Be Prepared for the Complexities of Mexico Cross-Border Logistics
Customs and legal issues, as well as capacity trends, underline the need for a transportation and logistics partner with the knowledge and experience to make the cross-border transition seamless.
As companies consider nearshoring manufacturing operations in Mexico, supply chain professionals must consider the complexity of cross-border operations. Customs and legal issues, as well as capacity trends, reflect the need for a transportation and logistics partner with the specialized knowledge and experience to make the cross-border transition seamless.
Q. Why should a company consider manufacturing in Mexico?
A. Obviously, you’re going to be closer to the point of consumption and not at the mercy of the vessels and ports. You can not only reduce transit costs, but also reduce inventory costs. It’s more feasible to move to a just-in-time replenishment model. You can be more flexible, especially if you have emerging products. For consumer-packaged goods and fast fashion, time to shelf is critical.
Q. What challenges should shippers be aware of in launching or expanding in Mexico?
A. The first thing that always comes up in relation to launching or expanding in Mexico is always the known security challenges throughout Mexico, and that is only compounded in border locations.
In addition, there is a capacity imbalance due to the bulk of goods that move northward, especially considering that other companies are following the same Mexico strategy.
Finally, with the upcoming Carte Porte requirement, an advanced notice of goods in transit by any mode throughout Mexican territory, will require additional documentation for customs compliance. Any failure to obey the provision could lead to fines and force shutdowns of operations in Mexico for a shipper.
Q. What are some of the security challenges?
A. Mexican cargo liability laws differ from the United States, so a shipper may choose to self-insure, depending on the value of the cargo. Cargo may be held for ransom as well. Per-load coverage is available on a transactional level. You may also need to consider if your loads should move in escorted convoys, be monitored by security cameras, or be inspected by drug-sniffing dogs. Shippers must consider these risks as part of their cross-border strategy.
Q. How do cross-border shipments move through customs?
A. Often, truck freight is cross-docked at the border rather than use bonded or through trailer shipment because there are fewer qualified carriers and capacity is constrained. Truck shipments could move through a foreign trade zone. Rail intermodal containers could clear customs at inland ports, such as Chicago.
Q. How do you choose a cross-border logistics partner?
A. Look for a partner with the experience to guide you as a consultant, supported by proven relationships. They can help with the customs piece and guide you to regions with fewer security problems and better capacity flows. Align with a reputable customs brokerage because if you don’t have the proper paperwork, the delays at the border can be significant.
Develop an effective security protocol for your product. That can vary significantly depending on the type of product you’re shipping. A logistics partner with control tower capabilities, real-time visibility platforms, and access to capacity through a brokerage function can help you navigate those unfamiliar channels.
About Ryder System
Ryder System, Inc. (NYSE: R) is a leading transportation and logistics company. It provides supply chain, dedicated transportation, and commercial fleet management solutions, including transportation logistics, warehousing and distribution, e-commerce fulfillment, and last-mile delivery services. For more information, visit ryder.com.