7.1 – Transborder and Crossborder Transportation

Authors: Dr. William Anderson and Dr. Jean-Paul Rodrigue

Cross-border transportation involves the activities, infrastructures, and flows that support the passage of passengers and freight across an international border.

1. International Transportation

The growth of the amount of freight being traded as well as a great variety of origins and destinations promotes the importance of international transportation as a fundamental element supporting the global economy. Economic development in Pacific Asia and China, in particular, has been the dominant factor behind the growth of international transportation in recent years. Since the trading distances involved are often considerable, this has resulted in increasing demands on the maritime shipping industry and port activities. As its industrial and manufacturing activities develop, China is importing growing quantities of raw materials and energy and exporting increasing quantities of manufactured goods. The ports in the Pearl River delta in Guangdong province now handle as many containers as all the ports in the United States combined.

International transportation systems have been under pressure to support additional demands in freights volume and the distance at which this freight is being carried. This could not have occurred without considerable technical improvements permitting to transport larger quantities of passengers and freight, and this more quickly and more efficiently. Few other technical improvements than containerization have contributed to this environment of growing mobility of freight. Since containers and their intermodal transport systems improve the efficiency of global distribution, a growing share of general cargo is containerized.

Consequently, transportation is often referred to as an enabling factor that is not necessarily the cause of international trade but as a condition without which globalization could not have occurred. A common development problem is the inability of international transportation infrastructures to support flows, undermining access to the global market, and the benefits derived from international trade. International trade also requires distribution infrastructures that can support trade between several partners. Three components of international transportation facilitate trade:

  • Transportation infrastructure. Concerns physical infrastructures such as terminals, vehicles, and networks. Efficiencies or deficiencies in transport infrastructures will either promote or inhibit international trade.
  • Transportation services. Concerns the complex set of services involved in the international circulation of passengers and freight. It includes activities such as distribution, logistics, finance, insurance, and marketing.
  • Transactional environment. Concerns the complex legal, political, financial, and cultural setting in which international transport systems operate. It includes aspects such as exchange rates, regulations, quotas, and tariffs, but also consumer preferences.

About half of all global trade takes place between locations of more than 3,000 km apart. Because of this geography, most international freight movements involve several modes since it is impossible to have a physical continuity in freight flows. Transport chains must thus be established to service these flows, which reinforce the importance of intermodal transportation modes and terminals at strategic locations. Among the numerous transport modes, two are specifically concerned with international trade:

  • Ports and maritime shipping. The importance of maritime transportation in global freight trade in unmistakable, particularly in terms of tonnage, as it handles about 90% of the global trade. Thus, globalization is the realm of maritime shipping, with containerized shipping at the forefront of the process. The global maritime transport system is composed of a series of major gateways granting access to major production and consumption regions. Between those gateways are major hubs acting as points of interconnection and transshipment between systems of maritime circulation.
  • Airports and air transport. Although in terms tonnage air transportation carries an insignificant amount of freight (0.2% of total tonnage) compared with maritime transportation, its importance in terms of the total value is much more significant; 15% of the value of global trade. International air freight is about 70 times more valuable than its maritime counterpart and about 30 times more valuable than freight carried overland, which is linked with the types of goods it transports (e.g. electronics). The location of freight airports corresponds to high technology manufacturing clusters as well as intermediary locations where freight planes are refueled and cargo is transshipped.

Road and railway modes tend to occupy a more marginal portion of international transportation since they are above all modes for national or regional transport services. Their importance is focused on their role in the “first and last miles” of global distribution. Freight is mainly brought to port and airport terminals by trucking or rail. However, there are notable exceptions in the role of overland transportation in international trade. A substantial share of the NAFTA trade between Canada, the United States, and Mexico is supported by trucking, as well as a large share of the Western European trade. The developing rail and road connections in Eurasia, spearheaded by China, also involved additional overland international trade. Despite this, these exchanges are regional by definition, although intermodal transportation confers a more complex interpretation of the geographical scale of these flows.

2. International Transportation and Geopolitics

The basic features of international transportation are constrained by its geography, which involves geopolitical considerations. In the past, many conflicts took place to gain control over trade routes, to gain control over mineral or energy deposits, to gain colonial control over untapped regions, or to set trade routes via existing ocean ports. This has been particularly important for maritime nations seeking to support the existing trade, expand it, and secure its circulation. Throughout history, passages were subject to conflicts that generally aimed to assure the control of a strategic location.

“Whosoever commands the sea commands trade; whosoever commands the trade of the world commands the riches of the world, and consequently the world itself”..

Sir Walter Raleigh (c1610)

International transport infrastructures, such as ports, airports, and canals were also subject to geopolitical considerations as they can provide access to strategic resources or key markets. The geopolitics of international transportation can be considered from five perspectives.

a. Conquest and Conflicts

Transport technology was initially a means to control and conquer oceans, territories, and resources. From the 16th century, European powers were the first to improve significantly maritime technology in terms of military potential. They were thus able to establish maritime trading routes and colonies all over the world, a process that accelerated in the mid of the 19th century. This period of early globalization was thus characterized by the usage of military advantages of European colonial powers to access markets and resources to their advantage. The railroad was also mean to achieve territorial conquest, notably in North America (nation-building) and in Africa (colonialism).

As warfare started to take place at a broader scale in the 19th century, the need for efficient transportation and logistics became even more apparent. The role of transportation in supporting international conflicts enabled three crucial aspects. First, it allowed a faster mobilization and deployment of military units. Second, it enabled their strategic and operational mobility in theaters of conflicts. Third, it allowed their resupply in all the goods crucial for their continuing operation, such as food, fuel, and ammunition.

b. Competition

International transportation is a mean to compete in the global economy. Traditionally, through cabotage regulations, many nations reserved the right to carry national passengers and freight to national transport companies. For freight, this is often associated with empty flows on the return trip. Although cabotage regulations are still prevalent for air (air freedoms) and maritime transportation (e.g. Jones Act), competition has become a prevalent force in shaping modern transportation systems.

For several countries, the development of their international transport system has favored exports and transport-related activities such as shipbuilding, trade, and insurance. For instance, emerging maritime nations in East Asia, such as South Korea, Taiwan, and now China, have grown using this strategy. A new form of international transport competition is related to the usage of flags of convenience, where a maritime company can significantly reduce its costs by using the fiscal advantages of another country.

c. Jurisdiction

All sovereign nations have jurisdiction over their territories, including internal water bodies such as lakes and rivers, if they do not act as a boundary with another nation. Boundaries are constructed using geographical or arbitrary features. For instance, many boundaries were imposed by external actors. 40% of the world’s international boundaries were traced by the UK and France during the colonial era. Another important jurisdictional issue concerns the concept of extraterritoriality, where a territory is subject to different regulations, particularly concerning trade. Free zones are prevalent extraterritorial constructs designed to promote trade and attract investments.

Any international transportation entering, exiting or going through a jurisdiction is subject to national regulations. The United Nations Convention on the Law of the Sea Territorial waters in 1982 formally defined different levels of jurisdiction a nation can have over its adjacent sea. The territorial sea, a buffer of 12 nautical miles (22 km) from the coast is considered as sovereign territory, both for the above airspace and the seabed. Foreign ships are however allowed passage, but by doing so is subject to national regulations. This jurisdiction is partially extended to the Exclusive Economic Zone (EEZ) over which a state has rights to the exploration and use of marine resources (e.g. fishing, oil extraction). By convention, it extends to 200 nautical miles (370 km) but a state cannot prevent free commercial passage through the EEZ.

d. Cooperation

Although international transportation mostly involves competition, common interests obviously favor agreements over different aspects involving access to infrastructures or setting standards. By 1792, most countries along the Rhine agreed to free navigation. Canada and the United States started in 1871 a long process of negotiation and common management of the St. Lawrence River that would eventually lead to the development of the St. Lawrence Seaway in 1954. This supplemented prior trade agreements allowing goods produced in the United States to travel through Canada and re-enter the United States without duties. This was particularly relevant along the Great Lakes that act as a boundary.

International trade within Europe was enhanced by the adoption of a standard over rail gauges (1.435 meters). International air transportation is subject to regulations over security, access to specific gateways (air freedoms), and prices. Furthermore, the emergence of economic blocs such as the European Union and the North American Free Trade Agreement leans on common rules about transport standards and prices. The development of continental landbridges, such as the Eurasian Landbridge represents new and complex forms of collaboration between nations and private companies operating transport infrastructure.

e. Security

The control of strategic locations is also an important part of international transportation, mainly to reduce vulnerability to disruptions and improve national security. As the global economy becomes more interdependent, economies are becoming vulnerable to disruptions in the supply of raw materials, energy, and food. For instance, the dependence of the United States on external supplies of energy is shaping its foreign policy aiming at securing strategic locations in oil trade. Further, international trade involves the circulation of valuable goods along trade lanes, which can be subject to security concerns such as piracy.

3. Boundaries and Borders

Globalization implies increasing flows of people and goods across international borders. Thus, an increasing proportion of passenger and freight transportation operations must cope with borders as impediments to mobility. At a time when technologies for identification and surveillance are proliferating, this might seem to be a significant problem, as borders are more easily crossed than in the past. However, concerns with issues of illegal immigration, illicit trade, and terrorism have led some states to exert more scrutiny at their borders. Thus, crossing borders remains one of the greatest challenges in global transportation for both passengers and freight.

A boundary is an abstract line separating the territories over which two states have sovereignty. Since the boundary is a legal entity, its precise location must be determined in a treaty between the two states. This means that for a state to have a precisely defined territory, it must have boundary treaties with all contiguous states. Even where such treaties exist, the boundary may be delineated on paper but not demarcated on the ground, which means its exact location cannot be found without surveying. The border is a more broadly defined geographical entity, comprising elements of the natural and built environment that define the boundary and control passage across it.

Sometimes the distinction between the boundary and the border is one of precision; for example, one might say that a river defines the border between two countries, while the boundary is a precise line located somewhere on the river. The main point is that the border includes a set of things that facilitate (roads, bridges, ferries), prevent (fences, military installations), monitor (cameras, motion detectors), and control (border crossing facilities) movement across the boundary. Borders also create bottlenecks in transportation networks, which are commonly associated with a concentration cross-border flows along with a limited number of gateways. Cross-border flows in North America are particularly illustrative since they are intensive and take place at specific points of entry. Due to differences in air transportation regulation, air travel tends to be less expansive in the United States than Canada, inciting the use of alternative American border airports by Canadians. Further, a customs pre-clearance agreement exists between Canada and the United States, enabling passengers bound to the United States to clear customs at the main Canadian airports.

While boundaries have become more clearly delineated and immutable, it might appear that borders – or more specifically, border functions – are declining in importance. At one time, the most important border function was defense. Since territory increasingly defined the state, defending territory was critical to preserving sovereignty. To some extent, the territorial integrity norm has reduced the importance of border defense. But changes in the technology of warfare that undermine the importance and even the possibility of defending lines on the ground have also reduced the defensive function of borders.

After defense, the main functions of borders are customs and immigration control. With the reduction of tariffs and the application of information and communications technology to both customs and immigration, one might expect that borders as impediments to the movement of goods and people would be a matter of declining importance. Yet, a “borderless world” is far from being a reality. In some places such as North America, border impediments have increased in recent years, particularly along the US – Mexico border. The same observation applies to Europe in light of migrants and refugees entering from Northern Africa and the Middle East. The pressure to open and expand border crossing facilities is substantial in light of the growth in international traffic. The completion of the Hong Kong–Zhuhai–Macau Bridge in 2018 across the Pearl River delta necessity the support of a large border crossing facility built on an artificial island adjacent to Hong Kong airport. The border thus remains an important element impacting transportation activities and flows.

4. Cross-border Transportation

Cross-border transportation. The activities, infrastructures, and flows that ensure the passage of passengers and freight across an international border. Cross-border transportation can be facilitated, monitored, controlled, and even prevented.

Unless all goods are unloaded and transferred at the border, cross-border freight movement involves some trade in transportation services. For example, if an American trucking company moves a consignment from an origin in the United States to a Canadian destination, it is providing transportation services in a foreign country as soon as it crosses the border. This brings up two types of challenges:

  • The first is compliance with technical standards for transportation operators, which may vary between the two states.
  • The second is cabotage restrictions that limit the ability of transportation providers to sell their services in a foreign country.

The classic problem of technical standards is when national rail systems have inconsistent track gauges, making it impossible to directly link networks across borders. While most gauge inconsistencies have been resolved with the adoption of the standard gauge (1435 mm), some still exist, for example, between countries of the former Soviet Union that use the 1520 mm Russian gauge and neighboring EU countries using the standard gauge. Cross-border transportation is also influenced by trade imbalances as it implies different freight volumes depending on the direction of the border crossing as well as empty cargo flows.

A more current problem, especially in North America, is inconsistency in truck size and weight (TSW) standards. Most of the trade within NAFTA is in goods moved by trucks. Still, the three countries have widely varying TSW standards, with Mexico and Canada both allowing higher gross weights and having more liberal regulations on long combination vehicles (LCVs) than the United States. To complicate matters further, Canadian provinces and U.S. states have their own TSW regulations, leading to 66 different regulatory regimes within the NAFTA area. This presents carriers with the choice between making cargo swaps between trucks with different configurations or operating with the lowest common denominator configuration that will be legal in all jurisdictions – generally a single semi-trailer truck carrying no more than 36,288 KG (80,000 pounds).

Cabotage refers to the provision of transportation service between two points within the same country by a foreign firm. Cabotage is restricted under NAFTA in the sense that a Canadian truck could move loads from a Canadian origin to a U.S. destination or from U.S. origin to a Canadian destination, but not between a U.S. origin and U.S. destination since it would be considered as cabotage. The problem with cabotage restrictions is that they lead to frequent empty backhauls, especially at crossings where cross border flows are imbalanced. Cabotage restrictions reflect the fact that in the case of NAFTA, free trade does not extend in transportation services. In the case of the European Union, cabotage restrictions have been lifted but only after many years of negotiation and legal challenge.

Despite trade liberalization, new technologies for communication and surveillance, and improved border procedures, crossing borders remains one of the main challenges in global transportation. The border effects on freight distribution remain salient, even in areas where levels of economic integration are high. Increased concern about clandestine transnational actors (drugs, illegal immigration, terrorism) has led to a new regime of enhanced scrutiny that has offset many of the institutional and technological changes that once promised to make borders irrelevant. While the threat of international terrorism is very real, the intensification of scrutiny is reinforced by public opinion that is more aware of the benefits of security than of the benefits of trade. Especially in the United States, the strategy of interdiction takes priority over trade facilitation.


Related Topics

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