DOT faces cross-border trucking decision as US-Mexico trade grows

DOT faces cross-border trucking decision as US-Mexico trade grows

The book is closed on a three-year cross-border trucking pilot project with Mexico but the debate over the project and its findings is far from finished. The question hanging over the increasingly busy U.S.-Mexican border is what steps the U.S. will take next to meet its North American Free Trade Agreement obligations and avoid a renewed economic conflict with its second-largest trading partner.

Federal regulators will meet with a trucking industry advisory committee Oct. 28 in Alexandria, Virginia, to discuss the results of the pilot project, which began in 2011 and ended Oct. 10. The pilot replaced an earlier Bush-era test program shut down in 2009 and led to the lifting of more than $2.4 billion in punitive tariffs Mexico imposed on U.S. goods.

However, the pilot project attracted very few Mexican carriers. For now, the tractor-trailers operated by the 13 Mexican trucking companies that participated in the program will continue to roll across the border and operate within the U.S. beyond the border commercial zone, as the Federal Motor Carrier Safety Administration decides whether to grant the carriers permanent U.S. authority.

“Prior to making any additional determinations regarding cross-border trucking issues or specific carriers, the Department of Transportation will await expected reports on the pilot program from the Motor Carrier Safety Advisory Committee and the DOT Inspector General,” a spokesperson for the federal trucking safety agency said in an e-mail. Until then, the Mexican carriers in the pilot project will have provisional or standard U.S. authority, she said.

Through the project, those carriers received authority to carry freight beyond the border commercial zone to destinations throughout the U.S. and to haul freight back to Mexico, but not U.S. destinations.  However, the trucking firms that enrolled in the project were hardly a drop in the proverbial bucket when it comes to total cross-border truck traffic between the U.S. and Mexico.

The pilot project carriers operated a total of 55 vehicles and employed 53 drivers, according to FMCSA data. In 2013, commercial trucks made 5,194,867 border crossings between the Mexico and the U.S., a 1.8 percent increase over 2012, according to the U.S. Bureau of Transportation Statistics. From 2011-2013, the BTS logged a total of 15,167,166 truck crossings.

In a 36-month period, the 13 carriers in the pilot project made 27,915 border crossings, according to the FMCSA — less than two-tenths of one percent of the total number of truck crossings logged by the BTS for 2011-2013. What’s more, one of the carriers, Servicio de Transporte Internacional, accounted for 72 percent of the pilot project border crossings.

Should more Mexican carriers be allowed to apply for U.S. authority under terms comparable to those in the pilot project? That question will be hotly debated. The Teamsters union and the Owner-Operator Independent Drivers Association opposed the pilot project strenuously, though they weren't able to block it. The Mexican trucking association, Canacar, threatens to seek billions of dollars in damages from the U.S. government for not fulfilling its NAFTA obligations, according to Transporte.mx.

There’s a clear need for a better way to move freight across the U.S.-Mexican border, where shippers, carriers and logistics companies face both congestion and short capacity, thanks to the imbalance in northbound and southbound loads. That imbalance, however, may be one reason few Mexican carriers were willing to join the pilot project and haul freight well beyond U.S. border states to destinations where Mexican-bound freight might be scarce.

If only one southbound load is available for two to three or even four northbound loads from Mexico, Mexican carriers aren’t likely to send drivers too far into El Norte without guarantee of a backhaul. “They don’t have sales forces in the U.S.,” who could find those southbound loads, and they can’t haul domestic freight within the U.S., said Troy Ryley, managing director of Transplace de Mexico, the Mexican arm of U.S. third-party logistics provider Transplace.

“I’ve also heard that there was a huge concern about U.S. liability exposure,” Ryley said. “They had and continue to have more than enough business in Mexico, why would they venture into U.S. markets at this time?” he said. “This is a good time to be a Mexican trucker.”

The U.S. and Mexico hope to speed cargo across the border through an agreement that seeks to increase collaboration between the nations’ customs agencies. The agreement, signed last week, would benefit shippers and carriers recognized as “trusted traders” — such as such as members of the Customs-Trade Partnership Against Terrorism in the U.S. The U.S. and Mexican customs agencies expect to implement the plan in 2015.

Truck traffic, however, is increasing now. The number of truck crossings in July rose 5.8 percent and the value of goods carried by truck rose 8.8 percent, BTS data show.

More of that congested cross-border truck freight may shift to intermodal rail. Kansas City Southern Railway is investing in cross-border expansion as intermodal and carload traffic across the Mexican border increases. In the third quarter, KCS intermodal and carload revenue hit a $167 million record, the company said Friday. That’s a 14 percent increase, the company said. Automotive business accounted for 79 percent of KCS cross-border traffic.

There’s even a new short-sea shipping service connecting the Mexican Gulf Coast Port of Coatzacoalcos, in the state of Veracruz, and Port Manatee, Florida. Starting this month, World Direct Shipping will offer weekly, 2 1/2 day transit time service using an 862-TEU ship.

As more automotive and white goods manufacturers locate production facilities in Mexico, the need for more diverse cross-border transportation options will only increase.

Contact William B. Cassidy at wcassidy@joc.com and follow him on Twitter: @wbcassidy_joc