Cross-Border Transportation Spring Cleaning Tips & Tricks
Volatile shipping rates and capacity, uncertain forecasts, limited alternatives and overall speed-to-market needs are driving many companies to near-source operations to Mexico. However, there are some important considerations to keep in mind when revamping your cross-border strategy in order to effectively do business south of the border. We caught up with Troy Ryley and Jose Minarro, managing directors for Transplace Mexico, and freshened up some cross-border transportation tips, which originally appeared in Inbound Logistics. Read on for some sound transportation advice!
1. Build in flexibility. Natural disasters, as well as economic, environmental and social issues, affect trade in Mexico. Working with providers and creating multiple contingency plans can help you overcome most of these events if and when they occur.
2. Control the black hole at the border. Because multiple parties and hand-offs are involved, shippers often become frustrated and lose track of freight at the border. Find a transportation partner that has the visibility tools to meet this challenge.
3. Integrate where possible. Accountability and visibility are lacking across the Mexican supply chain. Integrating where possible limits the number of hand-offs, and streamlines accountability and freight location issues.
4. Find a great Mexican customs broker. In Mexico, you’re guilty until proven innocent; therefore, choosing a customs broker is not the place to focus solely on cost savings. Unlike in the United States, the Mexican customs broker plays a key role in imported merchandise classification. You are tied to your broker long term, and issues that arise affect both parties— even as long as five years after a mistake is made. It is in your best interest to have a strong, long-term perspective on this complex element of Mexican trade.
5. When in Rome. Forget the U.S. practices you’re accustomed to and learn the realities of the Mexican marketplace. You’ll go farther a lot faster.
6. Diversify your carrier base. Constant variation in north to southbound freight changes equipment availability throughout the year. Relying on a single-asset carrier will not get your business through the tough months, and by diversifying you can mitigate this issue and take advantage of equipment surpluses.
7. Buy insurance through your global policy. Carrier insurance coverage is not built into transportation rates in Mexico. Mexican law makes the carrier liable for 15 times the Mexican minimum wage per ton, or a fraction thereof, which is equivalent to about nothing, and collecting on it is unheard of. Use your global policy to leverage the coverage you need in Mexico, as it is always the cheapest option.
8. If something sounds “too good to be true,” it probably isn’t true at all. It’s important to have a solid partner, particularly for those shipping to or from Mexico for the first time. Do due diligence on your partner, and make sure that they not only look good on paper, but will deliver on their promises.
9. Protect against exchange rate variance. Purchase logistics services in the same currency in which you sell your products.
10. Start with the supply chain “big picture.” There are lots of options in today’s supply chain, so start by thinking about how everything should look from point to point. Now that intermodal and rail are so prevalent, consider a mix to your existing supply chain. Co-loading across the border is also a new concept, so find a partner that can truly provide year-over-year cost savings – which is much different than just finding the lowest-cost broker or trucker in the market.
11. Understand U.S. Customs and Border Protection security requirements. Learn the security implications of government programs such as C-TPAT to help facilitate the flow of cross-border freight.
By assessing your cross-border initiatives and aligning yourself with a true supply chain partner, you can create a solid strategic plan to save you significant money year over year and bring huge benefits. To learn more about cross-border transportation, visit http://bit.ly/1h2j6uA
When was the last time you gave your cross-border strategy a spring cleaning?