Part%201%20-%20Corporate%20Profile

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M O V I N G F O R W A R D
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CROSS BORDER TRADE
October, 2004
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Outline

• Cross Border Trade Important to both Canada the
  US
• Importance of transborder trade to CPR
• The rail advantage
• The Transborder Shipping Today
• US CBPs Trade Act 2002
• FDAs Bio-terrorism Act
• VACIS
• Impact of Border Inspections cost of delays
• What have we learned

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Cross Border Trade Important to both Canada and US

• Canada Exports to US
• 83 of Canadas goods in 2003 (Statistics Canada)
• Canada Imports from US
• 70 of all imported goods in 2003 (State of
  Trade, DFAIT)
• US Exports to Canada
• 23 of US goods in 2003 (US Census Bureau)
• Canada was the lead export market of goods for 39
  states in 2002 (DFAIT)
• US Imports from Canada
• 18 of all imported goods in 2003 (US Census
  Bureau)
• In 2002 the total value of Canada US
  merchandise trade by rail US60 billion (US
  Bureau Transportation Statistics)

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Transborder Trade is Important to CPR

• Transborder business is very important to CPR
  with 2004 volumes expected to exceed 800,000
  loads
• Transborder shipments account for over 30 of
  CPRs total business
• Transborder traffic is projected to continue to
  grow most of this growth can be attributed to
  the international intermodal segment of the rail
  business.
• CPR has integrated, advanced electronic
  processing with both Canada and US Customs
  (ACROSS and AMS)
• CPR has the following transborder/security
  accreditations
• C-TPAT - US Customs Trade Partnership Against
  Terrorism
• PIP Canada Customs Partners in Protection
• CSA Canada Customs Self Assessment Program

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The Rail Advantage

• Environmentally friendly
• Cost competitive
• Time sensitive competitive service
• Dedicated corridors that are a safe alternative
  to increasingly congested highways
• System wide police force - security
• The rail industry has integrated, advanced
  electronic processing with both Canada and US
  Customs
• Becoming more and more seamless with other
  railroads
• Routing advantage through Canada to access US /
  NAFTA markets

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Canadian Pacific Railway

• Provides freight transportation over a 22,000
  kilometer network in Canada and the US
• Eight Canada/US border crossings

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Transborder Shipping Today

• Since September 11, 2001 we have seen many
  changes that have impacted rail and rails
  transborder customers
• US Customs and Border Patrol (CBP) now have over
  twice as many inspectors across the Northern
  border with plans to add additional officers.
• We have seen the publication and implementation
  of increased reporting requirements from CBSA,
  CBP and the FDA
• US CBP has implemented ATS - the Automated
  Targeting System.
• Implementation of VACIS (Vehicle and Cargo
  Inspection System) at all major rail crossings
  across the Canada / US border

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US CBP Trade Act of 2002

• As of July 12, 2004 rail must provide
  electronically a complete train consist to US CBP
  at least 2 hours in advance of border arrival
• Customers must provide complete shipment
  information including
• Precise cargo descriptions
• Complete names and addresses of actual shippers
  and ultimate consignees
• Seal numbers
• Expected later this fall the US Export reporting
  implementation. Rail exporters must file via the
  Automated Export System at least 2 hours prior to
  border arrival. Rail customers will need to
  provide the ITN (Internal Transaction Number)
  prior to in-gating the container at the rail
  terminal.
• Exporters need to ensure that they are using the
  correct port codes with AES

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Food and Drug Administration BioTerrorism Act

• 2 parts to this regulation
• Registration of Food Facilities
• Prior Notice of Imported Food
• Customers must submit electronically to the FDA
  no fewer than 4 hours before arrival by rail.
  Intermodal customers must have completed the PN
  prior to in-gating the container at the rail
  terminal.
• Rail encourages customers to submit their PN via
  the ABI/ACS system (US Customs Automated Broker
  Interface of the Automated Commercial System)
• There has been a phase in period for compliance
  the compliance policy guide is available on the
  website

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VACIS Vehicle and Cargo Inspection System

• Under a declaration of Principles signed in April
  2003, both CPR and CN have committed to work with
  Canadian and US customs agencies to install VACIS
  at all major rail border points.
• VACIS uses gamma ray technology to scan rail cars
  as they pass by at 5 to 7 mph
• Non-intrusive inspection technique, Safe due to
  very low radiation dose per scan
• VACIS will expose any trade or compliance errors
  - mattresses versus steel poles
• 100 screening of all rail traffic is not
  consistent with the Smart Border Accord principle
  of risk based targeting

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Border Inspections - Impact Cost of Delays

• Point 15 of the Smart Border Accord states -
  Develop an integrated approach to improve
  security and facilitate trade through
  away-from-the-border processing for truck/rail
  cargo (and crews).
• Today rail has seen an increase in the number of
  inspections at the border points
• Rail infrastructure at the border locations was
  not designed for switching and setting out cars
  and containers for inspections
• Rail switching costs are not the main issue.
  Actual cost of switching is variable and depends
  on circumstance. Costs are thousands of dollars
  per occurrence.
• Product delay is the biggest impact
• Delay to several containers, not just one. Its
  not as easy as taking one container off.
• Minimum delay to a series of containers is 48
  hours and up to two weeks or more. Less
  competitive with truck.
• Impact to importing and exporting customers.
• Impact to other customers.

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What have we learned

• Rail is cost competitive, environmentally
  friendly, and is the safe answer to a congested
  highway system.
• That advanced electronic information that is
  complete and accurate is the key to moving
  shipments across the border, northbound and
  southbound.
• Increasing border congestion, due to the
  significant tightening of US Security, has
  delayed shipments and has added cost to the
  transborder trade network. It is expected that
  as we move forward we will see more security
  programs implemented.
• By following the Smart Border Accord principles
  of implementing a risk based targeting solution,
  border security will be enhanced while continuing
  to promote the flow of legitimate trade.
• Trade is critical to both Canadas and the USs
  economic performance.

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M O V I N G F O R W A R D
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4
CROSS BORDER TRADE
October, 2004