Issue #15: Cross-Border Complexity
U.S.-Mexico cross-border freight carries so much complexity that there’s never just a simple path to follow in order to execute it successfully.
What makes cross-border freight so complex?
Moving freight between Mexico and the United States is significantly more complicated than moving U.S. domestic freight, and also comes with more challenges than moving freight across the northern border of the United States.
Domestic freight has your typical pickup and delivery facilities, a carrier moving the freight from A to B, and a Bill of Lading (BOL) that, when signed by the receiver, doubles as Proof of Delivery (POD). Loads moving to or coming from Canada have all those items plus the PARS (U.S. to Canada) or PAPS (Canada to U.S.) and takes about thirty minutes to cross the border.
Let’s look at what makes Mexico freight so complicated. First, you have 7-8 parties involved in a single shipment moving across the U.S.-Mexico border. The only similarity to a domestic shipment is that you have a pickup and delivery facility. Aside from that, you have:
Three carriers
Two customs brokers
A whole lot of paperwork beyond a BOL and POD (I wrote about this piece a bit: carta porte, carta porte complemento, DODA, and a commercial invoice, to name a few)
Potential product-specific inspections at the border
Two languages
Two cultures
Two countries (and a third if it’s Mexico to Canada or vice versa)
A border separating everything
Most logistics providers aren’t in a position to juggle all of these different parties and that’s why you typically need a Mexico department to support this kind of business. You need a leader who understands all these intricacies and can untangle a mess that’s jamming up your team’s day at the border. Communication is happening anywhere and everywhere, across email, phone calls, texts, and WhatsApp messages.
On any given load or account, there could be 3-5 distinct WhatsApp groups in use:
Broker/3PL ←→ Shipper
Broker/3PL ←→ Carrier
Broker/3PL ←→ Customs Broker
Broker/3PL ←→ Carrier <> Customs Broker
Broker/3PL ←→ Transload Facility (if the freight is being transloaded at the border)
All of that paperwork I mentioned above? It requires some key data points related to the carrier(s) involved in the load and the relevant load-specific details in order to be generated accurately. Missing the T in T1000 on a trailer number and your paperwork will be wrong and you’ll run into delays at the border. All of this information is being transmitted across these WhatsApp groups and emails. Now take those WhatsApp groups and multiply that by the 20,000 loads per day moving across the border, across the thousands of carriers helping execute on those shipments, and you can quickly end up in Excel Hell.
So how does this mess get solved?
It takes a lot of organization and structure. It also takes strong process-oriented leadership on your Mexico team. It takes buy-in across the organization to invest in a Mexico team or, if you’re a shipper, it means partnering with the right logistics provider who understands all these complexities and can create order out of chaos. It also takes exceptionally strong will to manage this type of freight on a day-to-day basis. If you’re a trucking company wanting to service Mexico, it takes a 3:1 trailer-to-tractor ratio, at a minimum, along with partnerships with Mexican trucking companies who will sign a trailer interchange agreement with you.
Most TMSs don’t have the fields to support half the information that you actually need to properly execute a cross-border Mexico shipment, which means that those teams are oftentimes spending a lot of their day in spreadsheets, email, and WhatsApp. There’s a whole lot of copying and pasting from one window to another. It’s not uncommon to walk around a brokerage floor that’s supporting Mexico freight and see two monitors on each desk, with one monitor occupied by WhatsApp.
I said “most TMSs” but what I really meant is that most software in this industry isn’t built for cross-border freight. Everyone has been chasing this $800B gorilla that makes up the U.S. freight market. And yes, there are some TMSs that support Mexico to varying degrees, both proprietary at some of the largest brokerages as well as SaaS products that brokers, shippers, and carriers buy to support their businesses. But most don’t.
As I wrote about in Issue #11: The Freight Industry Is Changing, I would love to see this industry get to a place where service providers are investing in their tech stacks through partnerships, not through their own massive in-house IT budgets. Yes, the big guys will continue to mostly build their own tech, but being open to establishing integrations and partnerships is going to prove to be the only way forward.
Insert Cargado
While we still aren’t quite ready to talk about exactly what we’re building, I can tell you that we’re looking to tackle a lot of these issues. We want to connect all these disparate parties in a single platform and help drive productivity across the U.S.-Mexico supply chain. If I had it my way, we would end the need for WhatsApp in this industry. Why does everything happen in WhatsApp? Because that’s how it’s been handled for the past seven years or so. When I first started moving Mexico freight in 2014, drivers in Mexico were primarily using those Nextel phones that act like walkie-talkies to communicate, a far stretch from a smartphone with a communication platform like WhatsApp.
What I can tell you about what we’re building is that we’re taking problems that I experienced at Coyote, Forager, and Arrive as a Mexico leader and we’re tackling them, one by one. We’re building in a very methodical way to establish a better experience for everyone in the industry, with the goal of creating a more interconnected, dependable, and transparent future for the industry.
And since I’m talking about Cargado, if you enjoyed this post, do three things for me:
Share this post on LinkedIn — everyone needs a hand with Mexico freight right now and hopefully this helps shed some light on why it’s so challenging.
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Sign up for the waitlist if you’re moving cross-border freight or want to get into it — Cargado.com.