August 12, 2013 6:00 AM, EDT

Mexican Fleets Cite Benefits From Cross-Border Program

By Timothy Cama, Staff Reporter

This story appears in the Aug. 12 print edition of Transport Topics.

Mexican trucking companies that are participating in the U.S. cross-border freight pilot program said it allows them to provide faster service to customers and to have more control over their own operations than the older alternatives, such as transferring freight to U.S. carriers near the border.

In interviews with Transport Topics, Mexican fleet officials said the program, which is run by the Federal Motor Carrier Safety Administration, presents them with a wide range of regulatory and logistical hurdles, but is worth it for the opportunity to make door-to-door trips between the United States and Mexico.

“The manufacturing industry that’s based on the Mexican border, they require door-to-door services,” said Cesar Alarcon, vice president of sales and marketing for Servicio de Transporte Internacional y Local, a carrier based in Ciudad Juárez, near El Paso, Texas. “And the pilot program works perfectly well to fulfill that need.”

In July, an appeals court reaffirmed that the program complies with federal law. So for now, companies such as STIL, which has 17 trucks it runs in the program, can continue to bring manufactured goods from Mexico to anywhere in the United States.

“We are getting our feet wet. We are trying to understand the program, how it works,” Alarcon said. “But so far, we haven’t been having any major problems. We expect this to be a good move for future business with the United States.”

As of last week, FMCSA records show that STIL has crossed into the U.S. 779 times, the second-highest figure among fleets in the program.

The pilot was launched in 2011 to comply with U.S. obligations under the North American Free Trade Agreement, which requires that the U.S. and Mexico grant access to each other’s trucks. It ended $2.4 billion a year in punitive tariffs that Mexico had placed on U.S. goods because of the delay in complying with the cross-border requirements.

Transportes Monteblanco, the trucking division of produce distributor Monteblanco, recently joined the pilot to take control of distribution between its warehouse in Saltillo, in northeastern Mexico, and its customers in Texas.

“This way, we have more control over delivering our stuff at the time we’re supposed to get it there,” said Juan Carlos Fuentes, the company’s general manager. “Our response from our customers has been improved drastically, because we have our own control.”

Monteblanco carries its goods for most of its operations in Mexico, and it used to hire carriers to take food to Texas, Fuentes said. But that meant deliveries often were late.

“In the food industry, especially in fresh produce, you have to be right on time with the customers,” Fuentes said.

Mexican carriers not in the pilot program generally are limited to traveling to a commercial zone across the border, where they must transfer the freight to a U.S. carrier.

As of last week, only 12 Mexican carriers had been fully admitted into the pilot. That’s a testament to the difficulty of FMCSA’s auditing process for carriers and the logistical problems carriers could face running into the United States., said Rodrigo Marroquin, president of Ram Trucking.

“It took us almost two years to get certified,” Marroquin said. “The trucks in the program, they have to be certified by the [U.S. Department of Transportation] personnel. And then individual drivers. And then once you go through that, it’s in Washington’s hands.”

Monteblanco has crossed 183 times.

Investigators must inspect every truck and test each driver the company plans to use in the pilot. Participants are subject to stringent rules, including that trucks must meet 1998 U.S. emissions standards and drivers must be proficient in English.

Ram applied for the program in 2011 with five drivers, but by the time it was certified in 2013, all but one of the drivers had left the company.

“Like the U.S., in Mexico it’s not easy to maintain drivers. It depends on the market demand,” Marroquin said.

Insurance also is very expensive for Mexican companies traveling in the United States, and only two companies offer it, he said. For Ram, that means it’s only cost-effective to keep one truck and one driver certified in the program, in case a shipper wants a door-to-door trip.

“Just in case we have to bid,” Marroquin said. So far, the company has only crossed into the United States once.

For Grupo Behr, based in Tijuana, the hassle is worth it. “We can go to L.A., or anywhere else, instead of stopping and getting another freight company to take the freight the rest of the way,” fleet manager Carlos Hoyos said. “They want only one person to handle the freight from the beginning to the door of the customer, instead of changing trucks.”

Behr’s trucks have crossed the border 220 times.

Mexico is the United States’ third-largest trading partner behind Canada and China.

Mexico is a major supplier of fresh produce and truck and car part production and assembly. A number of U.S. and international firms maintain production facilities in the northern part of the country for easy access to U.S. consumers.