Issue #25: Cross-Border Capacity

Carriers that service Mexico aren’t your average carrier. In fact, some cross-border carriers don’t let their trucks cross the border, just their trailers.

You’ve heard it before but I’ll say it again: cross-border freight is complicated (Issue #15: Cross-Border Complexity).

It isn’t just complicated because of the multiple languages, cultures, customs brokers, a border, and the whole “black hole” situation that everyone experiences when it comes to tracking freight in Mexico.

You see, trucking companies that service Mexico typically send their trailers into Mexico, but not their drivers or tractors. Well, kind of. The trucks may cross the border, but if they do, they typically won’t go further than the Mexican border city (I covered these different setups in Issue #10: How freight gets across the U.S.-Mexico border).

Carriers who service Mexico typically have a unique setup to how they operate, which boils down to a few key items:

Tractor-to-trailer ratio

Most US- and Canada-based carriers that service Mexico have three trailers for every tractor, if not more than that. Freight can take 1-3 days on average to cross the border, with some cases stretching to 12-15 days in some of the worst cases I’ve seen. If you have a 1:1 ratio and you send your trailers into Mexico, you’re going to have drivers sitting at the border for days, with nothing to do.

Let’s say a southbound load is going to Guadalajara, JAL, which is about 635 miles southwest of Laredo, TX. On Monday, the driver who picked up the load in the U.S. drops the trailer off in Laredo. The customs broker begins the clearance process and, once the paperwork is ready and we have a green light, a transfer carrier will take that trailer across the border.

The freight gets cleared for crossing on Wednesday afternoon. Once it crosses and clears Mexican customs, as well as any inspections that Mexico requires for product entering the country, a Mexican driver is going to take that trailer to the delivery in Guadalajara, some 12-14 hours later. That trailer might arrive Friday, but may have to go to the carrier’s yard in Guadalajara and then deliver on Monday morning.

Monday, the trailer is empty, finally. Later that day, or the next day, the trailer is reloaded with an export shipment, heading back to Laredo. So, the earliest we’re going to see this truck in Nuevo Laredo TAM is Tuesday afternoon, but more likely Wednesday or Thursday morning. As a point of reference, the trailer was dropped in Laredo originally 9-10 days ago and the driver is still sitting in Laredo, just twiddling his thumbs.

It takes 5-10 days, at least, for most trailers to turn around after being sent into Mexico and so that’s why carriers who service Mexico need at least a 3:1 trailer-to-tractor ratio. While it’s more expensive to own or lease those additional assets, it allows the carriers who run cross-border freight to keep trucks moving. They aren’t beholden to trailers crossing or being ready to cross, and their drivers and tractors actually see improved velocity when it comes to utilization. This surplus of trailers also allows the carrier to sell their ability to handle a drop-trailer program to prospective cross-border shippers.

Physical Footprint

Most carriers that service Mexico have a terminal at the border, if not their headquarters. Those carriers are leveraging a border city presence to employ cross-border experts. They need support in customer success, operations, customs management, and general customer service, which includes to providing tracking on every shipment in transit.

Some carriers have terminals elsewhere in the United States, which enables them to run even more efficient drop trailer programs. The same strategy applies in Mexico in key markets like Monterrey, El Bajio, Guadalajara, Queretaro, and Mexico City. A terminal, or a terminal they share with a partner carrier, allows the carrier to leave trailers in secure yards that positions them as premier providers to shippers with trailers always ready nearby.

Carrier Partnerships

Most carriers that send their trailers into Mexico do so partnering up with a Mexico carrier, or two, or even fifteen or twenty. These carriers run consistent lanes between major markets in Mexico and the corresponding border cities, using the U.S. carrier’s trailer to pick up and deliver freight. The U.S. carrier handles the customer service, requirements, and everything else considered to be the door-to-door carrier’s responsibility.

So how do these partnerships come about? It takes a whole lot of tequila, some long-term relationship building and sitting down for dinner before talking business. US-based carriers who service Mexico seek out these partnerships to establish more capacity in key markets based on demand of their customers. Meanwhile, carriers in Mexico are also looking for growth opportunities by partnering up with U.S.-based carriers.

Keep in mind, even with all these border inland moves, where carriers haul freight from a location in Mexico to the border, there’s also transfer carriers that can be added to your U.S. carrier’s list. These transfer carriers are the ones who actually cross the loads, with the permits and the patience to do that work. Carrier partnerships can overlap, where one Mexican carrier works with multiple U.S. carriers, but, most critically, they establish a core part of the backbone of North American logistics.

Cross-border carriers spend a lot of time and resources making sure they have the right carrier partnerships setup in Mexico. Relying on the wrong carrier can result in a shipment disappearing and a damaged (or destroyed) relationship with the customer. All it takes is one stolen load to break that trust.

It takes a lot to move a cross-border shipment

So, you see how this stuff is so complicated? You can’t just rely on a single carrier for updates or strong service. You need to have an understanding of who their underlying partner carriers are, how it all ties together, who’s handling what when and why, and it won’t hurt to understand it in two languages too. All of this is being communicated via WhatsApp right now.

I would love to see more carriers who have 50+ trucks start exploring expansion into Mexico. It’s rare to see a U.S. carrier who operates domestically in the United States just decide to start sending their trailers into Mexico but, given all the craziness around nearshoring, you would think some carriers would start making that investment. Instead, in the last few years, we’ve seen companies like US Xpress and Covenant pull out of Mexico, right before the nearshoring boom started.

If you’re involved in cross-border logistics and interested in learning more about what we’ve been building at Cargado, you should sign up for the waitlist to get a demo: cargado.com.