Issue #33: The Cross-Border Blueprint, Part II

Back in February, I wrote Issue #13: The Cross-Border Blueprint, which covered some of the first steps it takes to expand into Mexico. Let’s fast forward to the part where you found your leader to build your Mexico business. It wasn’t easy and it was a tough decision between promoting from within and hiring someone from outside the company. Maybe you even considered buying a brokerage in Mexico to expand more quickly and aggressively.

You have a few steps to building out the team the right way. My advice is always to do this somewhere in Mexico, ideally Monterrey NLE, which is only three hours from Laredo TX, where 40% of all freight crosses the southern border. The benefits to setting up shop in Monterrey is that you’re likelier to have bicultural talent – people who have spent time or have family in the US given the close proximity to the neighboring country – than you are further south in Mexico, in places like Guadalajara or Mexico City.

The value of the three-hour drive to Laredo is that most of the customs brokers and carriers you deal with on cross-border freight are going to be based in Laredo. It’s a lot easier and more cost effective to have people driving versus flights from Guadalajara, which have to connect via Mexico City, to Laredo. It also doesn’t hurt to have a physical presence in Laredo and any other border cities where you want to grow your business.

Relationships Matter

Look, this won’t be a surprising statement: relationships in this industry matter. They matter even more so for cross-border freight. Ask any experienced cross-border logistics leader what it takes to trust a carrier who takes your freight into and out of Mexico and they’ll tell you the same thing, which is that you need to sit down and meet the leadership from the company in person, talk to them face-to-face, and have a few tequilas and/or carajillos.

I’ve spent a ton of time in Laredo at this point, building relationships across the city. I’m looking forward to doing so in El Paso and other border cities soon. Laredo is such a small town, with approximately 260k people, and most of what you see when you visit is trucking companies, warehouses, and customs brokers. There’s only a handful of options for restaurants, and you’re likely to run into the owners of different trucking companies at Palenque Grill during lunch or at La Republica and Border Foundry for dinner. At some point, someone will send you some shots of tequila at La Republica and that’s really when the night begins.

If you haven’t been to Laredo yet and you’re investing in cross-border freight, you should consider visiting. Mark Vickers at Reliance Partners (Borderless Coverage) is hosting an event on August 6th and then the Laredo Motor Carriers Association Golf Tournament is September 6th. Both are great opportunities to network and meet cross-border carriers and potential warehousing/cross-dock partners.

Growing a Mexico business

In order to grow your Mexico business, you need freight, right? So go ask for it. Ask your existing customers if they’re moving freight out of Mexico. It’s likely going to be their biggest headache, even if it’s a smaller portion of their volume. And chances are that they’re actively discussing plans to nearshore – to move their manufacturing from overseas to Mexico.

If you’re not sure what industries to target, let’s look at a few options:

• Automotive and aerospace

• Chemicals

• Electronics, appliances, semiconductor-related materials

• Machinery

• Oil and gas-related products (like oil rigs – moving specialized freight cross-border can make for some serious ROI)

• Pharmaceutical and healthcare products

• Produce (fruit and vegetables), meat, and dairy products

• Raw materials like plastics, rubber, steel, and aluminum

• Textiles and apparel

You’ll find that more and more of your customers are manufacturing in Mexico, are buying products from Mexico, or are sending products to Mexico. Supply chains are tightening and becoming more regionalized and nearshoring is going to be a long-term strategy that a lot of manufacturers, retailers, and distributors are going to employ. But it’s not just about sales, you need the execution to back it up. So how do you execute?

Executing on cross-border freight

When you’re selling a Mexico solution to your customers, you’re selling the operational expertise and strong carrier network. You may have some technology that’s supporting some of that work, whether you built it into your TMS or you’re leveraging Cargado. When it comes to operations, you’re going to need people who can schedule appointments in Mexico, deal with the customs brokers, Mexico carriers, and transfer carriers. You also need people who understand the differences between a B1 driver and a CDL driver, and how trailer interchanges work (Issue #10: How freight gets across the U.S.-Mexico border).

Your customers, and their facilities and customs brokers are going to demand a lot of details about these cross-border loads and so you’ll need a team of expert operators who can support it. It’s tough to scale that team initially, as you feel like you’re just throwing people at every single account. It’s tough but it’s another reason that you do that in Mexico. And I’ll repeat the value of the proximity to the border – there will be issues that come up and it’ll be easier to resolve if you can meet those people in person and establish relationships. In-person engagement will make it likelier that they’ll actually help you get to a resolution.

Where to start

That’s a lot of information to digest so where’s the best place to start? Ask your customers. Figure out what freight they’re moving cross-border today and ask for an opportunity to quote their freight. Win their freight. Get Cargado while you’re at it. We recently passed thirty paying customers, with fifteen of the top 100 brokerages. Get to Laredo as soon as you can and set up that office in Monterrey.

P.S.: one additional way to find cross-border freight is to take a look at the freight you’re picking up or delivering in Laredo TX and ask those customers if you can move their freight all the way into or out of Mexico.