Border economy is a mixed bag

Mail Boxes International owner Brant Baron stands in his H Street company’s storage room lined with boxes. Holiday sales have returned to normal this year, which is about 50 percent more than nonseasonal times, Baron says, but overall business is not operating at prepandemic levels. 

“We’re still not back to where we were precovid,” Baron said. “There’s still a lot of people who haven’t been back to the states since. But we’re hearing more and more people every day saying, ‘This is my first time back.’”

Mailbox owners like Baron have had varying degrees of sales and optimism with returning Canadian customers as cross-border travel restrictions have slowly eased this year. 

Economic recovery in Blaine seems to be a mixed bag. Blaine’s sales tax receipts are looking promising despite the closure of several mailbox stores, but gas tax revenue continues to be hard hit with Canadians not waiting at the fuel pump as they once did.

Mailbox stores contribute to the city’s sales tax, which benefits basic city operations in the general fund, while gas stations contribute to the city’s gas tax, which funds street maintenance and operations.  

“It’s huge,” said city finance director Daniel Heverling of the missing gas revenue. “It’s really hurting the street fund because the numbers are way down. The sales tax is impacting the general fund but it seems like it’s rebounding.”  

Sales tax revenues were 0.4 percent higher, or $5,601 more, in the third quarter of 2022 compared to 2019, which Heverling said was an average year. Still, sales tax had a $75,990 deficit during the first three quarters of 2022 and 2019. 

Gas tax revenue was down almost 74 percent, or $188,000, in the first three quarters of 2022 compared to 2019. Heverling said he didn’t know when the gas revenue could rebound, as he expected Canadians would have returned to Blaine gas stations. He speculated that Canadians could be foregoing Blaine gas for less expensive prices on Lummi Nation’s reservation. “I thought when the border opened they would come back,” he said.  

East Blaine housing development is expected to cushion the lack of gas tax revenue as well as improve the growing sales tax, Heverling said.

Even with optimistic sales numbers, the finance director is hesitant to celebrate too soon. City council sliced the budget in 2020 and has kept it constrained, while restoring some services like police staffing in 2021 and 2022. Heverling planned the 2023 budget, which council passed on November 28, to be tight as national recession concerns loom for next year and 2024.

“We’re not cutting anything for 2023,” he said. “We just didn’t add a whole bunch of new stuff. We’ll have a bit of a deficit that will be drawing into our reserves.”

Baron said he saw about a 10-20 percent increase in customers when Canada stopped requiring the ArriveCAN app, but the U.S. vaccine requirement still stops some from traveling. Baron began forwarding parcels to Canada when customers couldn’t retrieve their packages, something he says has decreased since the pandemic but still remains about 10 percent of business.

“There still remains a huge value proposition for Canadians to come down to the states and get things they can’t get,” Baron said. “Or they can get it cheaper, or in some small cases, get it faster.” 

Several mailbox stores have closed or changed owners since the pandemic. Pacific Mail and Parcel closed in August and 5dpackages closed in late October. Pulse Packages closed recently and the owner started working at Security Mail Services, which Brant took over in 2021. Border Mail closed in June 2021 and was taken over by new owners this July, under the name At the Border Mail (Ship49). Hagen’s of Blaine also changed storefronts, and mailbox stores overall have reduced staffing and hours of operation since the pandemic. 

5dpackages owner Jamie Leu said his decision to close the mailbox store came from a combination of burnout, staffing and money issues. While operating during the pandemic was challenging, Leu, who opened the store at 20 years old in 2014, said closing the business came from personal reasons.

“Our customer numbers had zero factor in our decision to close. Our financials even less so, as the best financial choice would have been to keep the business open in an attempt to recoup the losses during Covid-19,” he said in an email to The Northern Light. 

Leu said his customers evaporated when the U.S./Canada border closed, reducing his staff from 18 to two part-time employees and most of the money going toward rent and payroll. Like other businesses, he didn’t see an immediate return in customers as they navigated travel barriers such as expired passports. Leu said he expects mailbox business to return to normal soon because the desire to shop online hasn’t gone away.

“I still believe there’s a demand for this service, and yes, if we stayed open we probably would be doing quite well right now as it is the holiday season and would be set up for a good start in the new year,” he said.

Hagen’s of Blaine downsized in the spring and moved its Peace Portal Drive storefront around the corner to a building it used for overnight storage. This holiday season is the largest uptick they’ve seen in customers, but is still 50-60 percent of holiday sales in 2019, co-owner Kelle Hagen said. 

“It’s changed,” Hagen said of the business landscape. “People have changed their shopping habits and the Canadian dollar is not great, so it’s not ever going to be as busy as it used to be unless the dollar changes.” 

As of December 6, the Canadian dollar was worth $0.73 U.S. 

Despite slower business, Hagen said sales were healthier than the past couple of years.

“Things are better,” she said. “Things are way better than they were a year or two years ago.” 

Similar to Hagen, Mike Hill, owner of Hill’s Chevron in downtown, said gas sales are improving but aren’t where they were before March 2020. Gas sales are down roughly half compared to before the pandemic, he said. In 2019, the gas station was pumping about 5,200 gallons per day, but now it’s pumping around 3,000 gallons daily, or 58 percent. Hill’s Chevron was down about 95 percent during the U.S./Canada border closure.

“It just takes time because people are creatures of habit,” he said.

Hill said he’s advertising in Canada and relying on the gas station’s souvenir sales, which have increased from $600,000 to $1 million annually since the gas station was remodeled before the border closed.

“I think it’s doing good, but it’s not even close to the potential the town could be,” he said. “I think Christmas will help.”

White Rock resident Chris Drake used to cross the border every 10 days to buy gas and pick up packages at least four times per year in Blaine. Drake hasn’t crossed the border in three years because she’s not vaccinated.

When asked if she would continue her normal shopping patterns if the U.S. dropped vaccine requirements, Drake immediately replied, “Absolutely, absolutely.”

About 85 percent of all B.C. residents are vaccinated against Covid-19 with two doses and 57 percent are fully vaccinated with a third dose, according to Covid-19 Tracker Canada, an independent initiative that works with the Public Health Agency of Canada.

Drake’s daughter picked up a box she had since March 2020 at 5dpackages before the store closed at the end of October.

“What this represents is the commerce side of it, but the more significant side as I came to talk with people is the familiar, the relational side of things, was really harmed,” said Baron, of Mail Boxes International. “Hopefully people can see it’s representative of a much bigger thing – that the Canadian and U.S. people are tied to each other. We’re neighbors. I hope we can have this moved past and continue to be neighbors.”