February 16, 2022

-Global News

A week-long disruption at North America’s busiest land border crossing has revealed just how dependent the Canadian economy is on the Ambassador Bridge, but experts say there are no simple solutions to offload demand from the critical piece of infrastructure.

The border crossing, which connects Windsor, Ont. to Detroit, Mich., handles roughly $400 million in goods travelling between Canada and the U.S. on a daily basis. Overall, it facilitates nearly a quarter of the trade activity between the two neighbours.

Sectors such as the automotive industry rely heavily on the free flow of parts between Michigan and Ontario. This exchange was brought to a standstill at times last week as blockades in solidarity with the so-called “Freedom Convoy” prevented trucks from accessing the Ambassador Bridge.

Though the past weekend’s enforcement efforts effectively cleared the interruptions before Monday, some economists say the fact that goods were stalled for nearly a week demonstrated an over-reliance on the bridge.

“We have always been reliant on the Ambassador Bridge, way too reliant,” says Ambarish Chandra, associate economics professor at the University of Toronto.

Chandra, who focuses specifically on border crossings in his research, notes that while there are a few other crossings in nearby Sarnia, Niagara or farther east of Toronto, they share the same vulnerability as the Ambassador — they cross over bodies of water.

Should the next disruption be a hit to the infrastructure itself, he argues, Canada’s supply chain could take much longer to bounce back.

“We have four or five really big bridge crossings that account for a vast majority of our trade. And if any of those bridges are impassable for some reason — it could be a natural disaster, earthquake, a terrorist attack or anything — we’re stuck.”

Any attempts to circumvent the primary Detroit-Windsor crossing can result in significant delays, with other bridges such as the Blue Water in Sarnia unable to fully accommodate the sheer volume of goods handled by the Ambassador Bridge.

That’s largely by design, Chandra says. Not only is the Ambassador key infrastructure for industries like automotive manufacturing with carmakers setting up the bulk of their North American plants close by, it’s been staffed accordingly, and warehouses have popped up in the immediate vicinity to offload goods crossing the border there.

“This is all path dependence,” he says.

“The Ambassador Bridge was built in 1929. It became the biggest bridge very quickly, so all the resources, the staff, were devoted to Detroit, Windsor, so more trucks go there, so all the highways lead there. And so more people, more resources are needed there. You can totally see how history has led us to this point.”

Fresh food vulnerable to Ambassador Bridge disruptions

In addition to automotive, Canada’s agricultural imports and exports rely heavily on the Ambassador Bridge.

Some $8-to-$12 billion worth of food crosses the bridge annually, and roughly a third of that is fruit and vegetable produce, says Simon Somogyi, the Arrell Chair in the Business of Food at the University of Guelph.

“The Canadian food system rides on the back of a truck,” he says.

Most of Canada’s leafy greens and berries, as well as citrus fruit and some fresh and frozen meat, comes across the Ambassador Bridge from producers in Florida or even farther south in Mexico, Somogyi says.

While Somogyi says logistics companies are usually adept at finding workarounds for supply chain snags, sudden disruptions at the Ambassador can have an immediate impact on the quality of fresh foods and getting them on grocery store shelves.

“Not only are they important to our diet, but the issue is they need to get onto our grocery store shelves quickly. So any slowdowns at the border can really reduce the shelf life of that product and therefore it can be wasted or it’s just not as nutritious,” he says.

The recent blockades at the Ambassador should reveal to Canadian authorities how critical it is for rapid enforcement around the bridge to keep goods flowing across the border, Somogyi argues.

“It’s really brought to light how critically important that infrastructure is, which many people may not have thought about in the past,” he says.

“So if there are shutdowns in the future, we really can’t go for having it shut down for seven days. I think that all governments, whether federal, provincial or local, need to act quickly if something like this happens again.”

Efforts to build more bridges, diversify domestic production

Though possible routes exist for shipment by sea or air, trucking has been by-and-large the most cost effective and reliable source of trade between Canada and the U.S., given its substantial land border.

“An alternative for the Ambassador Bridge would only be creating more bridges or creating more thoroughfares through the U.S.,” Somogyi says.

“It may mean governments look at other ways of getting products across to the U.S., but those are going to be long-term. Those will take a lot of time to come to fruition and will be very costly.”

After numerous hurdles, including opposition from the private ownership of the Ambassador Bridge, development is now underway on construction of a parallel crossing, the Gordie Howe International Bridge, with anticipated completion in 2024.

Global News attempted to reach out to representatives of the Ambassador Bridge ownership group, which has both American and Canadian interests, for comment on efforts to prevent future disruptions but did not hear back before publishing.

While Canada relies on temperate southern climates for produce in the harsh winter months, Ontario’s indoor farming capacity also has the potential to offset some future supply chain issues.

While the province’s greenhouses have largely been sources for tomatoes, cucumbers and peppers, growers have increasingly added lettuce and berries to their crops, according to Joe Sbrocchi, general manager of the Ontario Greenhouse Vegetable Growers industry group.

While it’s conceivable greenhouses could pivot further to cover other fruit and vegetables traditionally imported from south of the border, he warns there are significant costs and operational burdens tied to such a shift.

“In the past, it’s been not as economic to do so as bringing in (goods) from the southern U.S.,” he says.

“Can it get ramped up quickly? Relatively quickly, yes, but it would be painful again for a year or two.”

“Ridiculous costs” are already plaguing Ontario’s agricultural industry, Sbrocchi warns. Fuel, fertilizer and cardboard prices are among the expenses for producers that have skyrocketed in price in the past few years.

While greenhouses have been expanding in southwest Ontario as of late, the costs to build out new facilities has risen to roughly $1.75 million an acre, up from $1 million per acre just a few years ago, he estimates.

“I think people are going to … take a sober second look at this. Because their cost inputs have just gone through the roof. So I don’t know what the future holds in terms of additional growth at this particular point in time,” Sbrocchi says.

Somogyi says that governments looking to reduce Canada’s reliance on Mexico and the U.S. for fresh food could invest in research and development to make growth operations in the country cheaper, faster and more efficient.

“More production of those fruits and vegetables in Canada means we have more control over our food production and less reliance on imports,” he says.

“Canada has an opportunity to be a real powerhouse in indoor farming.”