Mexico has presented significant growth and cost savings opportunities for many companies in recent years as they’ve looked to decrease time-to-market, reduce inventory warehouse space, speed up cash-to-cash cycles and cut transportation costs. Additionally, a growing number of U.S. retailers have begun opening stores in Mexico to increase their customer base and further drive profits by capitalizing on the country’s growing middle class.
Yet despite the operational efficiencies already achieved by companies doing business in Mexico, for many, there is still significant untapped opportunity by shipping freight using intermodal.
Increased Speed and Reduced Costs With Intermodal
Since the North American Free Trade Agreement (NAFTA) was signed in 1994 and the resulting growth for the partnering countries, the U.S.-Mexico border has become one of the busiest, most economically important borders in the world, with nearly a billion dollars’ worth of goods crossing each day – eighty percent of which crosses the land border on trucks and trains. While it has become increasingly easier to do business in Mexico and streamline cross-border operations, there are still issues related to congestion at the border due to the volume of trucks trying to cross each day along with the intense, often time consuming inspection processes by U.S. and Mexican Customs. These border processes can take several hours and sometimes days.
Although necessary, this complex, often slow process can significantly delay shipments. While lengthy delays at the border are just a fact of life for over-the-road (OTR) carriers, this is not an issue when shipping via rail, which typically takes around two hours. This substantial difference in time required to cross the border is largely due to the different inspection processes, as boxcars shipped via rail are not subject to the same intense inspections from customs as truck trailers, which often require that the cargo be unloaded and examined before being reloaded and continuing service. By shipping via rail, companies can ship door-to-door without their products ever having to be unloaded for inspection.
Reduced delays at the border can greatly improve efficiency and service, but the benefits of intermodal are not limited to wait time. In recent years, many shippers have begun converting their domestic shipments from OTR modes to intermodal in order to take advantage of the reduced transportation costs afforded by rail. Additionally, rail is four times more fuel efficient than truck and, as a result, fuel surcharges are 50% of those charged by OTR truck.
In addition to the savings achieved by shipping via rail, there are also is also significant savings that can be achieved during the inspection process – both in cost and time.
Intermodal Presents Great Opportunities Cross-Border
While some shippers have viewed intermodal as a slower, lower quality service, the cross-border opportunities have changed over the last few years to allow for seamless transportation and quicker service at cheaper costs. However, there are still a large amount of shippers that don’t understand the process of shipping into and out of Mexico, and as a result, have been hesitant to start shipping into Mexico or changing the transportation modes being used.
Shippers doing business between Mexico and the U.S. should partner with logistics providers who have deep understanding of Mexican transportation and processes along with the technology and service offerings to provide seamless door-to-door visibility from origin to destination. This will allow them to take advantage of the opportunities and benefits presented by intermodal transportation and allow them to control their freight door-to-door – bypassing border crossing issues with customs and congestion at the border while reducing transportation costs.
Dan Beers, Intermodal Project Leader, Transplace Mexico
With more than 40 years in the transportation industry, Mr. Beers joined Transplace Mexico to produce an intermodal service to enhance the ability to meet transportation needs of customers. Prior to joining Transplace Mexico, Mr. Beers was the Chief Commercial Officer of Pacer International, where he was responsible for all commercial activities involving intermodal transportation, as well as customer support for Pacer Stacktrain. Prior to joining Pacer, Mr. Beers was President of Swift Intermodal and was responsible for the start-up and development of the intermodal division. Mr. Beers also worked for TFM Railroad (now KCS De Mexico) as Senior Vice President of Intermodal and was part of the original group that purchased the railroad from the Mexican government. Mr. Beers is a graduate of Texas A&M University-Commerce with a degree in accounting.
Ben Enriquez, Country Director, Transplace Mexico
Mr. Enriquez has more than 15 years of international experience in Mexico and the United States. His areas of expertise include cross-border transportation in multiple modes such as truckload, less than truckload, flatbed, intermodal, heavy rail cars and multimodal as well as supply chain, freight optimization and cross-border regulations (customs, C-TPAT). Prior to Transplace Mexico, Mr. Enriquez was a Shipper Export Manager at Electrodos Intra and held roles with Werner Enterprises, USA Carriers and Expeditors International. In 2012, Mr. Enriquez was recognized with the CSCMP Innovation Award for Transplace Mexico’s collaboration with Daltile, Whirlpool, Werner Ladder and Convermex. He has a Bachelor of Arts in international trade from Monterrey Tec in Mexico City.