This Mexican Customs Broker control requires all southbound ground-conveyed commercial cargo to stop on the U.S. side of the border at land ports-of-entry (POE) such as Laredo, Texas where the cargo will have to wait until the Mexican Customs Broker files the Relacion de Entrada and Pedimento de Importacion with Aduana (Mexican Customs Administration). Northbound commercial traffic destined for the United States has to stop on the Mexican side of the border for the same reason. The impact on the U.S. and Mexican shippers, and border POEs in the way of traffic, clutter, and congestion causes unnecessary delays, and costs - the hidden tariff! Here is an example.
A U.S. exporter in Detroit, Michigan ships car parts to an assembly line in Mexico. The U.S. cargo is picked up and carried by a U.S. commercial motor carrier and moved to the POE at Laredo, Texas. When the motor carrier reached Laredo, it dropped the cargo off at a designated location, usually at the warehouse facilities of an exclusive agent of the Mexican Customs Broker or at a U.S. forwarding agency in Laredo or at its own terminal. Unless there was cargo ready for a return trip back to Detroit, the motor carrier returned without cargo, resulting in a greater cost of carriage that was passed on to the exporter in Detroit.
Upon arrival of the cargo the Mexican Customs Broker is notified so he could inspect the cargo in Laredo, seal the container, execute the Pedimento de Importacion and complete the Mexican Customs paperwork. The cargo then sat until a Mexican drayage or transfer motor carrier (often owned or controlled by the Mexican Customs Broker), was dispatched by the Mexican Customs Broker to pick up and cross the cargo into Mexico.
There was no hurry to do this since the longer the trailer or container waited on the U.S. side to cross into Mexico, the greater the storage fee revenue would be for the exclusive agent of the Mexican Customs Broker. Thus, the basic costs for crossing included the Mexican Customs Broker's fee, his exclusive agent's fee, the warehouse fee, and, of course, the fee of the drayage motor carrier - all totally unnecessary costs at border POEs to move the U.S. exports into Mexico.
Essentially, the same process took place with a Mexican export to the United States. A Mexican exporter in Monterrey would ship to the United States, but its cargo would only be carried to the border on the Mexican side. The cargo is dropped off at drop lots (pensions) on the Mexican side. Again, the cargo would wait for the Mexican Customs Broker to release it for entry into the United States.
Except in this case, the drop lots were really open lots or areas where the conveyance with its cargo could be left for pick up. Security was in most, if not all, cases absent or extremely limited. Thus, drug cartels could easily enter the conveyance and steal goods or add drugs to the legitimate cargo shipped from Monterrey. As in a southbound shipment, after the Mexican Customs Broker released the cargo for movement into the United States, a Mexican drayage motor carrier would pick up the cargo to transfer it to the U.S. side.
Fundamentally, the Mexican Customs Broker had complete control of inbound cargo on the U.S. side (25% of the Customs market), inbound cargo on the Mexican side after the U.S. cargo crossed into Mexico (25%), and control of all outbound cargo on the Mexican side destined for the United States (25%), essentially 75% of the cross-border Customs market, leaving only 25% of it for the U.S. Customs Broker.
The incredible revenue produced by this situation of "releasing cargo" for crossing and controlling the entry of cargo into the territory of Mexico once crossed, constituted the estimated an annual 2 billion dollar unofficial tariff on goods crossing the southern border representing a virtual monopoly of 75% of the cross-border Customs Brokers' market. One can see why this process and resulting drayage are defended so intensely by Mexican Customs Brokers.