Shipping South of the Border

How Celadon Can Solve Your Cross-Border Concerns

Background

Given the fact that Mexico is the third largest trade partner for the US, there’s a good chance that your company operates in Mexico or ships your products across the border. This white paper will outline steps and best practices to help you more effectively move goods to and from Mexico.

Situation

When shipping via truck to Mexico, carriers employ two primary methods to move goods – direct service and transloading.

With direct service, a shipment crosses the border on the same trailer or container from the point of origin to the destination.

With transloading, carriers shift goods from one trailer or container to another at a warehouse or terminal. Once transferred, the shipment crosses the border and travels to its final destination.

As a carrier, Celadon traditionally has offered direct service to customers. However, with the addition of more than 600 Jaguar trailers and our new Laredo terminal, we can now offer transload service.

The following suggestions can help you identify your best method for crossing the border:

1. Shippers may need several carriers on shipments due to carrier restrictions.

Mexican law prohibits a U.S. carrier’s tractor from traveling beyond 26 km inside the Mexican border. The U.S. government holds Mexican carriers to similar restrictions in the U.S. Therefore, U.S. carriers pick up and deliver on U.S. soil and Mexican carriers pick up and deliver within Mexico. Mexican and U.S. dray carriers, however, can carry freight within 26 km of either side of the border.

With a little research, you can identify one partner who can do it all: Celadon Trucking.

2. Customs officials can stop and inspect shipments multiple times.

Mexican and U.S. Customs handle inspections differently based on several factors. Regardless, you can expect a freight inspection both northbound and southbound.

Northbound: Usually, imports into the U.S. from Mexico are duty-free and the U.S. collects only a small amount at the bridge crossing. On these northbound moves, inspectors seldom unload and inspect trailers. Typically, U.S. customs x-rays shipments and uses dogs to check for drugs as well as smuggled goods/people. After this, the freight travels freely into the U.S.

Southbound: On definitive imports, Mexico collects a value-added tax (VAT). Since the VAT serves as a revenue source for the country, Mexican Customs agents are particularly diligent about the inspection of southbound shipments.

The Mexican customs broker and the Mexican importer are both legally responsible for compliance with Mexican Custom regulations for southbound imports. The Mexican importer of record is the only one who can empower a Mexican customs broker to file an importation or exportation on their behalf. Should you not comply, they can impose fines and delays as well as ultimately revoke the importer’s license.

3. Equipment availability varies for direct and transloaded shipments.

Carriers often consider direct service as a premium cost service, typically used by large, heavy freight like machinery, fragile cargo, or freight that requires specialized equipment for unloading. In direct service, the same individual trailer carries the freight from origin to destination, only the tractor unit changes. Only the linehaul carriers who have an interchange agreement with the trailer owner can haul the trailer. The result of this relationship means that there are a limited number of direct trailer providers and a limited amount of direct equipment available.

Transloads leverage Mexico and U.S. backhaul carrier opportunities. With transloading services, shippers can select the U.S. carrier and Mexican carrier independent of any relationship between the two. This provides unlimited opportunities to match carriers to increase availability.

4. Carriers are not required to have cargo insurance in Mexico.

The U.S. government requires carriers to carry cargo insurance. In Mexico, the government does not require insurance. Shippers add a separate endorsement on their insurance policy for cargo insurance. These endorsements may take the form of exclusions, such as coverage only when team drivers are used or that the carrier confines travel to private toll roads.

5. Carriers’ involvement in customs can speed borders crossings.

Participation in the various customs programs can greatly facilitate border crossings. These programs included C-TPAT (Customs Trade Partnership Against Terrorism) and OEA (Operador Económico Autorizado). The programs strengthen security on the supply chain through implementing internationally recognized safety standards.

 

Cross-border shipping is challenging. When you understand how moving freight across the border works, you can make better carrier partner choices. This can also lead to a more effective supply chain with a better potential of diminished risk.

Contact Celadon today and we’ll figure out how our expertise can drive your business forward!

Want to hear how we can help meet your business needs?