Borderlands is a weekly digest of developments in the world of U.S.-Mexico cross-border trucking and trade. This week: Cargo insurance can boost cross-border operators’ business; Ryder System leases logistics center near Dallas-Fort Worth; Paccar announces $50 million investment in truck plant in Mexico; Thefts from freight trains in Mexico rose in September.
Cargo insurance can boost the business of cross-border operators
Although cargo theft and trucking accidents are common in Mexico, cross-border business remains a lucrative market for brokers, carriers and shippers.
An increased focus on bringing supply chains back to North America helped Mexico replace China as the United States’ largest trading partner in 2023. Mexico has been the United States’ top trading partner since the beginning of the year, recording $656 billion in two-way trade from January through January. November, according to the US Census Bureau.
Even with nearly 70% of trade between Mexico and the United States done through trucking, the cross-border cargo insurance market can be confusing to many, according to Mark Vickers, executive vice president and head of international logistics at Reliance Partners.
Big carriers devote a significant amount of their energy to shipper-specific cross-border contracts, Vickers said.
“They won these contracts because of a number of factors, but the most important are throughput, cross-border risk management and insurance strategy, and size of asset allocation,” Vickers said.
Cross-border shippers often prefer to work with a carrier that can provide them with 100 trucks a week rather than smaller carriers, according to Vickers.
“These large carriers are then able to get preferential terms on their Mexican freight insurance because of the volume they transport, and because of the fixed nature of their risk management,” Vickers said. “This makes it difficult for a small and medium-sized broker or carrier to compete against larger companies. Cargo insurance rates in Mexico will be much better for a large carrier that has uniformity in their risk management than for a broker trying to move a single spot shipment or for a carrier Which move less volume.However, we are seeing brokerages and smaller carriers getting business when they proactively offer Mexican cargo insurance and highlight their risk management protocols if their rates are compliant.
Reliance Partners, based in Chattanooga, Tennessee, is a trucking insurance company with nine locations across the country. Vickers joined Reliance Partners in 2021 after the company acquired Borderless Coverage, which he founded in 2018.
He started Borderless Coverage because many major shipping companies were requesting an all-risk cargo insurance solution in Mexico.
“I worked at Total Quality Logistics for about eight years before starting Borderless Coverage, and during my time there I handled a lot of expedited inbound and outbound shipments from Laredo, Texas,” Vickers said. “All these shippers in this industry, they use me for their brokerage services locally and then they start saying, ‘Hey, you’re doing a great job handling all our expedited shipments.’ Can you also start handling our Mexican business?”
Liability insurance is not required in Mexico. However, when the shipping company does not declare the value of the goods, liability is limited to $90.52. Given the very low threshold, pursuing liability actions is uncommon in Mexico, Vickers said.
“What I needed as a freight broker and what shippers have been asking for for 10 to 12 years is a product they can put on top of their global insurance policy and/or self-insurance program (which typically carries a $100,000 deductible), which covers theft and has a $5,000 deductible,” Vickers said. A dollar or less.” “Borderless coverage does just that and forces shippers, brokers and carriers to work better together in a siled cross-border supply chain.”
As more global manufacturers move parts or all of their supply chains to Mexico, Vickers said brokers and small and medium-sized carriers need to understand all the insurance options available to them for loads moving across the country.
“Cargo insurance in Mexico is now easier and more cost-effective, and is now requested by more than 30% of cross-border shippers in the United States,” he said. “It is more cost-effective because logistics companies are using it 500% more than they did before the pandemic, and before the implementation of the U.S.-Mexico-Canada Trade Agreement (trade agreement) and the ongoing U.S.-China trade agreement.” The trade war, which accounts for a lot of the reasons behind the supply chain congestion that has led to the proximity to Mexico.
As more shipments move across the border between the two countries, cargo theft remains a problem in Mexico. Reliance Partners has launched a cargo hijacking data portal in Mexico, where shippers, carriers and brokers can see some of the latest trends across Mexico.
There were 6,030 incidents of merchandise theft across Mexico between January and September 2023, an increase of 8% year-on-year from the same period in 2022, according to Reliance Partners.
In November, the National Association of Vehicle Tracking and Protection Companies in Mexico recorded 306 cases of cargo theft across the country, with an average of more than 10 cases per day.
In August, the Mexican Alliance of Transport Organizations threatened to strike if federal and state authorities did not implement more road protection measures, which they had agreed to before the work stoppage.
Vickers said Mexico’s federal and state authorities still need to do more.
“The government needs to be more involved; That’s why there was almost a very big strike in Mexico by drivers due to violent hijackings, and the government did absolutely nothing to help with that. “They need to take a more aggressive stance about theft of goods.”
Ryder System leases a logistics center near Dallas-Fort Worth
Ryder System Inc. 234,475 square feet industrial space in Haltom City, Texas.
The space is located in the recently constructed Northmark Mall, a Class A facility that includes 32-foot clearance heights, single and multi-tenant occupancy, cross-section configurations, 56 doors, 132 parking spaces, and 19 off-dock trailer stalls. and a secure landing area containing 104 additional trailer stalls.
Miami-based Ryder (NYSE:R) is a provider of leasing, fleet management, transportation and supply chain solutions.
Haltom City is located between Dallas and Fort Worth and close to AllianceTexas, a 27,000-acre mixed-use industrial and residential development.
Northmark Mall also recently sold to an institutional buyer, according to Newmark Group, which handled the sale. Details of the buyer and transaction were not disclosed.
“With its prime last-mile location in the north Fort Worth industrial submarket, Northmark presented an exceptional investment opportunity,” Dustin Volz, vice chairman of Newmark’s board of directors, said in a press release.
Paccar announces $50 million investment in truck plant in Mexico
Paccar Inc. invests. $50 million Kenworth Mexicana truck manufacturing facility in Mexicali, Mexico, according to a news release.
The investment will be allocated to a new testing facility for electric, diesel and natural gas vehicle engines, as well as additional administrative offices, and an expansion and redesign of the facility’s cafeteria. The factory employs 3,500 workers.
Paccar (Nasdaq: PCAR) produces Kenworth and Peterbilt Series 5 to Series 8 trucks at its 590,000-square-foot Kenworth Mexicana plant. In 2022, the factory produced 15,500 cars, which were mainly exported to the United States and Canada.
Mexicali is located in northern Mexico, directly across the US-Mexico border from Calexico, California.
Thefts from freight trains in Mexico rose in September
There were 312 incidents of theft from freight trains in Mexico in September, according to the latest monthly data from Mexico’s Rail Transport Regulatory Agency (ARTF).
Freight train thefts rose by 108% year-on-year in September compared to the same month in 2022, when 150 incidents were recorded.
Agricultural grains accounted for 21% of thefts during the month, followed by industrial and raw materials at 17%, and car spare parts at 16%.
The ARTF did not provide details on which Mexican states recorded the highest number of freight train thefts.
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