US companies shipping to or from Mexico are finding it necessary to go deeper into the country, to be more involved with logistics and transportation on the Mexican side of the border, to think of the country more as another state rather than a foreign land.

Increased trade between the two countries is the driving force behind some basic but important changes in cross-border logistics. Says Robert P. Imbriani, vice president of international operations for Team Worldwide, JFK Newark, New Jersey, "Most US shippers and importers have not in the past dealt directly with Mexico logistically. They would ordinarily deliver goods to a Mexican freight forwarder on this side of the border.

"But," he explains, "With the expansion of trade, with the need to do more business in Mexico and with greater competition between US companies and Mexican companies for the market, it is no longer the only way business can be done."

Imbriani says the situation is creating a need for logistics and transportation companies to provide services on the Mexican side of the border for both truckload and less-than-truckload shipments.

Further Changes Wrought by NAFTA

One of the more evident changes on the horizon will be Mexican trucks freely crossing the border and hauling all across the United States and into Canada. This has been a matter of contention for some time, and not until a NAFTA committee recently ruled that the United States had to allow such crossing, as was mandated by NAFTA, did this country relent on prohibiting Mexican trucks north.

There will still be the matters of truck safety, driver certification, and proper insurance, however. And these matters may keep some Mexican firms south of the border, primarily because of cost. "There are going to be significant costs for Mexican carriers coming across," says Bob Carr, vice president, international, of Roadway, in Akron, Ohio.

For his own part, says Carr, "I don't see us changing the way we do business. We do a tremendous amount of business to and from Mexico, but I don't see us running US drivers into Mexico from a cost standpoint and a language standpoint." The reverse may well be true for Mexican truckers for some time, as well.

Even when Mexican trucking companies do qualify for US entry, shipping costs could still be about the same as if the situation hadn't changed, because their increased costs, including some wage increases, will have to be passed on to shippers.

Documentation is growing in importance in the shipping process. Says Imbriani, "You can't separate logistics from documentation. The rules of origin are becoming more important as the volume of trade grows. You're seeing a greater enforcement and review of documentation to ensure the product complies with NAFTA provisions."

Improper documentation can have a ripple effect beyond whatever woes it heaps upon the shipping company-in particular, on the customs brokers involved. These parties will also be much more stringent in reviewing certificates of origin. Explains Imbriani, "In the US, the broker can be assessed financial penalties; whereas, in Mexico, it can be as extreme as the Mexican customs broker losing his license."

By Land or By Land

Because of geography, the greatest portion of goods traveling between Mexico and the United States make the journey either by road or by rail.

Roadway exemplifies the procedures used by most US-based trucking companies. Goods from the US are delivered to a freight forwarder, who classifies it. Then Roadway moves the freight into a consolidation center south of the border. From there, the freight is delivered to terminals throughout Mexico. Roadway has 10 of its own terminals in Mexico, with two or more on the way, in all the country's major metropolitan areas.

Where Roadway differs from the majority of the pack is in its freight-tracking system. "Our focus is on seamless information flow and freight flow," says Carr. "We ship from, say, Winnipeg to Mexico City on a single invoice and can track it through the system."

An automated AES system is integral to Roadway's procedure. Further, in the company's Nuevo Laredo call center, every shipment is tracked. "If the information on a shipment is not updated in three days," says Carr, "we're on the phone to the payer of the freight charges or his broker. The whole process is monitored, which reduces crossing time, and we've improved that significantly in the last two years."

Yet one more practice used by Roadway and others that expedites shipments is to use two-team sleeper cabs and satellite truck tracking. "All our line haul equipment in Mexico is part of a dedicated fleet provided by a Mexican carrier," Carr explains. "[In the past,] sleeper tractors had a single driver. He would pull over and sleep. Our tractors keep moving. It gets the shipment there quicker, and there's less possibility of a hijack while he's sleeping."

Actually, Carr says, cargo theft is not the problem it once was in Mexico. "Much better, compared to 1990, 91," he says. Other trucking-industry sources have suggested that theft of tractor-trailer cargo is actually less of a problem in Mexico these days than it is in the United States.

Transportacion Ferroviaria Mexicana (TFM), a subsidiary of Mexico's Grupo TMM, with a network of more than 2,500 miles of track in northeast Mexico, moves 60% of the cargo going to the United States from Mexico. This transportation behemoth seamlessly connects with all major US rail carriers, including Union Pacific, Texas Mexican, Burlington Northern, Santa Fe, and Kansas City Southern. In its own territory, TFM serves 75% of the Mexican population and the 14 Mexican states that create 70% of Mexico's GDP.

More Changes on the Way

The past two Mexican administrations slowly laid the foundation for the kind of economic growth President Vicente Fox envisions for the country. Inextricable with that vision is improved transportation facilities, infrastructure, and systems.

"Nothing gets done overnight," says Imbriani, "but they are very interested in finding ways to improve the service, looking into such things as pre-clearance. On our side, with Bush as president, we will probably see some significant changes for the better."

Roadway's Carr agrees. "We can talk all we want about selling goods across the border, but if we don't improve the efficiencies of the transportation system, we're really impeding the growth. We need to continue to work to improve that process because it's key to the success of everybody's economic growth. There are a lot of policies still to change, but with Fox coming in, even bigger changes will be coming," he says.

"The important thing to know," Imbriani says, "is that there are logistics companies that are expanding their presence on the border, forming alliances with their counterparts on the other side of the border, and going a few steps farther to provide their clients with door-to-door service."

Because of these movements, he concludes, "[Exporting or importing] companies should look for those companies that are expanding their services and not looking at Mexico as business as usual." wt