Container growth ups Mexico customs reform pressure

Container growth ups Mexico customs reform pressure

Shippers and other stakeholders say cargo could be moved into Mexico through the sea and land ports if the customs system were streamlined through a variety of measures. Photo credit: Shutterstock.com.

Mexico’s customs system, sagging under the strain of near double-digit cargo growth at the country’s ports, is in need of serious reform to rid the process of numerous inefficiencies, frustrated stakeholders say. 

Greater efficiency in single-window technology and a reduction in the power and role of customs brokers, thus spreading responsibility to other players, would enhance flow through Mexico’s customs system, users say.

Other measures that should be attempted are a greater willingness among shippers and freight forwarders to collaborate and share information, and a commonality in the interpretation of customs rules across the 49 customs offices located in Mexico’s ports and land border posts, they say.

The focus on the customs process is part of the broader discussion over the ability of Mexico’s logistics and transportation system to fit the country’s growing role as a manufacturing and logistics hub for North America and Latin America.  

Key to any customs reform is a shift in the attitude of Mexican customs officers toward shippers or freight forwarders bringing cargo in, and the customs broker responsible for shepherding the goods through customs, said Fernando Ramos Casas, a customs broker and founding partner of RADAR Customs & Logistics.

The country’s 800 customs brokers and 100,000 importers, not to mention warehouses and transportation companies, submit paperwork for thousands of cargo entries daily and are treated with the same suspicion, he said.

“If we have made a mistake, or customs thinks that we have made a mistake, they treat us as if we were criminals,” Ramos Casas said at the JOC Mexico Trade Conference in late July. “That is stupid ... If I am a customs broker representing an importer, customs needs to see me not as a bad player but as one who wants to play good, and in good faith.”

The Mexican General Customs Administration (AGA) handled 18.6 million cases in 2018, a 5 percent increase over the year before. That number was 2 percent higher through the first seven months of 2019 compared with the same period last year, agency figures show. Although the AGA has invested time and funds in recent years reorganizing the system — particularly creating a single-window system through which documents can be submitted digitally — further steps to streamline the system are needed to increase outcome certainty and avoid delays, according to speakers at the JOC conference.

Rising load on customs

Imports through Mexican ports increased 5.9 percent in the first six months of 2019, to 1.49 million loaded TEU, over the same period in 2018, as total cargo rose 3.4 percent, according to figures from the Secretariat of Communications and Transportations (SCT). Imports last year rose 9.6 percent to 3.04 million loaded TEU compared with the year before, while total volumes were up 8.8 percent. 

Land ports handle the bulk of Mexican customs cases, with only one sea port — Manzanillo — among the country’s top 10 busiest customs offices, AGA figures show. While Manzanillo handles about 4 percent of the AGA’s caseload, the other nine together handle about 70 percent.

The need to increase fluidity in Mexico’s customs process has caught the attention of the country’s ports officials. Héctor López Gutiérrez, Mexico’s secretary of ports and merchant marine, told the JOC conference his agency is meeting with officials from Mexico’s Secretary of the Treasury and Public Credit, which oversees the General Customs Administration. The two agencies are discussing a program to improve the efficiency of the customs system with new equipment and personnel, Gutiérrez said.

Emphasis on problem cargo

One improvement suggested by a panel at the JOC conference was greater use of risk analysis to enable customs officers to identify potentially problematic cargo. That would enable the bulk of routine cargo to be processed with less scrutiny, said Ramos Casas. María Elena Sierra, a former AGA manager, is now operations manager for Grupo Prodensa, which helps manufacturers set up their business in Mexico.

“The biggest percentage of traders are trusted traders,” Sierra said, noting cargo documentation is submitted — and available to customs officers — days in advance. “So, you do have information to do the analysis and identify cargo that is going to be high on the target [list].”

Luca Winters, general manager for US-Mexican cross border services at C.H. Robinson, said one bottleneck that could be removed would be relieving customs brokers of the responsibility for calculating and collecting import taxes. That responsibility forces them to spend more time on each shipment, slowing the process, he said.

The tax collection role is just part of a customs broker’s job as the person who is solely responsible for a shipment. By shifting some of that responsibility to other parties, such as the shipper or the freight forwarder, the process of approving it could be streamlined — with the customs service able to make an evaluation of the cargo and what level of scrutiny is needed — well in advance of its arrival, Winters said.

Contact Hugh R. Morley at Hugh.Morley@ihsmarkit.com and follow him on Twitter: @HughRMorley1.