Package and industrial transportation giant UPS launched an expedited ground freight service linking Mexico and the U.S. as it anticipates higher freight traffic from customers moving manufacturing and distribution facilities to Mexico.
UPS CrossBorder Connect is a lower-priced alternative to air freight that will speed shipments from Mexico to the U.S. within two to four days, depending on origin and destination, said Steve Flowers, president of UPS GlobalFreight Forwarding.
CrossBorder Connect will complement the trucking services of UPS Freight and UPS’s air freight service, offering a product priced somewhere in the middle.
“It’s absolutely expedited freight,” Flowers said in an interview Thursday. “It’s going to be faster than standard ground transit times but at the same time much less expensive than air freight,” as much as 20 to 30 percent cheaper, he said.
The service will bundle UPS’s customs brokerage capabilities with the expedited trucking network used to support air freight service in North America.
“We have an extensive intra-U.S. ground network” used to move air freight, said Flowers. “In Mexico, we’ll be utilizing the relationships we have with a number of carriers that will help us expedite the movement of the goods to the U.S.”
UPS is launching the new cross-border service as more manufacturers locate or relocate facilities in Mexico, “near-sourcing” to take advantage of Mexico’s proximity to U.S. markets and lower transportation costs to the U.S. compared with Asia.
U.S. surface trade with Mexico rose 14.6 percent to $367.1 billion in 2011, and is now 25.3 percent higher than it was in 2008, according to the U.S. Bureau of Transportation Statistics.
“We see transborder trade with Mexico increasing at a compound annual growth rate of 10 percent,” said Flowers. “With fuel prices going up and labor costs increasing in China, customers are looking for other options to near-source.”
In particular, UPS expects more freight from automotive, healthcare and high tech customers, though Flowers said the types of goods CrossBorder Connect will move are “across the board.” “We talked to 150 customers before launching,” he said.