates set to go into effect.