Mexico Cross Border Trucking

  • Mexico Cross Border Trucking

    Rail is growing faster, but truck still dominates U.S.-Mexico cross-border freight transportation

    - by Tom Sanderson

    The flow of trucks and rail containers across the U.S. Mexico border is growing, but not at a tremendously fast pace according to data from the U.S. Department of Transportation Bureau of Transportation Statistics. In 2014, 3.8 million loaded truck containers and 474k loaded rail containers crossed the U.S.-Mexico border including northbound and southbound flows. That means there were 8 truck crossings for every one rail container crossing in 2014, and the ratio has been 10:1 or more in some years, including 2009 and 2010. The compound annual growth rate from 1996 to 2014 was 4.5% for truck and 6.9% for rail.

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    The annual percentage growth or decline in rail container crossings is much more volatile than truck crossings, growing faster when the economy is strong but shrinking more when the economy is weak (and when rail service is challenged). Trucking companies reduce prices in weak economies to hang on to freight and keep their trucks moving. In stronger economies trucking companies take price increases to improve financial results when there is a shortage of equipment. Rail picks up the slack. The annual numbers show that there is only one year since 1999 that truck crossings have grown by more than 10% year-over-year, while rail growth has exceeded 10% in 7 of these years. In 2014, it is likely that industry-wide rail service and capacity issues prevented rail from continuing to grow at a faster rate than truck for U.S.-Mexico trade.

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    It is also clear that cross-border trucking has become more balanced between northbound and southbound flows, while rail container crossings remain highly imbalanced. In the late 90’s there was almost one empty truck border crossing for every loaded truck crossing. In 2014, 71% of all truck crossings were loaded. Given that there is more northbound than southbound freight, there are probably relatively few northbound empty crossings so the numbers imply that there is still about 1 empty for every 1 loaded southbound truck move. Rail crossings remain highly imbalanced and only in the last 2 years have there been more loaded than empty rail container crossings. Again, given the stronger northbound flows, the number suggest that there are very few southbound loaded rail container moves. The dramatic difference in equipment balance between truck and rail reduces the overall economic advantage of rail versus truck  because of the need to move empties southbound to handle the northbound flows. Despite this inefficiency, intermodal is growing at a faster pace than truck driven by the long haul nature of cross-border freight, the shortage of long haul truck drivers, customs clearance advantages, and the overall economic advantage of rail over truck for long haul transportation.

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  • Mexico Cross Border Trucking

    MX cross-border trucking stalls

    - by Tom Sanderson

    The number of US-Mexico border crossings by Mexican-domiciled carriers remains limited to only a few small carriers and the growth rate seems to have stalled. As of today, according to FMCSA’s web site, there are still only 13 carriers with Operating Authority, 9 permanent and 4 provisional. One additional carrier is in a pending status. The approved carriers have completed 26,706 border crossings, but the vast majority of those have been made by two carriers as shown in the following table.

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    In the U.S., to qualify to haul hazardous materials, among other criteria, a carrier must score in the top 70% of all carriers on Vehicle Out-of-Service rate (<33.3%) and Driver Out-of-Service rate (<9.7%). Clearly the participating carriers are scoring much better than what would be required of hazardous materials haulers in the U.S. Eleven carriers had Compliance Reviews in 2013 and 10 of those received Satisfactory ratings while 1 carrier received a Conditional rating. The carrier with the conditional rating had their Operating Authority revoked. While growing at a slow pace, it is great to see the strong safety performance scores for carriers participating in the program.

    In order for the program to be considered viable, FMCSA has stated the program needs a sample of 46 carriers and 4,100 safety inspections. The safety inspection criteria has been met, but the number of participating carriers is far below goal. FMCSA granted provisional authority to the first Mexican-domiciled carrier on October 14, 2011, formally initiating the pilot program. Legislation required that the pilot program be completed in three years, by October 2014. It will be interesting to see how the FMCSA handles this over the next month.

    During the week of 9/15-9/21 there were 362 crossings by 55 vehicles. That would annualize to about 19,000 crossings per year. When I last reviewed this data in April there were 453 weekly crossings. Each of the 7 weekly reports before the current report showed crossings  in the 400’s so the latest report may be an anomaly. Still, it is very disappointing to see a lack of growth in the last six months.

    About three-quarters of all crossings to date have been at Otay Mesa, CA. This is interesting since, in total, the number of trucks crossing the MX-Texas border is 3 times as many as cross the MX-California border.

    Otay Mesa

  • Mexico Cross Border Trucking

    Update on Mexico cross-border trucking

    - by Tom Sanderson

    On the legal and regulatory front, the good news is that The U.S. Supreme Court refused the Owner-Operator Independent Drivers Association’s (OOIDA) request to hear its appeal from last July’s court rejection of OOIDA’s case against the federal cross-border trucking pilot program with Mexico.

    Meanwhile the number of crossings continue to increase, but are limited to only a few small carriers. As of today, according to FMCSA’s web site, there are 13 carriers with operating authority, 10 permanent and 3 provisional. In addition there are three carriers pending approval, one of which is open for comments, Docket Number FMCSA-2011-0097 at www.regulations.gov. The approved carriers have completed 16,670 border crossings, but the vast majority of those have been made by two carriers as shown in the following table.

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    During the week of 3/24-3/30 there were 453 crossings by 55 vehicles. That would annualize to about 24,000 crossings per year. Well over half of all crossings to date have been at Otay Mesa, CA.

    In the U.S., to qualify to haul hazardous materials, among other criteria, a carrier must score in the top 70% of all carriers on Vehicle Out-of-Service rate (<33.3%) and Driver Out-of-Service rate (<9.7%). Clearly the participating carriers are scoring much better than what would be required of hazardous materials haulers in the U.S.

    While still growing at a slow pace, it is great to see some growth and to see the strong safety performance scores for carriers participating in the program.

  • Mexico Cross Border Trucking

    More good news on US-Mexico cross-border trucking program

    - by Tom Sanderson

    On July 26, the Federal Motor Carrier Safety Administration (FMCSA) won both of the cases filed against the cross-border trucking program. In one case, the Owner-Operator Independent Driver Association (OOIDA) was joined by the Teamsters in appealing an April 2013 ruling against them arguing that a Mexican issued Commercial Drivers License (CDL) should not be accepted in the U.S. The court ruled that Congress had decided the Mexican CDLs would be accepted and that would not be overruled by the court. Judge Brett Kavanaugh on behalf of the three-judge panel wrote: “We therefore conclude that the pilot program allows Mexican truck drivers to use their Mexican-issued commercial drivers’ licenses.” The court cited a 2001 statute requiring the FMCSA to verify that each Mexican driver had proper qualifications “including a confirmation of the validity of the Licencia de Federal de Conductor”, or Mexican CDL, and a 2007 statute that said the Secretary of Transportation “will accept compliance with a corresponding Mexican law or regulation as the equivalent to compliance with the United States law or regulation.”

    OOIDA also argued in this case that Mexico’s drug testing program was inadequate and neither were its vision tests. Regarding the Mexican vision tests, the court stated “ … Mexican medical standards, some of which are more stringent than the American standards, would provide a level of safety at least equivalent to the American standards as a whole.” These arguments were also rejected, meaning the case will not be reheard. 

    In the second case, OOIDA argued that Mexican drivers were receiving substandard medical clearances because doctors in Mexico are not on the FMCSA’s National Registry of Certified Medical Examiners. This argument was also rejected, and is quite a stretch given that the Registry ruling will not take effect for U.S. carriers until July 2014.

    According to the FMCSA website, through July 7 there have been 4,320 crossings by 11 carriers. A twelfth carrier has been approved but has not moved any loads and according to Transport Topics, a 13th carrier will be approved – Sergio Tristan Maldonaldo, doing business as Tristan Transfer. There were 255 crossing the week of 7/1 to 7/7 which would annualize to more than 13,000 per year. Now that is some good news on this program!

  • Mexico Cross Border Trucking

    Heavy Duty Trucking magazine provides an update on cross-border trucking

    - by Tom Sanderson

    Heavy Duty Trucking provides a nice update on the status of the U.S. and Mexico cross-border trucking program. The report is consistent with what we have posted in our blog; participation is much slower than hoped for and the carriers participating in the program have an excellent track record of safety.

    There have been about 3,500 movements from Mexico to the interior of the U.S. and more than 1,110 inspections so a very thorough inspection process. For all but one carrier the driver out-of-service rates are zero and for that one carrier the rate is 3.85%. To be in the best 30% of all carriers monitored by the FMCSA requires a driver out-of-service rate of less than 9.7%, so hats off to the current cross-border participating carriers. Seven of the twelve participating Mexican carriers have received Compliance Reviews from the FMCSA and all of those have received Satisfactory ratings.

    With the implementation today of the new hours-of-service regulations which will not improve highway safety but will harm trucking productivity, it is heartening to see some progress on cross-border trucking and great to see the strong safety performance of the participating carriers. This program is an important component of a safe and efficient national supply chain.

  • Mexico Cross Border Trucking

    Cross-border US-Mexico trucking clears a legal hurdle and gains some momentum

    - by Tom Sanderson

    A federal appeals court unanimously rejected a challenge to the legality of the Federal Motor Carrier Safety Administration’s pilot program for cross-border trucking. The challenge was brought by the Teamsters and the owner operator group OOIDA and was supported by Public Citizen. The Teamsters argued that Mexican trucks moving freight into the US should be subject to the same environmental regulations that are imposed on trucks manufactured in Mexico and imported to the U.S. for use by U.S. companies. OOIDA challenged the FMCSA’s rule that a Mexican commercial drivers license and medical certificate were acceptable in the U.S. Both groups are simply trying to eliminate competition through regulation. The FMCSA and American Trucking Associations welcomed the ruling.

    While legal battles are one aspect of the challenge, perhaps the more important challenge it to convince Mexican truckers that it is in their best financial interests to participate in the pilot program. I have written several posts on the very slow pace of participation in the program. The FMCSA has now approved the 11th carrier for the program and as of today, the FMCSA website reports that since inception there have been 2,668 crossings under the program. While these numbers remain short of the FMCSA’s targets of 46 carriers and 4,100 crossings, it appears that the program is gaining momentum in the real world – that is the world outside of Washington DC where freight actually gets picked up and delivered every day in spite of the regulatory onslaught on freight transportation.

    It has to be noted that collectively, the approved carriers only operate 20 trucks in the cross-border service, but this still represents progress. One of the carriers, GCC TRANSPORTE SA DE CV, accounts for almost 75% of all crossings under the program. 

  • Mexico Cross Border Trucking

    Cross-border trucking program flounders

    - by Tom Sanderson

    As the year comes to a close, it is disappointing to report on the lack of progress made in 2012 on Mexico-U.S. cross-border trucking. At this point the program is in danger of failing, not due to safety issues or court challenges, but due to lack of interest.

    Transport Topics reported last week that only 9 carriers have been granted operating authority by the Federal Motor Carrier Safety Administration (FMCSA), 16 application are currently under review, and 10 have been withdrawn or denied. The approved carriers have made only 193 border crossings. To put that in perspective, nearly 5 million trucks per year cross the U.S.-Mexico border and 6,900 Mexican carriers operate within the 25-mile commercial zone. The FMCSA stated that a minimum of 46 carriers receiving 4,100 roadside inspections would be required to validate the safety of the Mexican trucking companies and drivers.

    The court battle against Mexican carriers continues, as oral arguments were heard December 6th in the suit filed by the Teamsters, Owner Operators (OOIDA) and the so-called safety advocate Public Citizen. The FMCSA is confident in its case and while there is some risk of court action to kill the program that is not the biggest risk to cross-border trucking.

    While Mexican carriers are certainly hesitant to participate because of the complexity of U.S. regulations, a more practical concern is that once in the U.S. the carrier must haul a load back to Mexico or return empty. Without a customer base in the U.S. with a steady flow of southbound cross-border freight, Mexican carriers would be hard pressed to make money on the business. Perhaps we will see greater participation with freight destined to Dallas or Houston from Mexico, but more likely the limited participation will result in cancellation of the program by FMCSA.

    Why should you care? First, cancellation will likely result in Mexico putting tariffs back into effect on some commodities moving from the U.S. to Mexico which will hurt our economy. Second, eventually our economy will recover and we will see a significant shortage of over-the-road TL drivers. While the cross-border program is not a solution to that problem, there is no single solution and we need to pursue every viable and economically feasible solution to mitigate a problem that will dramatically impact our supply chains.

  • Mexico Cross Border Trucking

    U.S. and Mexico cross-border truck traffic nears 5 million annually

    - by Tom Sanderson

    Cross-border truck traffic between the U.S. and Mexico increased 2.6% in 2011 to 4.9 million units. In 1995, traffic was only 2.9 million units. Traffic was down slightly in 2008 and then dropped 11.8% in 2009, but has now recovered to pre-recession levels. The one truck that has actually crossed the border under the FMCSA cross-border pilot program crossed 9 times between October and February or about 2 times per month. To put that in perspective, there were about 400,000 total crossings per month in 2011.

    There is now almost as much cross-border traffic with Mexico now as there is with Canada, which is quite a change from 1995. Canadian traffic had reached 7 million units annually in the early 2000’s but has dropped to 5.5 million. Cross-border Canadian freight did increase slightly in 2011. In 2002, the Canadian dollar was worth about 64 U.S. cents but now is roughly at parity. That is a major factor in the reduction of goods crossing the U.S. Canada border.

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  • Mexico Cross Border Trucking

    “Progress” on cross-border trucking

    - by Tom Sanderson

    A third trucking company, Baja Express Transportes out of Tijuana, was approved for cross-border trucking. You are forgiven if you are not familiar with this carrier. They operate one truck and have one driver. The truck is a 2004 Freightliner. OOIDA is challenging the truthfulness of Baja’s application.

    That brings the grand total to 4 trucks (not trucking companies) that have been approved under the pilot program. To those who remember Ross Perot’s presidential debate, there is no giant sucking sound of jobs going south on this program.

    There are 17 other carriers that have submitted applications that are currently in “Pending” status. You can follow along at the FMCSA website.

  • Mexico Cross Border Trucking

    Mexico cross-border trucking program remains stalled

    - by Tom Sanderson

    Not much has happened since last October when the the FMCSA approved the first Mexican trucking company to enter the U.S. According to Transport Topics, Transportes Olympic remains the only motor carrier granted authority under the pilot program. The carrier only has two trucks, one of which is registered for the program. The registered truck has crossed the border 9 times since October. In addition, one owner operator Moises Alvarez Perez, who does business as Distribuidora Marina El Pescador, received authority in December and has one truck but it has yet to cross the border. We should be grateful that the Mexican government cancelled its retaliatory tariffs on U.S. exports when the cross-border program was approved, but it sure does not seem like they got much in return.

    Despite the incredibly low participation in cross-border trucking, the program is being challenged in court by the Owner-Operator Independent Drivers Association, the Teamsters union, and Public Citizen. The lawsuits were filed in the Court of Appeals for the District of Columbia Circuit. They remain separate lawsuits, though the court has ordered that they be argued on the same day. It has not yet scheduled the arguments.

    The FMCSA denies that the groups are eligible to challenge the program.

    It is hard to say whether the lack of participation is due to uncertainty around legal, political, and regulatory issues or if it is driven more by economic concerns. Long-haul Mexican carriers do not want their drivers sitting for hours at the border waiting to cross into the U.S. Most of those moves are handled by local shuttle trucks. Once they are in the U.S. the Mexican carrier is only allowed to haul a load back to Mexico. That makes it unlikely that the carriers will want to go much beyond Dallas, Houston, and San Antonio recognizing that they don’t want to sit and wait for a return load and also can’t afford to come back empty. Longer haul round-trip dedicated runs are also a possibility.

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