SMSJ: Mining companies and suppliers are more and more dependent on the efficient movement of freight across international borders at a time when jurisdictions around the world are tightening security. How is this impacting on the mining industry?
Travis Fitzgerald: Transport Canada will be bringing in a whole raft of regulations with regard to getting cargo on aircraft. It’s going to be a lot harder. The Canadian International Freight Forwarders Association has put together a training program to get forwarders ready for these new regulations. They will come into effect in the next few years, so when the changes happen, we’ll be ready.
SMSJ: Has tighter security impacted on the movement of goods to date?
TF: Security has affected transportation like no other industry. It’s completely turned what we used to do upside down. It’s much more complicated and time consuming, and it’s going to get worse before it gets better.
SMSJ: What percentage of your business is mining related?
TF: A large chunk of what we do is mining related. I’d say about 70 per cent, but our client base has diversified. Twenty years ago, the customs brokerage business was very paper-based. Everything we did was in hard copy and we had to be in close proximity to customs offices. Now, everything is electronic, so your physical location isn’t nearly as important as it used to be and that has allowed us to expand our client base to customers beyond the immediate area.
SMSJ: You’re a customs broker as well as a freight forwarder. Explain the difference between the two services.
TF: Customs brokerage is the work we do on behalf of clients to clear goods through Canada Customs on import.
Freight forwarding is the actual arrangement of physical transportation from point A to point B, and booking passage on a ship or making arrangements for space on an aircraft. You can have a freight forwarder take care of transportation out of the country, but once it reaches a border, it stops and the broker takes over. The broker performs the actual function of customs clearance and acts as a liaison between Canada Customs and the importer. We prepare the documentation, make sure everything is classified properly and pay the duties and taxes. The broker keeps abreast of all the regulations, which are constantly changing.
SMSJ: Can companies do their own freight forwarding?
TF: They can, but they are opening themselves up to liability. If you’re shipping something out of Canada that’s going to a country other than the U.S. and if it’s valued at more than $2,000, you’re required to present an export declaration to Canada Customs. I’m sure there are many companies out there that don’t know this, but they can be fined for not reporting goods exported.
SMSJ: Are there other reasons for using a freight forwarder?
TF: There are other advantages to using a freight forwarder. We are often able to negotiate lower freight rates, particularly for air freight. It’s also a time consuming thing to make all of these arrangements. It’s an area that most people are not familiar with. You may know how to make rock bolts. Your job isn’t international transportation and what kind of forms are going to be required when you ship something to Russia. It’s the same as any other business where you’re sourcing something out to a professional. It’s why people go to a lawyer to get a will made.
SMSJ: Is packaging something exporters need to pay attention to?
TF: Most countries now require special types of wood to be used. If you drive down to Toronto, you’ll see signs posted on the side of the highway that you are entering an area infested by the Asian Longhorn Beetle. It’s an area that surrounds CP Rail’s Vaughan Terminal. What happened some time ago was a pallet came in from another country that was infested with this insect. It got out into the trees surrounding the terminal and now there’s an infestation in the area. That’s a problem that is a direct result of wood packaging used in international transportation.
SMSJ: What measures have been adopted to prevent this from happening in future?
TF: Most countries have signed on to the International Plant Protection Convention. They have issued a set of regulations for wood that is used for pallets, skids, crates, and for blocking and bracing. The wood has to be fumigated or pressure treated and marked in a specific way. If the Canadian Food Inspection Agency opens a container and finds that the wood isn’t compliant, the goods can be refused entry and sent back to their point of origin. As knowledgeable as you may be about your business, this is something that wouldn’t occur to most people in the mining industry.
SMSJ: How has customs clearance changed?
TF: For 300 years, the primary function of Customs was revenue collection. Now, it’s security. They’re protection officers now, not revenue officers, so the trades that work with Customs – the freight forwarders and the customs brokers – are seeing a lot more oversight. The new program that is going to be brought in by Transport Canada is going to require all people who handle cargo – from drivers and dock workers, to freight forwarders and air cargo handlers to have criminal background checks. They’re all going to have to undergo periodic testing and we will have to submit cargo security plans for approval.
SMSJ: Will all of this translate into delays?
TF: Probably, initially. You can plan for something like this, but until you actually get freight moving through, you don’t know how it’s going to work.