EclectEcon

Earlier I noted that the rapid rise in the US price of the Canadian dollar has left a sizable price differential between the US and Canadian prices of many goods, leading many Canadians to do more shopping in the US.

The price differential is narrowing only slowly as Canadian retailers are reluctant to take capital losses on their inventories purchased at higher prices -- a classic case of ignoring opportunity costs.

The result has been that Canada Post has been swamped with parcels being shipped from the US to Canadian consumers. From the Glob & Mule:

A surge in Internet cross-border shopping by Canadians trying to cash in on the soaring loonie is creating headaches for consumers, border agents and Canada Post.

There are already complaints of delivery delays as mail sorting centres try to dig out from heaps of Canadian Internet orders from the U.S. — and the holiday shopping season is barely under way.

Officials say the volume of parcels has choked three main international mail-sorting centres operated by Canada Post and the Canada Border Service agency in Vancouver, Toronto and Montreal.

There are reports of parcels from the United States languishing for days and even weeks at the centres before being released for delivery.

Bruce Cran of the Consumers' Association of Canada says he is getting plenty of complaints and is warning that the backlog is going to get worse.

Canada Post and the border service agency say they are working to speed up service and are urging consumers who plan to cross-border shop for the holidays via the Internet to place orders as early as possible.

Watch for other effects:

• Consumers will make even more use of private couriers and shipping firms (e.g. UPS, Fed-Ex, DHL, etc.
• Consumers will make more personal trips to the US to do their shopping.
• Border crossings will become even more seriously clogged.