The flow of vehicles heading south to shop in the U.S. isn't what it used to be

The flow of vehicles heading south to shop in the U.S. isn't what it used to be

Cross-border trips dive with loonie

Nearly 25 per cent drop in travel at Peace Arch and Abbotsford in December good for retailers in B.C. but not Washington (with charts)

The number of Canadians heading south into the U.S. at Lower Mainland crossings was down sharply in December even before the latest plunge in the loonie took another bite out of B.C. residents’ purchasing power across the border.

Canada Border Services Agency data shows the five crossings from Tsawwassen to Abbotsford recorded 19.6 per cent fewer trips south by Canadians last month compared to a year earlier, when the Canadian dollar was still worth 94 cents U.S.

Looking back two years, southbound Canadian traffic is down 28 per cent from December of 2012, when the loonie was above par. It closed Friday at 80.7 cents U.S.

The declines vary depending on location, but the drops were steepest at the Abbotsford-Huntingdon border crossing, which saw a drop for the month of nearly 30,000 Canadian trips or 24.7 per cent, and at the Douglas (Peace Arch) crossing, where the decrease was 71,500 trips, or 24.4 per cent.

Add in similar declines at other crossings – 14.9 per cent at Pacific Highway, 15.6 per cent at Boundary Bay (Point Roberts) and 14.1 per cent at Aldergrove – and a total of 164,000 fewer Canadians crossed the border last month from a year earlier, or 258,000 fewer than in December of 2012.

It’s good news for Canadian retailers if B.C. residents spend more at home.

But Washington State businesses in Whatcom County are watching the sinking loonie with growing alarm.

“It’s definitely something we’re all watching and looking at,” Bellingham Chamber of Commerce president and CEO Guy Occhiogrosso said.

He said retailers there were already noticing about a 10 per cent drop in sales in December and the latest declines in the Canadian dollar in January likely mean more decreases are coming.

Occhiogrosso was surprised by drop in Canadian cross-border travel measured by the CBSA.

“That’s really, really steep,” he said. “Everybody will be impacted with that sharp of a decline.”

Big U.S. retailers are the hardest hit when the loonie falls, Occhiogrosso said, adding smaller shops and restaurants may be better positioned.

He said some business observers there have speculated that the flow of cross-border Canadians will fall significantly if the loonie reaches 75 cents U.S.

“We’re definitely approaching that theoretical number right now so we’re all waiting to see what happens.”

He noted the drop in retail business also translates into less local sales tax flowing to Washington municipalities, which may then be under pressure to cut costs or raise other taxes.

Occhiogrosso predicts more Americans may head north to vacation in B.C. or take in entertainment events because their dollar goes further here.

Retail Council of Canada vice-president Mark Startup said the falling dollar is definitely an incentive for B.C. shoppers to keep their money in Canada.

“It’s very positive and welcomed by retailers,” he said, but added some chronic cross-border shoppers are very entrenched in their habits.

“Nothing will convince them to keep their dollars in Canada.”

Crossing the border |Create infographics

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