A Covid-19 vaccination requirement that will bar unvaccinated drivers of freight trucks coming from Canada to deliver goods across the American border this month may exacerbate supply chain issues for auto parts, experts say.
An estimated 12,000 drivers could be prohibited from entering the United States under the mandate that may take effect Saturday, according to the Canadian Trucking Alliance.
The U.S. mandate, announced in October, requires all essential foreign travelers, including truck drivers, who cross U.S. land borders to be fully vaccinated. Essential nonresident travelers had been able to enter the U.S. during the pandemic regardless of their vaccination status, in part so as not to disrupt trade and to give them more time to get vaccinated.
The forthcoming mandate follows one that went into effect in Canada last week that prohibits unvaccinated truckers from crossing into Canada from the U.S.
The mandates come as Covid-19 hospitalization numbers in the U.S. have climbed because of the highly contagious omicron variant, and as supply chain issues persist across the world.
The border restriction will make the automotive supply chain issue worse, said Doug Betts, president of the global automotive division at J.D. Power, a data and analytics company focused on the auto industry. He noted that auto parts come from all over the world and one obstruction in the chain can significantly slow or stop production.
“By the time you map out the supply chain, it’s just a spider web going everywhere,” he said.
“I would be surprised if there are any (U.S.) cars that don’t have at least one Canadian-based part. Canada is a pretty important part of auto manufacturing,” Betts said. “Any part that doesn’t arrive or if there’s something wrong with it, you can’t build it. There’s more points of failure.”
U.S. auto part imports from Canada were $14 billion last year, while its auto part imports from Mexico were $51.6 billion, according to analysts at the Auto Care Association.
“Due to the current supply chain issues and chip shortages that the American automotive manufacturers are facing … we believe any additional strains placed on the supply chain have the potential to exacerbate this situation and could cause the demands on both the automotive manufacturers and the aftermarket to rise even further,” Bill Hanvey, the association’s president, said in a statement to NBC News.
Charles Sox, a business professor at the University of Cincinnati and a supply chain expert, said the border restriction will extend the time it takes for vehicles to be built in the U.S., as foreign drivers will likely be forced to drop off auto parts at the border and have U.S. drivers take them the rest of the way.
“Automobiles are very complex machines, they have thousands of component parts,” he said. “It only takes one missing part to stop you from being able to complete that vehicle and sell it.”
Border restrictions won’t stop auto part shipments, but it will slow it down leading to delays in manufacturing vehicles nationwide, he said.
Trucking companies are opposed to the new measures.
On its website, the Canadian Trucking Alliance said it “remains engaged with U.S. Customs and Border Protection and contacts south of the border regarding enforcement of the U.S. vaccination mandate."
Last weekend, Canada began enforcing its own vaccine mandate against U.S. freight drivers, prohibiting them from crossing the border.
Bob Costello, chief economist for the American Trucking Associations, said the trade group is "very concerned” about the requirements.
“Canada is our largest trading partner, so any disruption at the border will certainly have consequences for the U.S. economy whether it is the auto sector and other manufacturing agricultural products or consumer goods,” he said.
In Michigan, Brian Hitchcock, owner of MBH Trucking LLC, said he expects his freight transportation company to lose 40 percent in revenue because only five of his 30 drivers are vaccinated, leaving the others ineligible to haul diesel exhaust fuel back and forth from Ontario to Michigan.
“And it’s all because we can’t cross the border,” he said. “It’s affecting every sector of what we use in this country.”
Hitchcock, also the interim executive director of the Michigan Trucking Association, said he’s spoken with 15 other trucking companies who have about 400 drivers, 75 percent of whom are unvaccinated.
“How do you force a mandate on a bunch of truck drivers who have been out there on the front line for 20 months and never asked for anything?” he said. “They were the ones that kept our economy moving and supplies (going), so you never ran out of food,” he said.