U.S. – Canada Border Cold Chain and Cold Storage

Read about the steps being taken to improve the cold chain and cold storage warehousing at the northern border

Improving the Cold Chain at the Northern Border

The cold chain at the northern border faces challenges that are unique to the region. The United States and Canada share the longest international border in the world at 5,525 miles. Their trade relationship results in the daily exchange of almost $2 billion in goods and is supported by 120 land ports-of-entry along the border.

As food travels across time zones, climates, and altitudes, shifts in external temperatures are inevitable. The progression from warm to freezing temperatures and vice versa require different cold chain processes than those at the U.S.– Mexico border.

Temperature is the main factor that affects the safety and quality of perishable food items. In Canada, outdoor temperatures can vary significantly based on the time of the year and location, ranging on average from -22 degrees Fahrenheit to 86 degrees Fahrenheit. To avoid food waste and foodborne pathogens, foodstuffs such as produce, seafood, and meat must be kept chilled or frozen at the correct temperature throughout all steps of the cold chain.

Having the proper cold chain packaging and product boxing to keep products at the correct temperature is essential in cross border shipping. Most beef and fish products are imported and exported fresh or chilled, while pork imports, crab exports, and lobster exports are frozen.

In addition to food temperature, distance is a factor in the success of imports and exports between the U.S. and Canada. For instance, 64% of Canada’s fresh and frozen seafood exports are to the U.S.

Much of the seafood must travel long distances either coast to coast or north to south during the transportation process. Conversely, perishable products such as fresh fruits and vegetables imported into Canada travel throughout the U.S. to their destination.

Cold chain transportation vehicles travelling to the U.S. – Canada border must be equipped with technology that enables them to safely traverse the countries and deliver quality goods. This capability has become even more important to the cold chain due to food security concerns that still linger from the pandemic.

Take fruits and vegetables for example. Supply chain disruptions have limited the amount of fresh produce Canada can import from countries such as China. This has resulted in increases in U.S. and Mexican produce exports to Canada. Most of these products are shipped in refrigerated transportation vehicles, sometimes thousands of miles.

What is The Cold Chain?

The term cold chain refers to the temperature-controlled supply chain of perishable products like food and pharmaceuticals. The cold chain involves storage, production, and distribution processes to get goods from one point to the next. The cold chain is important because it ensures that products are safe for human consumption, protecting public health. The cold chain is divided into three main categories:

Temperature-controlled storage
Refrigerated transportation
Cold packaging methods

The cold chain industry is vital to safely supplying foods, beverages, and healthcare pharmaceuticals to consumers. The importance of product quality along with regulations has driven companies to utilize advanced technologies to improve cold chain temperature monitoring. Technologies powered by 5G and connected to the Internet of Things such as temperature sensors, RFID devices, & telematic tools are being used in cold storage warehouses and transportation vehicles to optimize cold chain processes for safer products and faster transportation times.

IoT and the Cold Chain

In the past, cold chain companies had to monitor and record their data manually. Human errors often affected food quality leading to:

Increased food waste
Increased greenhouse gas emissions
Disrupted food security

Today, the Internet of Things and 5G are being utilized to transform the cold chain at the U.S. – Canada border. Automated technologies powered by IoT such as temperature-controlled monitoring systems provide cold chain logistics managers with near-real-time and real-time data regarding the temperature and location of goods.

Businesses can monitor products as they move through the cold chain, while simultaneously remotely controlling logistics processes. An example of this is in cases of imminent food spoilage or contamination. During these times, IoT sensors can automatically alert logistics managers to reroute perishable products to a closer location. Moving away from manual processes to automated ones also provides greater access to data that can help companies save on energy costs by reducing inactive data usage or resolve maintenance issues before they occur.

Being connected to the Internet of Things is especially critical to imports at the U.S.- Canada border. Using IoTand 5G, cold chain businesses can utilize temperature-monitoring solutions over long distances to enable better control over the safety and quality of goods. In summer months, frozen or refrigerated transportation vehicles and refrigeration warehouses are required. In the winter, heating systems are used to prevent injury to chilled or frozen foods.

Many businesses are optimizing their use of the technology by moving electronic data to cloud storage systems. U.S. freight carriers are not allowed to transport intra-Canadian freight. Instead, once they enter the country the cargo is transferred directly to either the consignee or a 3PL. By utilizing cloud storage, businesses can share temperature and location data with one another. This enables them to streamline processes such as:

Maintaining temperature settings upon cargo transfer
Optimizing transportation routes for speedier deliveries.

U.S. Imports from Canada in 2021

Fish and fish products – $4.28 billion

Meat and meat products – $3.84 billion

Vegetables – $2.70 billion

Fruits – $554.73 million

Dairy products – $220.74 million

Canada Exports to United States – 2022 Data 2023 Forecast 1989-2021 Historical (tradingeconomics.com)

The USMCA

The United States-Mexico-Canada-Agreement (USMCA) went into effect on July 1^st, 2020. The agreement was developed to replace the North American Free Trade Agreement (NAFTA). The USMCA was enacted to create a more balanced and reciprocal trade partnership between the U.S., Mexico, and Canada that benefits the economy as well as:

Workers
Farmers
Ranchers
Businesses

There are several differences in the ways that Mexico and Canada govern cross border shipments. Because of this, the USMCA affects cargo shipped between the U.S. and Mexico differently than shipments between the U.S. and Canada.

Unlike Mexico, Canada allows U.S. based truck drivers to use less-than-truckload, truckload, or flatbed trucks to carry cargo directly to Canadian consignees or 3PLs. This is because Canada does not allow U.S. truckers to remain in the country and deliver freight to different locations. Due to this, industry executives believe that relationships between 3PLs and their customers are critical to the cold chain at the U.S.- Canada border.

3PLs experienced in U.S.- Canada cross border freight transportation typically rely on in-house customs brokers. These brokers can clear goods into Canada while simultaneously navigating customs procedures. Customs brokers are important because they review required paperwork that helps to streamline the transportation of goods into the country.

Canada’s requirements for imported goods include:

The Bill of Lading
Packing List
Canadian Commercial Invoice
Letter of Credit
Certificate of Origin

Protests at the Northern Border

In January 2022, a trucker protest began due to Canadian and United States COVID-19 vaccination mandates. These mandates resulted in the closing of the Ambassador Bridge between Windsor, Ontario, and Detroit, Michigan. The bridge is the busiest international land crossing in North America and handles nearly $323 million in freight each day. Subsequent protests along the U.S. – Canada border caused delays ranging from one to two days. It is predicted that the congestion resulted in a decrease of 270 million pounds of products across the border each day. In addition, up to 15% of the available transportation capacity decreased. Industry experts believe that the closing of the Ambassador Bridge caused a 2.2% dip in the U.S. National Shipments index.

Driver Shortages

On January 15, 2022 Canada imposed COVID-19 restrictions on cross-border truck drivers and the United States followed with its own restrictions on January 22, 2022. The truck driver market has been problematic to the cold chain at the U.S.– Canada border since vaccine mandates prohibited unvaccinated truckers from entering both countries.

According to the Canadian Trucking Alliance and the American Trucking Association, 26,000 or nearly 16% of cross-border truckers were affected by the mandates. In Canada, many cross-border truck drivers are now only travelling domestically. While this has benefitted cold chain transportation throughout the country, the reduced capacity for cross border freight has impacted cross border shipping prices. Cold chain executives have reported that the costs to transport U.S. produce into Canada have risen by 50%.

Cold Chain Improvements

The pandemic set off a chain of events that rocked supply chains across the world. Disruptions caused by labor shortages and port closures created issues that forced governments and businesses to reimagine their supply chain tactics. This reassessment has led to investments in advanced technologies and infrastructure to repair broken supply chain and logistics operations.

Listed are some important advances that will benefit the cold chain at the border.

Cold Storage Warehouse Expansion

The North American cold chains are becoming of increased importance to Canada as port delays and container shortages impact the country’s ability to import and export perishable items. Canadian cold chain executives predicted that the congestion at the ports in California would drive U.S. food producers to use 3PL cold storage warehouses in western Canada. This did not go as planned however, as those cold storage warehouses reached maximum capacity swiftly.

Due to Canada importing more American fresh and frozen foods, there is a greater need for frozen cold storage and refrigeration warehouses. This has driven businesses to invest in cold storage warehouses along the border. These cold storage facilities will help to increase cold storage capacity and advance cross border cold chain infrastructure.

Tippmann Innovation is constructing a $65 million cold storage facility in Ontario. This facility will specialize in refrigeration warehouses.
Americold Realty Trust purchased Nova Cold Logistics for $337 million. The deal is meant to expand cold chain infrastructure in the gateway cities of Toronto, Calgary, and Halifax.
Lineage Logistics bought full-service refrigeration warehousing company Henningsen Cold Storage. Lineage has plans to invest in its facilities located in the Pacific Northwest. This will also improve United States cold storage along the border.
Lineage Logistics also acquired Ontario-based VersaCold Logistics Services and will expand facilities along the U.S. – Canada border. VersaCold operates 24 cold storage warehouses in Toronto, Calgary, Vancouver, Edmonton, and Montreal.

Air Canada Cargo

In response to cold chain disruptions caused by driver shortages and inland port closures, Air Canada Cargo is building a cold chain handling facility. The $16-million site will be located at Toronto’s Pearson International Airport cargo facility and will improve the airline’s ability to handle perishable items like foods and pharmaceuticals.

The temperature-controlled facility is the only one of its kind run by an airline in Canada. Its construction will expand the existing Air Canada cargo facility by 30,000 square feet and will have a wide variety of temperature-controlled areas to store both frozen and refrigerated goods. The expansion of the facility will also increase the airlines cold storage capacity, helping their cold chain inventory strategy transform from just-in-time to just-in-case. IoT-connected devices such as temperature controllers will continuously monitor warehouse conditions and automatically regulate temperatures throughout the facility. This will reduce energy consumption as well as prevent food spoilage.

Conclusion

The North American cold chain market is one of the fastest growing markets within the supply chain and logistics industry. According to the Bureau of Transportation Statistics, the North American cold chain market reached $61.8 billion in 2021 and is expected to hit $99.7 billion by 2027.

Industry experts associate the growth of the North American cold chain market with the e-commerce boom that stemmed from the pandemic as well as changes in consumer dietary habits. As grocery inventories improve, consumers are purchasing more perishable foods like fish and vegetables online. These products require more than one form of cold storage facility, different types of temperature-controlled trucks, and insulated product boxing for distribution.

Although the imminent growth of the market is not surprising, the disruptions that the pandemic caused had a major effect on the cold chain connection between the United States & Canada.

Many of Canada’s cold chain issues are the result of a cluster of factors including constraints at inland ports from vaccine mandates and protests as well as a lack of qualified truck drivers. This created a perfect storm that has resulted in cold chain companies modernizing processes to combat disruptions and propel the industry forward.

Cold chains connected to the internet are enabling the transfer of electronic data to cloud storage. In turn, businesses can monitor temperatures and locations of goods in real-time as well as reduce inactive data usage.

From frozen warehouses with blast freezing technology to refrigeration warehouses that handle fresh foods, businesses are investing in a wide variety of cold storage facilities. Having more than one form of cold storage is vital to the cold chain at the U.S. – Canada border.