Logistics Implications of an Integrated US‐Canada Market

Trade restrictions; border crossing difficulties, and company organizational structures have limited historical cross‐border distribution activity. The result, generally, is two or three independent distribution systems to support North American logistics operations. With the completion of the US‐Canada Free Trade Act, many of these limitations are being reduced. It is now time for firms to refine their distribution networks to respond to this new environment. The major changes that firms must consider are distribution centre locations and manufacturing supply points. The factors that influence these changes are country/market integration, duty levels, and cross‐border transportation rates. Reports on the results of food industry simulations that consider multiple levels of integration, duties, and cross‐border rates. The results compare the number of distribution centres and the total cost of each network, and generally indicate that there are no significant changes in distribution system network design resulting from US‐Canada Free Trade. The minor changes which are observed include Toronto serving the Eastern US and Seattle serving Western Canada. The cost differences are not significant. The results also indicate that there is no significant economic motivation for cross‐border logistics activity until duties are eliminated and cross‐border transportation rates decline by 10 per cent.