U.S., Canadian shippers struggle to meet anti-bug rules for cargo platform.
By Chris Dupin
Wood packaging material, such as pallets, crates, and dunnage, used to secure freight has been subject to strict U.S. regulation under an agreement known as the International Standards for Phytosanitary Measures No. 15 (ISPM 15) since September 2005.
The idea behind the rule, which has been adopted by the United States and dozens of other countries, is to prevent the spread of invasive wood-eating insects by requiring lumber used in wood packaging to be debarked and heat treated or fumigated with methyl bromide.
But there has been an important exception in the rule, exempting wood packaging materials moving between the United States and its largest trading partner, Canada.
That may change soon.
The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service, which regulates wood packaging materials (WPM), said the less restrictive requirements for WPM imported into the United States from Canada are based on the premise that U.S. forests share a common boundary with Canada and, therefore, share to some degree the same wood pests.
But in a notice published in the Federal Register in 2010, it said an analysis “determined that many North American forest pests, both indigenous and nonindigenous, occur in both Canada and the United States. Some of these are unique forest pests and pathogens that are established in Canada and have the potential to be introduced or reintroduced into the United States via the movement of WPM, while others are pests that also occur in the United States but are subject to official control in order to prevent their further spread.”
The two countries have considered putting an end to that exemption for several years, and information about the rule is sometimes confusing for wood packaging material suppliers, shippers and transportation providers.
The Canada Border Services Agency said in the winter issue of its CBSA Today newsletter “the current ISPM 15 exemption between Canada and the United States, which had been scheduled to be eliminated in January 2013, will remain in effect until further notice.” That newsletter was published in late January after the New Year had already started.
How soon the change will come is still not clear. One official from the Canadian Food Inspection Agency (CFIA) wrote “no changes are expected to occur prior to January 2014,” and Lisa Murphy, a spokeswoman for the agency, said in an email to American Shipper that the two countries “are currently considering management strategies to mitigate the risk associated with WPM originating and traded between the two countries.”
Tanya Espinosa in the Legislative and Public Affairs Office of APHIS said “we anticipate a final rule will be published in the near future,” adding “we have no date or goal set as of yet. We do anticipate that it will be published in the near future.”
Brent McClendon, president of the National Wood Pallet and Container Association, said it is thought the exemption may be eliminated “by late 2014 or 2015, but we will not know until APHIS tells us.”
Among the pests of concern to U.S. and Canadian forestry officials are the brown spruce longhorned beetle, European oak borer, emerald ash borer (see photo), Asian longhorned beetle, European woodwasp, and several fungi.
A change in regulations governing which pallets can cross the U.S.-Canada border could be expensive.
Jerry Skiles, general counsel for the Grocery Manufacturers Association, who commented on the proposed rule, wrote “estimates suggest that the total costs would easily exceed $100 million annually, which will drive up the cost of consumer goods, many of which are household staples such as food and paper products.”
Lara Mehr Currie, administrator for the Council on Safe Transportation of Hazardous Articles, which includes companies that move chemicals and other hazardous materials, gave a similar $100 million cost estimate for her industry and predicted a supply chain slowdown if such a regulation is put in place.
Further, she argued “pallets are not the dominant risk contributors in this issue. Firewood is the leading culprit behind new infestations due to its common and largely unregulated movement.”
L.C.N., a pallet manufacturer based in Saint-Félix-de-Kingsey, Québec, said the new regulations could raise the cost of pallets by as much as $2 each.
The Canadian Wood Pallet and Container Association said most of the WPM used for export to the United States currently is not heat treated and the need to boost supply “will strain existing certified facilities.” The group estimated the industry will be required to pay $30 million a year to heat treat new WPM for export, based on annual shipments of 26 million units to the United States, of which 80 percent now will need to be treated at a unit cost of $1.25 for softwood and $2 for hardwood.
“To heat treat the current inventory of 300 million pallets which travel south under load, would incur a first-year ‘hit’ of $300 million, assuming 50 percent of this inventory needing heat treatment at an average cost of $2 per recycled unit to comply with the accelerated rule. This cost will be the responsibility of exporters and consumers. This incremental cost in second and subsequent years would diminish, but would remain above $200 million per year,” the association explained.
It said those estimates were conservative and it had not considered any costs to production of WPM in the United States for export.
Canadian Cold. The Canadians also thought the U.S. government had perhaps lowballed the cost of the regulation. It estimated the cost of heat treating a pallet at $1, while the Canadians said it could be double that. Why the difference? Canadian kilns that treat lumber must start up in winter when its -20 degrees Celsius, while kilns in the southern United States can start at a balmy +20 degrees Celsius. It also said while the United States estimated only 52 percent of maritime imports arrive on pallets, 90 percent of Canadian exports of trucked and railed exports to the United States rely on WPM.
As expensive as treating WPM may be, it must be considered against the havoc the emerald ash borer could inflict on forests.
USDA’s Forest Service noted ash’s economic importance, with 8 billion of these trees on U.S. timberlands, is valued at $282.25 billion.
The agency said ash is “one of the most prevalent trees in urban areas, agricultural lands, and shelterbelts and the costs to communities and landowners for removal and replacement will continue to escalate. The 2003 Federal Register reported costs of ash removal and replacement at $11.7 billion for six infested southeastern Michigan counties alone.”
CFIA’s Murphy said today “there are movement restrictions on standalone pallets and wood packaging material (pallets or crates imported as a commodity in their own right without carrying goods) made from ash components entering Canada from areas of the U.S. regulated for emerald ash borer.”
But she added “pallets or crates that support the shipments of goods or are not made of ash components are currently exempt from these movement restrictions.”
Similarly, Espinosa of APHIS said “there are no restrictions on pallets between the U.S. and Canada; this includes moving pallets from certain states to Canada. Pallets leaving a quarantine zone are controlled solely by the domestic regulation.”
However, a news release issued by USDA in May 2012 said “movements of regulated materials (and regulated material that includes green ash lumber) from quarantined areas to protected areas must be done with a properly issued federal certificate or limited permit.”
Larry Nelson, national account sales manager at Roar Logistics, an intermodal marketing company, described the problems one of his customers encountered earlier this year when shipping a containerload of blue stone by rail from a quarry in Pennsylvania to a landscaping company in Alberta.
When the shipment was flagged by Canadian Customs, Nelson thought it was a routine inspection of a new importer.
CFIA said Canada and the United States still had the ISPM 15 exemption, but “there are specific movement restrictions, both in Canada and the United States for ash lumber that is used in the manufacture of pallets and other wood packaging material.
“To prevent the entry and further spread of this serious forest pest within Canada, any pallets or wood packaging material made from a component of ash (Fraxinus spp.), originating from an EAB (emerald
ash borer) regulated area is subject to movement restrictions.”
The Canadian government allowed the stone to be removed from the pallets and the pallets destroyed, but the shipment was delayed a couple of weeks.
CFIA said on its Website that 18 states in addition to parts of Quebec and Ontario are regulated.
CFIA wrote Nelson last month that “since April 23, 2013, pallets accompanying goods do not have to be ISPM 15 heat treated for those shipments entering Canada from areas in the U.S. regulated for emerald ash borer. This may change in the future…”
“Word is getting out and some of the shippers back East are reverting back to plain pallets — It is all a cost thing,” Nelson said.
A further complication is the Canadian government also is taking measures to prevent the entry of oak wilt disease, a fungus from the United States.
Debarked forest products are exempt, but no more than “2 percent of the surface of all regulated articles and no more than 5 percent of the surface of a single article retaining bark” in a shipment.
McClendon said most pallet manufacturers do a good job of using clean wood, but pictures on the U.S. Customs Website show sometimes pallets or bracing materials are found with considerable amounts of bark on them.
Nelson was eager to get word out to others in the industry about the difficulty his customer encountered so that other shippers and intermediaries are forewarned.
He said it’s a confusing situation when “we have a serious problem with this nasty bug and taking preventative measures to slow the spread have been tabled.”