Join Date: Feb 2011
Thanked 5 Times in 5 Posts
Why? Here's Why.
When I import from the US I don't use banks for my US dollars I use a broker, we agree on an amount and a time period and then get a locked in rate on our money. It does not matter what happens on the open market our money is locked in. So the broker is betting our dollar (cdn) will rise we are betting it will be the same or less, right now the brokers are ahead, but that can change and does over time. What I get for my business is peace of mind and I can but a business plan together for a year at a time with out being dinged on the market every time you need to exchange money.
The other factor that plays into the whole game is the value of the US dollar, right now the Cdn dollar is maybe up only slightly but the US dollar has fallen big time. This is what you see when you compare the US dollar to other Moneys around the world etc. Why does this make an effect, it's because most big items prices are built in US dollars as the dollar falls on world markets the price for parts to produce goes up, even in Cdn dollars and in turn you see a difference in prices. Most companies in wholesale are having a hard time and are breaking even or loosing in the US market right now, they don't believe the economy can support a major correction on prices right now. This is what can cause inflation in a recovery down the road, tons of catch-up on the wholesale side.
Another factor is volume vs transportation, the US transportation system is unmatched around the world and Canada is only 10% the size but the distance from east to west is the same and as one might expect we simply don't have as many choices when it come to moving our goods so we pay a higher price. Mostly we pay about 50% higher rates in Canada for trucking vs the US. And this is only the begining, there are tons more things that effect the retail price as well, a good example in Canada you don't have illegals to get the bum jobs done on the cheap so again you pay more. For example one product we import it costs us $300 USD to prep and repaint inside and out, in Canada the same job costs $850 CDN this all gets pasted on to the last guy in line our customers.
Hope I didn't bore you to much but these are some things importers deal with everyday, and I haven't even talked about duty and taxes and brokerage fees, wages, benefits and it just goes on.
P.S. several sugar products we import from the US had a duty increase last November from 5% to 125%. No warning just Canada and the US having a little war over cake toppers.