Transborder Trends
Mexico… your guide to Golfing, Driving and Importing to Canada
For most people, Mexico conjures up ideas of dream vacation possibilities such as relaxing in Cozumel or exploring Mayan ruins. In contrast, for many of those in the logistics field, shipping to Mexico instills the same fear that could be derived from cliff diving in Acapulco.
The U.S.-Canadian border, where shipments are routinely released at the beep of a barcode scanner, is a very different environment from the one on the U.S. -Mexican border where stories abound of shipments sitting for months as daily penalties are incurred.
I first visited a number of the crossing points between Mexico and the United States in the late eighties as well as venturing by car from Laredo, Texas, to Mexico City. The purpose of these and several later excursions was to gain a stronger familiarity with the process and requirements of shipping to and from Mexico, prior to our establishing an operational facility at the Mexican border.
| Too often the first exposure to shipping to or from Mexico occurs at the time of shipment and your new self-appointed supplier... |
The most important lesson I learned at that time was, don’t assume anything. Logistics in Mexico bears little resemblance to that in the rest of North America.
The same could be said for driving, which to a visitor can be challenging. I quickly learned one rush hour that on Mexico City’s Avenida Reforma the traffic lights appear to be there for decoration only. The traffic direction and flow is clearly not determined by what is happening with the lights. Changes in direction occur when the drivers on the cross-street say it’s now or never, close their eyes and hit the gas. These interruptions in the flow of your traffic lanes are there to allow you a few seconds to stock up on Chiclets or newspapers and pay your financial respects to the entertainers that include everything from mime acts to fire eating jugglers.
Sitting in the middle of a major intersection, I realized that when doing business Mexico market knowledge is essential: know what you are getting yourself into.
In my view Mexico is a fantastic country rich in history and culture. Mexico also represents expanded business opportunities in North America. It would be unfortunate for any organization to miss these opportunities due to fears that their shipments would be impounded, or worse, at the border.
Shipping goods to or from Mexico differs significantly from shipping between Canada and the United States. The regulations differ, the process is different, as are the group of service providers involved at the various stages of the door-to-door movement.
When shipments take place between Canada and the United States only two or three parties are usually involved, at least in the majority of cases: the carrier or forwarder, the customs broker, which are sometimes one and the same company, as well as Canadian or United States Customs.
When you import a shipment from Mexico into Canada two or three parties quickly increase to eight or ten, some of which are involved on more than one occasion. To illustrate this, here’s an example of the steps, the parties and their roles in the movement of a Less Than Truckload (LTL) shipment from the interior of Mexico via Laredo to eastern Canada.
The Shipper: Not all Mexican companies qualify to be exporters. The shipper or exporter is required to have an RFC Number (similar in purpose to the United States IRS number and the BN number in Canada). Documentary evidence of the RFC number as well as a separate Import/Export ID number is also required at the time of shipment, along with documentary evidence of the physical address of the shipper. The shipper completes the Commercial Invoice, Packing List and North American Free Trade Agreement (NAFTA) Certificate of Origin and tenders the shipment with the accompanying documentation to the originating carrier.
The Originating Carrier: The carrier transports the shipment from origin to his terminal in Nuevo Laredo, hopefully ensuring that the shipment and the documentation travel together. Upon arrival in Nuevo Laredo the carrier must notify the appointed Mexican custom broker and turn over the original documents.
The Mexican Customs Broker: This is the party that legally represents the shipper under the authority of a Power of Attorney and arranges the export customs clearance filing, known a Pedimento. The custom broker will also require documentary evidence that the signatory on the Power of Attorney is so authorized to sign. In addition to preparing the Pedimento, the Mexican Broker coordinates the movement with the transfer (drayage) agent and the appointed U.S. customs broker.
The Transfer Agent: The agent picks up the shipment from the originating carrier’s facility and transports the shipment across the border through Mexican Customs to report at United States Customs.
Mexican Customs: It reviews the documentation, which must be complete in Spanish, and releases the shipment for export by stamping the Pedimento. Even though the goods are leaving the country, Mexican Customs also have the right to conduct a physical examination or intensive on the goods prior to release for exportation.
United States Custom Broker: Hopefully the U.S. and Mexican Brokers have been communicating prior to this point. Prepares T & E documentation and presents this to U.S. Customs. Physical presence of the U.S. broker’s dispatcher is required in order to have the driver released and the shipment enter the United States. There is no pre-filing arrangement in the case of T & E Shipments.
United States Customs-Laredo: Accepts, by stamping the T & E, allowing the goods to enter the United States for the purpose of transit.
The Destination Carrier: It receives the shipment at the Laredo, Texas, facility from the transfer agent and moves the goods through their system to the Detroit/Windsor crossing.
United States Customs-Detroit (back in the picture again): Satisfied the goods are leaving the United States, it cancels the T& E bond at Detroit.
Canadian Custom Broker: The broker prepares the release documentation and submits this electronically or in another format to Canada Customs.
Canada Customs: Releases the shipment for delivery to final destination by the delivering carrier. And, Voila, the Consignee receives the shipment.
Welcome to Free Trade in twelve easy steps. I thought to keep things simple l would eliminate the issues of other government agencies such as the FDA, DOT, Agriculture Canada, Foreign Affairs etc., as well as assuming that both the originating and the destination carriers were operating without inter-line partners.
If that sounds fairly straightforward, l would say: so does par golf. The problem, of course, with so many parties involved is the chances of disconnects and /or derailments becomes highly likely. You are also required to act in observance of the regulations and procedures of these three countries. All this takes place in least two languages. For those involved for the first time, or with expectations that don’t match the reality of the situation, yes, shipping to or from Mexico can be a frustrating exercise.
Talking of golf and of Mexico, I am reminded of a subsequent trip to Mexico City some years later. A busy week ended with a Saturday morning golf game in Cuernavaca, a beautiful town situated in the mountains an hour’s drive to the south of Mexico City. Invited by colleagues from our local office, two of us were playing the course for the first time. Never having played the course local rules, we retained the services of a caddy. My caddy also had a trainee with him, his nine-year-old son. Consequently, our foursome consisted of seven people. Due to the high altitude and my constantly overshooting the greens by 30 yards (l wish) we were not moving as quickly as the group behind. Having just taken our tee shot on a par three, we stood aside to let the group behind play through, before we followed them down to the small island green. Upon arrival of the marshal and his dog, our group, the second foursome (with their caddy’s trainee or otherwise) we totaled a small crowd of fifteen people. Back to my original point. I can’t emphasize enough, be aware that often things are done differently in Mexico.
Mexico is a market that can present unusual challenges. Our company has been established in Mexico for several decades and we have had an active presence on the U.S.-Mexican border for most of the last decade. We operate in the three North American countries as one extended network in order to integrate and make seamless the types of process outlined above.
In providing value to our customers through our expertise, our network and service capabilities, we assist them by navigating through what can seem like a maze of requirements.
Too often the first exposure to shipping to or from Mexico occurs at the time of shipment and your new self-appointed supplier, which you did not know you needed and know even less about, is calling you asking for a bank transfer to cover charges that you never heard of.
If you are doing business in Mexico I would first of all recommend taking the time in advance to become familiar with the procedures and requirements as they apply to your shipments. It is equally important to know who you are dealing with and develop a comfort level and trust with them as suppliers. Finally, stay on top of all shipments: you don’t want to run into major demurrage charges because you happen to be away for a few days and your broker can not get in contact with you.
If this seems like a tall order, it’s best to work with a reputable full-service company that has the scope to manage your shipments for you on a door-to-door basis. It may cost a little more, but with some hard-working and dedicated professionals tracking your shipment from start to finish you will be certain to be pleased with your choice. Don’t be put off doing business in Mexico: be prepared.
Keith Hart, P.Log, is Vice President, the Americas, Schenker of Canada. Specializing in what is now the NAFTA market area, Mr. Hart has established and managed a key part of the business infrastructure and transborder forwarding and clearance products offered by Schenker.