Shipping Cross-Border and Within Mexico

Volatile shipping rates and capacity, uncertain forecasts, limited alternatives, and overall speed-to-market needs are driving many companies to near-source operations to Mexico. There are, however, some key considerations for doing business effectively south of the border. Troy Ryley and Jose Minarro, managing directors for Transplace Mexico, offer these tips for shipping cross-border and intra-Mexico.

1. Build in flexibility. Natural disasters, along with economic, environmental, and social issues, affect trade in Mexico. By working with providers and creating multiple contingency plans, you can overcome most of these events when they occur.

2. Control the black hole at the border. Because multiple parties and hand-offs are involved, shippers often become frustrated and lose track of freight at the border. Find a transportation partner that has the visibility tools to meet this challenge.

3. Integrate where possible. Accountability and visibility are lacking across the Mexican supply chain. Integrating where possible limits the number of hand-offs, and streamlines accountability and freight location issues.

4. Find a great Mexican customs broker. In Mexico, you’re guilty until proven innocent; therefore, choosing a customs broker is not the place to focus solely on cost savings. Unlike in the United States, the Mexican customs broker plays a key role in imported merchandise classification. You are tied to your broker long term, and issues that arise affect both parties— even as long as five years after a mistake is made. It is in your best interest to have a strong, long-term perspective on this complex element of Mexican trade.

5. When in Rome. Forget the U.S. practices you’re accustomed to and learn the realities of the Mexican marketplace. You’ll go farther a lot faster.

6. Diversify your carrier base. Constant variation in north to southbound freight changes equipment availability throughout the year. Relying on a single-asset carrier will not get your business through the tough months. By diversifying your carrier base, you can mitigate this issue and take advantage of equipment surpluses.

7. Avoid LTL in Mexico whenever possible. LTL shipments work differently in Mexico than in the United States; they are regionalized and more expensive. And, under Mexican customs brokerage practices, LTL shipments cross separately at the border (sharing space with others’ freight is prohibited), making for longer transit times.

8. Buy insurance through your global policy. Carrier insurance coverage is not built into transportation rates in Mexico. Mexican law makes the carrier liable for 15 times the Mexican minimum wage per ton, or a fraction thereof, which is equivalent to about nothing. And collecting on it is unheard of. Use your global policy to leverage the coverage you need in Mexico. It is always the cheapest option.

9. Protect against exchange rate variance. Purchase logistics services in the same currency in which you sell your products.

10. Understand U.S. Customs and Border Protection security requirements. Learn the security implications of government programs such as C-TPAT to help facilitate the flow of cross-border freight.