Running a cross-border business is hard enough, but even more so when seafood is in the mix. Now you’ve got to worry about spoilage in addition to cargo theft and other risks.
Phillipe Katkhouda knew that he couldn’t run a successful cross-border shipping business without strict adherence to risk mitigation, so when he entered the industry in 2017, he made sure the cross-border aspect of shipping was his forte.
Katkhouda founded Paragon LLC, a cross-border seafood distributor based in Pasadena, California, with one goal in mind: ensure that Mexican seafood is transported safely across the border.
While in the business of cold chain logistics, Paragon isn’t a distributor, nor does it utilize cold storage that often. Instead, it engages in drop shipping. The 10-person team serves wholesalers, importers and distributors in Los Angeles, San Francisco, New York, New Jersey and Miami.
But it’s south of the border where most of the action takes place. Striving for the utmost in quality, Katkhouda went about ensuring that his Mexican operations and partners were on the same page. This meant having full control over the product itself.
Katkhouda went about investing in a number of plants throughout Mexico, going as far as to buy a plant in Baja California to oversee its processes.
“We control everything from the way it’s caught to the way it’s brought back to the beach; how it’s taken from the beach to the plant to how it’s processed at the plant; how it’s packed to how it’s put on top throughout its entire ride from Mexico to Los Angeles or to San Francisco, Miami or wherever in the United States the product needs to go,” Katkhouda said of the specifics of his shipping controls. “We have certain policies that we put in place that a lot of other producers don’t have.”
What’s more, he made sure to form strong partnerships with the fishermen working on his behalf.
“One of the things that really separates Paragon from any other importing or exporting companies is the very strong feeling of responsibility we have towards our fishermen,” Katkhouda said, describing the pride he feels in supporting over 300 families in these fishing communities. “We’re talking about the people in these villages in that their main income is whatever they’re able to get from the ocean, so we take great pride in making sure that everybody is taken care of as we bring the American culture of excellence into those regions.”
Such measures have strengthened Paragon’s seafood cold chain operations, a chain which he said must never be broken. However, this is easier said than done in Mexico.
For starters, the climate is hot and dry. Katkhouda said it can be challenging — and expensive — to ensure that each of the 150 fishing vessels has enough ice to store each catch, in addition to the trucks hauling the loads to the processing plants. However, he said taking those precautions is worth every penny.
Fishing occurs daily, but each catch spends no more than two hours aboard before being brought ashore, where it’s immediately hauled to a processing facility. The whole process is completed within 24 hours.
But these measures are just to ensure that processing is done correctly. The real challenge comes when getting the product stateside. To mitigate transportation risks, Katkhouda said his team first makes sure the driver is eligible to drive — are they fully rested and in good shape? Also, are they CTPAT certified?
The second step is to make sure the trailer is what he calls “prefrozen.” Paragon won’t allow anything to be loaded unless the trailer’s thermometer reads minus 5 degrees Fahrenheit.
Katkhouda’s third step is to ship only in the best conditions. In addition to checking the weather and route conditions, Paragon’s trucking partners move only in the daytime, especially in Mexico, to avoid potentially sketchy scenarios. Shipments head out primarily in the morning and no later than midafternoon.
The fourth and final step is to be in constant communication with the drivers. While it isn’t common for a shipper to have direct contact with a logistics partner’s driver, Paragon has formed special relationships with their trucking partners in order to chat with drivers and track each truck via GPS.
“If something happens, we wanna know first,” Katkhouda said. “We don’t want to hear it from the trucking company, we want to hear it from the truck drivers, because the faster we know something is going on the quicker we can respond.”
Mark Vickers, Reliance Partners’ executive vice president of international logistics, applauded Katkhouda’s methods and stressed how important it is for Mexican carriers and logistics service providers to follow suit, encouraging them to be transparent on any issues that arise. “For a cold chain to really work, visibility and that communication is paramount,” he said.
But no cross-border operation is complete without the added protection that insurance provides. Even when precautions are followed to a T, an accident is bound to happen.
Vickers said that over 90% of small to midsized shippers in the U.S. involved in moving their product from within or across the border are taking risks upon themselves by attempting to control everything. But unfortunately those controls don’t always hold when somebody drops the ball.
Katkhouda found out the hard way. After hundreds of successful loads, one shipment was lost when the truck overturned, spoiling its seafood cargo.
“I started thinking, I don’t want that to happen again, but if it does … I want to make sure that we’re covered,” Katkhouda said. He had heard of Mexican policies before, but mainly from trucking companies discussing its complexities. Katkhouda assumed that a simplified and Americanized policy existed somewhere but was probably really expensive.
That was until he came across Reliance Partners’ All-Risk Shipper’s Interest Cargo Insurance, which covers standard and high-value Mexico and international shipments on a per-shipment or per-project basis from the moment of pickup until final delivery regardless of mode.
“The process to get insured was very easy and it just was the right fit, completely the right fit,” Katkhouda said, explaining that Vickers “gave me a sense of peace and that this was something that I needed to do.”
“I came to the realization that as much as we try to control things, there are things in life that we cannot, and there are things that are going to happen. And so I wanted Reliance Partners to be there as part of the team and to make sure that if all of our controls fail, at least we have somebody that we can rely on.”
Click for more FreightWaves content by Jack Glenn.
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