Choosing the right provider to help get your freight across the U.S.-Mexico border can be a bit of a high-wire act — it can be a tricky balance of cost, service, and security.
Don’t worry, there are many good options. Everything from avocados to new cars safely and efficiently cross the border every day.
But how do you choose? What does a good cross-border Mexico carrier network look like?
It will vary based on your business needs, but having a solid understanding of the cross-border carrier market fundamentals is essential.
Let's dive a little deeper to learn about the Mexico trucking market, everything you need to know about CTPAT, and 5 tips for building a solid cross-border strategy.
Procurement vs. Operations: Balancing Cost, Service & Security
The key to finding the right cross-border solution starts with asking yourself simple questions about your network, for example:
- Are you shipping a commodity with low margins and flexible transit times?
- Are you a premium brand moving a high-theft product?
- Do you have a just-in-time transportation network with stringent delivery schedules?
Why? Though cost, service, and security are all important, sometimes you have to make some concessions.
Determining priorities can help you if (and when) you come across conflicting interests.
Procurement (person or team responsible for sourcing transportation providers) will often prioritize cost-savings, while operations (person or team responsible for planning and shipping the freight) will prioritize service.
Which makes sense; often times, the two functions will often be judged against different metrics and key performance indicators (KPIs).
- Common procurement KPI: transportation spend
- Common operations KPI: on-time delivery performance
Even if you’re a smaller shipper and you don’t have separate departments for purchasing and operations, you’ve probably run into this issue.
Problem: procurement wants lower costs, operations wants higher service
Solution: agree on overall company goals and align on a strategy to meet them
Rather watch? In this on-demand cross-border webinar, I talk about CTPAT, choosing carriers and deciding if through-trailer or transloading is right for you.
Understanding the Mexico Truckload Market
Mexico is the United States’ second-largest trading partner, and more than 70% of the cross-border freight moves by truck.
You might understand the U.S. truckload market fundamentals, but if you're shipping cross-border, it's just as important to know the basics of the Mexico carrier market.
Why? A shipment usually involves at least two carriers, one on either side of the border.
Mexico carrier market by the Numbers
Like the U.S., the Mexican market is large and fragmented.
- Over 154,000 carriers
- 97.2% of those operate 30 trucks or less
Within the Mexico carrier market, there are different types of trucking companies:
Carriers who only drive within the country. Many of these will bring freight to and from the border, but stay in Mexico.
Also known as drayage carriers, who specialize in shuttling freight across the border, clearing customs and delivering the cleared shipment to terminals near the border.
Many of these are actually based on the U.S. side of the border, even though they operate in Mexico daily.
These carriers are often based in the U.S., and have a partner carrier (or carriers) on the Mexico side of the border where they share trailers (or have interchange agreements with).
This way, the carrier is able to offer through-trailer service, where the freight stays on the same trailer the entire way. Most of the time, however, there are still multiple drivers involved, unless a carrier is using B-1 drivers.
In some circumstances, Mexican truckers operate in the U.S. and deliver shipments directly to customers. Their drivers, who have B-1 visas, may then pick up a return shipment at a U.S. location for delivery to Mexico.
Mitigating Risk of Cargo Theft in Mexico
Mexico presents its own set of risks. Cargo security, for one, is a significant issue, as the rate of theft is higher than in the U.S.
Companies that are transporting goods through Mexico can take measures to avoid some of the cross-border risks.
One of the best ways to increase security is to work with trusted providers, and one of the easiest ways to make an initial assessment of a carrier is using CTPAT certification.
What is CTPAT?
Short for the Customs Trade Partnership Against Terrorism, CTPAT is a voluntary public-private sector partnership program that strengthens international supply chains.
The U.S. Customs & Border Protection (CBP) established CTPAT in 2001 to work with the trade community and improve border security. It has quickly grown to include over 11,400 certified partners.
The program recognizes that CBP can provide the highest level of cargo security only through close cooperation with the principal stakeholders of the international supply chain, including:
- Asset-based carriers
- Licensed customs brokers
How does CTPAT work?
When an entity joins CTPAT, an agreement is made to work with CBP to protect the supply chain, identify security gaps, and implement specific security measures and best practices.
Applicants must address a broad range of security topics and present security profiles that list action plans to align security throughout the supply chain.
What are the benefits of work with CTPAT carriers?
CTPAT members enjoy several benefits, including an increase in freight-processing speed, shorter wait times at the border, and a reduction in fees.
Members are considered to be low risk, and are less likely to be examined at a U.S. port of entry.
If your logistics partners are certified, it can lead to competitive prices, expedited transits and fewer hiccups transporting your goods across the border.
5 Tips for Choosing a Cross-Border Freight Provider
Now that you have a basic understanding of the market, how do you actually choose providers?
These steps will help you balance cost, security, and service in your cross-border Mexico transportation network, and
1. Align procurement and operations.
The disconnect between these two areas is a common issue we see in shippers.
It's critical that whoever is deciding what carriers to use and whoever is operating the freight are in close communication. Both should have a common set of goals.
We’ve seen shippers assign a neutral internal party to work alongside both.
By choosing the right suppliers and negotiating the best contracts, you will optimize the procurement process as well as the supply chain.
2. Weigh the pros and cons of transloading versus through-trailer.
One of the biggest decisions you have to make when it comes to Mexico is what type of service you want to use to get your freight across the border.
There are pros and cons to both transloading and through-trailer, and the right service will vary based on your needs (and potentially market conditions).
Knowing which is right for your freight will help guide your selection process.
3. Combine the flexibility of multiple providers with the security of CTPAT.
Customers who require CTPAT-certified carriers and a minimal setup process, tend to have the best mix of service and cost.
Combining a multiple-carrier strategy with the added security of utilizing rigorously screened CTPAT-certified carriers can deliver capacity, flexibility, and peace of mind.
These carriers also expect the facilities they ship to and from to be certified as well for safety and security purposes.
4. Build long-term relationships.
This seems obvious, but it's critical for Mexico cross-border. Whenever possible, try to engage in strategic, long-term relationships over short-term, transactional decisions.
With so many moving parts, you have to know and trust all of your cross-border partners, including your transportation providers, your customs brokers, and other vendors.
They all have important parts to play. A breakdown anywhere along that chain can result in fines, unnecessary accessorials, production disruptions, or worse — it could negatively impact your customers.
Trusted providers will be able to provide insights on current market conditions, address any operational questions you may have, and provide guidance on choosing the best approach for your cross-border freight.
5. Work with an experienced 3PL.
From sourcing carriers and managing customs to working between two languages and cultures, cross-border shipping is complex. A good 3PL can make it much simpler, and help you avoid mistakes of cross-border shipping.
They will have relationships with thousands of carriers on both sides of the border, relationships with both through-trailer providers and transloading facilities, and experience dealing with customs brokers.
No matter what kind of freight you're shipping, or what you need, an experienced 3PL gives you all the cross-border solutions you need in one place.
This Shipper Used an Experienced 3PL to Grow Their Cross-Border Business
If you need expertise to help make your cross-border shipping easier, we can help.
Whether you're importing or exporting to Mexico.
Whether you need truckload, intermodal or LTL, our team of cross-border specialists will get you the coverage you need.
Learn how Coyote helped this manufacturer get started with cross-border Mexico truckload shipping.
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