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Focus: Transportation Management

Feature Article from Our Transportation Management Subject Area - See All
 

From SCDigest's On-Target E-Magazine

- Jan. 19, 2015 -

 

Supply Chain News: Mexican Truckers Finally Coming, but Impact is Unclear

 

Applications Now Being Accepted, Despite Opposition from Teamsters, Independents; Border Delays, Deadhead Miles will Reduce Level of Change

 


SCDigest Editorial Staff

 

Twenty years after being required as part of the NAFTA trade agreement of 1994, the US Department of Transportation has finally approved Mexican trucking firms operating - to an extent - in the US, but for all the hand wringing over this issue, it's not clear that the impact will significant.

Last week, after a second pilot program concluded in October, the DOT announced that Mexican trucking firms able to acquire permits will now be allowed travel basically anywhere in the US to deliver their loads after crossing the border.

SCDigest Says:

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Mexican truckers may not want to have expensive Class 8 trucks tied up at the border, and may actually prefer the current short haul drayage system to move goods to drop off points just inside the US.
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Until now, Mexican truckers could travel no more than 20 miles into the US, requiring costly transfers of freight at special warehouse locations or transload facilities.

That even as American truckers have free reign to drive in Mexico and Canadian truckers are allowed to operate in the United States.

The approval by the Federal Motor Carrier Safety Administration (FMCSA), an arm of the DOT, comes after data from this second pilot program, this latest one lasting about three years, with just 15 Mexican truckers participating.

In 2009 and 2010, Mexico placed tariffs of some $2 billion annually on US food imports to Mexico, in retaliation for the US Congress voting to end the first pilot program that involved more than 100 Mexican truckers. The tariffs were then suspended when the second pilot program was launched in 2011.

In the latest pilot, the 15 Mexican companies made 28,000 border crossings. Their trucks traveled more than 1.5 million miles and underwent more than 5,500 safety inspections. In presenting its conclusions, the agency said it also relied on data collected from 952 Mexican-owned trucking companies that were operating during the same period under pre-existing authority.

Companies from Mexico that apply for long-haul operating authority will be required to pass a rigorous safety test to gain approval, hold either U.S. or Mexican commercial licenses and meet the agency's English language proficiency requirements.

Once approved, their vehicles will be required to undergo an inspection every 90 days for at least four years.

Supporters of the program in United States and Mexico are praising the move as an important step toward the economic integration of the two countries and Canada that was envisioned at NAFTA's signing in 1994.

The pilot program showed that "Mexican carriers demonstrate a level of safety at least as high as their American and Canadian counterparts," Transportation Secretary Anthony Foxx said in a written statement.

But the move was strongly opposed by both the Teamsters and the Owner Operator Independent Drivers Association (OOIDA), which allege the move is primarily politically motivated and ignores continued safety concerns.

"I am outraged. This policy change flies in the face of common sense," said Teamsters President Jim Hoffa. "Allowing untested Mexican trucks to travel our highways is a mistake of the highest order and it's the driving public that will be put at risk by the DOT's rash decision."


(Transportation Management Article Continued Below)

 
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"(DOT's) persistence to move this program forward is mind-boggling, especially when the agency tells us ad nauseam that their highest priority is safety," said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association.

Impact Likely to be Minimal?

All the angst by truckers may be overkill, some experts say, because the impact on US logistics is likely to be minimal.

First, crossing the border is still generally a very slow process, though there is some hope that may start improving in 2015. (See Changes Coming to Cross Border Logistics with Mexico.)

But if and until those delays are mitigated, Mexican truckers may not want to have expensive Class 8 trucks tied up at the border, and may actually prefer the current short haul drayage system to move goods to drop off points just inside the US.

"NAFTA trucking is not going to change things much at the border," says Martin Rojas, vice president for security and operations at the American Trucking Associations, which has supported NAFTA. "A lot of the cross-border relationships that exist between U.S. and Mexican carriers are going to continue."

Second, Mexican carriers will have to deal potentially with expensive deadhead miles. While under the new rules Mexican firms can haul a load from the US back to Mexico, they cannot move purely domestic US freight. So that means to make a delivery deeper into the US profitable, usually the Mexican truckers will need to have secured a return load.

How hard or easy that will be is unclear. In the peak produce season from late Spring through Summer, for example, for every southbound load headed to Mexico, there can be several northbound loads for the U.S, according to Troy Ryley, managing director of logistics company Transplace de Mexico.

Ripley told the Journal of Commerce Mexican truckers may simply want to haul loads further into border states, not all the way to final delivery, looking for transloads say in Phoenix or Dallas.

"The majority of what they're interested in doing is running capacity into bordering states," Ryley said.

Are you fior or against the Mexican trucking program? Why? Let us know your thoughts at the Feedback button (for email) or section (for web form) below.

 


   
 

Recent Feedback

Is there a report to share that will guide analysts to understand the success of this program?


Jeff Jones
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Apr, 21 2016
 
   
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