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North American Trade Growth Continued in 2007

North American Trade Growth Continued in 2007

by Steven Beningo and Fahim Mohamed

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Trade between the United States and
its North American Free Trade Agreement
(NAFTA) partners-Canada
and Mexico-has more than doubled
in dollar value since the inception of
NAFTA in 1994. In 2007, U.S. trade
with Canada and Mexico reached
$909 billion-a 5 percent increase
over the prior year's total trade value.
Since 2001, U.S.-NAFTA trade has
grown by an average annual rate of
7 percent. This report examines the
rapid growth rates, modal distribution,
top gateways, and major commodities
of U.S.-NAFTA trade and looks at
U.S.-NAFTA trade volume by state.

NAFTA Trade Volumes

In 2007, U.S. exports to NAFTA
countries were valued at $385 billion,
while imports were valued at $524
billion. U.S.-Canada trade accounted
for 62 percent ($562 billion) and U.S. -
Mexico trade 38 percent ($347 billion)
of total U.S.-NAFTA trade.

Measured by value, U.S.-NAFTA
trade moves primarily via land modes
(table 1). In 2007, land transportation
accounted for 88 percent ($797
billion) of the trade, a relatively stable
proportion since 1995 (figure 2).
Two-thirds of the remaining trade
value was moved by water and one-third
by air.

Box A: Growth in U.S.-China Trade is Upsetting Traditional Trade Patterns

Although Canada and Mexico, which are the
focus of this report, have traditionally been the
top two U.S. trade partners, the rapid 21 percent
annual growth in U.S.-China trade from
2001 through 2007 resulted in China supplanting
Mexico as the nation's number two trade
partner in 2006. As seen in figure 1, despite
dropping to third place as a U.S. trade partner,
the value of Mexico's trade with the United
States still rose throughout the 2001-2007
period.

In 2007, imports accounted for 56 percent of
the U.S.-Canada trade, 61 percent of U.S. -
Mexico trade, and 83 percent of U.S.-China
trade. U.S. imports from China have more
than tripled since 2001, and the value of imports
from China now exceeds the value of
imports from either Canada or Mexico. U.S.
exports to China, however, still trail exports to
either of the U.S. - NAFTA trade partners.

SOURCE: U.S. Department of Transportation, Research and Innovative
Technology Administration, Bureau of Transportation Statistics, based on
data from the U.S. Department of Commerce, U.S. Census Bureau, Foreign
Trade Division, FT920 U.S. Merchandise Trade 2001-2006. U.S. Department
of Transportation, Research and Innovative Technology Administration,
Bureau of Transportation Statistics, Transborder Freight Data as of
October 2008.

Measured by tonnage, water transportation carried more
freight in 2007 than any other mode. An estimated 241
million short tons moved via water, accounting for 36
percent of the weight of NAFTA trade. In contrast, merchandise
moved by water transportation accounted for
only 8 percent of the total NAFTA trade in terms of value
(figure 3)

U.S.-NAFTA Trade by Surface Modes: Trucks are the
dominant land mode, accounting for nearly 70 percent
($555 billion) of land trade in 2007 (figure 4). Truck shipments
as a percentage of freight traveling by land modes
have been relatively stable since 2001. Texas, California, Michigan, New York, and Ohio, were the top states accounting
for 51 percent of the total trade by truck in 2007.

Rail accounted for 17 percent ($138 billion) of the 2007
trade by land modes. Michigan accounted for 31 percent
of the rail trade, followed by California with 11 percent and
Texas with 10 percent.

Pipelines, mostly carrying petroleum and petroleum products,
accounted for 7 percent ($59 billion) of surface trade
in 2007 (figure 4). Virtually all of the pipeline trade (98
percent) was between the United States and Canada, with
almost 50 percent of this trade being with firms in Illinois,
Washington, and Minnesota.

Figure 5 shows the growth of U.S.-NAFTA trade by land
modes between 1995 and 2007.

Key Land Border Gateways

In 2007, Detroit, Michigan, was the leading land border
gateway1, accounting for 17 percent ($137 billion) of land
trade, followed by Laredo, Texas, with 14 percent ($110 billion),
and Buffalo-Niagara Falls, New York, with 10 percent
($79 billion).

Box B: Gateway Defined

A gateway is a port of entry across an international
land border-consisting of one or more road, rail, or
pipeline facilities. For example, the Detroit port of
entry includes the Windsor Tunnel and the Ambassador
Bridge, a rail tunnel, and a freight barge. The Windsor
Tunnel has three highway lanes approaching the port
facility, with nine dedicated passenger lanes and one
dedicated commercial lane at the inspection facility.
The Ambassador Bridge has 4 lanes, which lead to 12
inspection booths, of which 6 are dedicated to commercial
traffic.

Northern Border: Detroit, Michigan; Buffalo-Niagara Falls,
New York; and Port Huron, Michigan, were the top three
ports of entry on the U.S.-Canada border, accounting for a
combined 57 percent of land freight crossing the northern
border. There are a total of 86 ports of entry on the U.S.-
Canada border, with the top 10 handling 78 percent of the
value ($397 billion) (table 2).

In 2007, the top three ports of entry handled 68 percent
($217 billion) of truck freight crossing the northern border.
The percentage of freight traveling by truck and rail varied
significantly between ports of entry. At Detroit, 84 percent
of freight moved by truck and 16 percent by rail, with a
similar split at Buffalo-Niagara Falls, where truck moved
79 percent and rail moved 13 percent of freight crossing
the border. Rail handled a much higher percentage of the
cross-border freight at Port Huron than at the other two
ports of entry. At Port Huron, 38 percent of merchandise
moved by rail freight compared to 52 percent by truck
(figure 6).2

Southern Border: In dollar value, the top 2 of the 25 ports
of entry on the U.S.-Mexico border, Laredo and El Paso,
Texas, accounted for 56 percent of land freight crossing the southern border, while the top 10 ports accounted for
95 percent of that freight (table 2).

As with the Canadian border, the split between truck and
rail varied significantly among the various ports of entry
on the U.S.-Mexico border. At Laredo, 75 percent of the
freight moved by truck and 25 percent by rail. Trucks accounted
for 89 percent of the trade at El Paso, while only
11 percent moved by rail. The highest percentage moved
by rail among the top 10 southern ports occurred at Eagle
Pass, Texas, where 60 percent of the freight moved by
train and only 40 percent by truck. At Otay Mesa, California,
trucks moved virtually all land freight due to the lack of
rail service at that border crossing (figure 6).

U.S.-NAFTA Trade by Air: In 2007, the $38 billion in air
cargo trade accounted for 4 percent of the total U.S.-
NAFTA trade. Exports to Canada by air were almost twice
that of imports from Canada. Air trade with Mexico exhibited
a similar trend with exports being significantly larger
than imports.

The top airports trading with the NAFTA partners are located
in the Port District3 of Cleveland, Ohio (including Louisville
International Airport, Kentucky, a UPS hub; Cleveland
Hopkins International Airport, Ohio, a DHL hub; and seven
small airports) with trade valued at $13 billion. The second
largest port district trading by air is New Orleans, Louisiana
(Memphis International Airport, Tennessee, a FedEx hub;
and Louis Armstrong International Airport in New Orleans,
Louisiana) with trade valued at $10 billion.

U.S.-NAFTA Trade by Vessel: Ships moved 8 percent
($74 billion) of total trade by value in 2007. The U.S.
waterborne trade with Mexico was more than twice that
with Canada, accounting for 67 percent of trade by vessel
(table 1)

The number one port in terms of trade by vessel was
Houston, Texas, accounting for 18 percent ($13 billion)
of the total, followed by the port district of New Orleans,
Louisiana, with $10 billion of trade.

Major Commodities Transported

Ten commodity groups accounted for 71 percent ($646 billion)
of the total U.S.-NAFTA trade in 2007.4

About 17 percent of U.S.-NAFTA freight shipments ($158
billion) involved motor vehicles and parts. The dominance
of motor vehicles and parts reflects the continued integration
of automotive production across North America.
Michigan accounted for 45 percent ($70 billion) of this
trade. The second largest commodity traded was mineral
fuels, oils, and waxes ($130 billion). The top 5 commodities
accounted for 60 percent of U.S.-NAFTA trade. See
figure 7 for the top commodities traded with Canada and
Mexico, and figure 12 for the leading commodities that
travel through the top 10 land gateways.

Of the $158 billion trade in motor vehicles and parts, $110
billion occurred between the United States and Canada,
making it the top commodity group traded between the two
countries. Electrical machinery, equipment, and parts ($80
billion) is the top commodity group traded between the
United States and Mexico.

Figures 8, 9, 10 and 11 show the top five commodities moved
by truck, rail, air, and vessel respectively. Table 4 shows
the distribution of the top five commodities of NAFTA trade
by top land gateways in 2007.

U.S. - NAFTA Trade by State

In 2007, Texas ($147 billion), Michigan ($110 billion), California
($92 billion), Illinois ($53 billion), and New York ($43
billion) were the top states for trade with the NAFTA countries.
These five states accounted for 49 percent of the
trade (see table 3). In 2007, Texas accounted for 16 percent
of the total trade with the NAFTA countries, with exports
and imports almost equally split. In fact, exports and
imports are balanced in many of the states along Interstate
35, which originates at Laredo, Texas, on the U.S.-Mexico
border and goes as far north as Duluth, Minnesota, about
160 miles from the U.S.-Canada border. By comparison,
the northeastern states each import more merchandise
from NAFTA partners than they export. Figure 12 shows
U.S.-NAFTA exports and imports by state.

About 57 percent ($289 billion) of land trade between the
United States and Canada has its origin or destination in
Ontario. This proportion has not changed much since the
inception of NAFTA. Figure 13 shows the trade value between
the top 10 U.S. States and the Canadian provinces.

In 2007, Michigan was the top state trading with Canada,
accounting for 15 percent ($77 billion) of the land trade.
Of this trade, 91 percent was with the Province of Ontario.
Illinois and New York ranked second and third with trade
worth $39 billion and $34 billion, respectively.

Two states, Texas ($88 billion) and California ($49 billion),
accounted for 48 percent of U.S.-Mexico merchandise
trade in 2007. Michigan ($31 billion) was the third largest
state trading with Mexico.

1 Gateway in this report refers to the Customs and Border Protection
(CBP) port of entry between Canada and Mexico for land modes,
where the mode of transportation (truck and rail) may be inspected
while entering or leaving the United States. A port of entry denotes an
individual port and not a port district-a port district can comprise multiple
ports based on the geography of a region. Flows through individual
ports are based on reported data collected from U.S. trade documents.
Gateways are ports through which large volumes of merchandise in terms
of value move between the United States and its NAFTA partners. For
the purposes of this report, a port of entry includes locations at those
ports where goods enter or exit the United States.

2 Totals do not equal 100 percent because some of the freight traffic at Buffalo-Niagara Falls and Port Huron moved by other modes.

3 A port district is a collection of large and small ports within a geographic
area.

4 The commodity groups are defined in the Harmonized Tariff System
(HTS) of nomenclature, which is an internationally standardized system
of names and numbers for classifying traded products. HTS codes are
developed and maintained by the World Customs Organization (WCO), of
which the United States is a member.

About this Report

Steven Beningo, International Transportation
Specialist of the Bureau of Transportation Statistics
(BTS), and Fahim Mohamed, International Transportation
Analyst, Macrosys, prepared this article.
Zhi Liu of Macrosys provided special assistance in
creating the maps. BTS is a component of the Department
of Transportation's Research and Innovative
Technology Administration.

This Special Report is primarily based on BTS
TransBorder Freight Data. Released monthly, the
TransBorder Freight Data program presents statistics
on freight movements between the United
States and its North American trading partners-
Canada and Mexico.

For related BTS data and publications: www.bts.gov

For questions about this or other BTS reports, call 1-800-853-1351, email answers@bts.gov or visit www.bts.gov.

Updated: Sunday, May 21, 2017