Cross-border freight to and from Mexico has long been a hassle that many shippers and manufacturers avoid when possible. Customs processing, infrastructure failures, crime and delays are especially difficult to navigate for traditionally domestic companies.
Echo Global Logistics is able to leverage its network retailers, suppliers and top-notch logistics expertise to help shippers avoid the perilous pitfalls of transportation through Mexico.
Troy Ryley, President of the Mexico division for Echo Global Logistics, says that growing demand has brought a host of manufacturers and shippers from various sectors into the Mexican supply chain, and they need expert assistance from Echo to keep their operations running smoothly.
Ryley says he started with Echo’s Mexico-based branch before NAFTA had been signed, and he’s seen an immense shift in the shipping environment since then.
“When I came on, Echo’s program in Mexico hadn’t been developed to its potential,” he said. “We learned very quickly that it’s not like what we do domestically. There are a lot of elements to the equation at the border especially.”
With decades of experience and a well-established network, Echo is now able to provide much needed aid to cross-border shippers. “We’re taking the base truck brokerage model and turning it into an integrated logistics model to meet our clients’ needs, and that’s been very well received,” Ryley said.
According to Ryley, there are a number of difficult hurdles unique to Mexico, and transporting freight reliably across the border requires the kind of network and knowledge base that Echo has developed. “When we solve those issues for a client as a strategic partner with single-party accountability, it creates tremendous value,” Ryley said.
Due to its preexisting cross-border capabilities, Echo is in the process of launching other products, such as warehouse distribution at its facility in Laredo, Texas, as well as a US/Mexican customs brokerage operation that will become part of the core Echo offering.
“The one consistency with Mexico is inconsistency,” Ryley said. “It’s hard to predict things like infrastructure and regulatory issues. We once dealt with a hurricane that wiped out the main roads between Monterrey and Laredo, our main artery of transportation.”
“I’ve seen customs facilities blown down in hurricanes and strikes among border workers that shut down inspection docks and bridges,” Ryley said. “What the client needs is a company that offers not just day-to-day service, but also robust contingency planning.”
According to Ryley, shippers need logistical help in order to shift and be flexible in a difficult environment. “These dynamics change constantly,” he said. “It’s not that these things may occur, but that they will occur, and often.”
Theft and fraud are also major concerns for many companies operating in Mexico, but Ryley says that proper insurance is the only effective risk mitigation. “There are things you can do to lower your exposure in Mexico, but there’s no bulletproof plan,” Ryley said.
Many transportation companies utilize GPS tracking units, convoys of security vehicles, fenced or walled compounds and a variety of other traditional security tactics, but are still not without considerable risk.
“You can do all the right things, but the fact is, the bad guys will be willing to use jammers, they’ll be able to bring more guns, they’ll break into anywhere, and they’ll do all kinds of things to ensure that they can take what they want,” Ryley said. “Your only reliable safety net is to purchase proper cargo insurance.”
As far as cargo insurance is concerned, Mexico operates with very different standards to the US. “There’s a low limit to liability, so you need to make sure you have the right partner,” Ryley said. “Reliance Partners handle our insurance needs in Mexico. We get preferential rates for our clients, who can add that service to their Echo program.”
As China’s supply chain becomes increasingly volatile due to an uncertain political climate, risk of more lockdowns in the case of another pandemic like COVID-19, looming tariffs and a general trend of nearshoring among US manufacturers and shippers, Mexico is seeing massive increases in manufacturing and overall market share.
“There’s a tendency toward regionalization of production,” Ryley said. “US companies are planning to limit their risk exposure in the supply chain, and that means diversifying. They can’t source solely out of China.”
This trend accelerated greatly during the COVID-19 lockdowns of 2020 and beyond, according to Ryley. “I think Covid taught us a valuable lesson – the longer and more complex your supply chain, the more risk you’re exposed to and the less reliably you can forecast potential issues,” he said.
Mexico’s manufacturing and distribution growth is due not only to domestic North American companies, however. Chinese companies are also attempting to retain access to the US market.
“China knows all of this, and they know their best entry is through the backdoor,” Ryley said. “They’re working to establish themselves in the Mexican market to maintain a foothold in North America.”
“I can’t think of an automaker that’s not operating in Mexico today, but besides that there are obviously many other sectors following the same trend,” Ryley said. “There’s a huge advantage to being somewhere like Monterrey, where you’re within a few hours of the US market.”
While Ryley is hopeful that technology updates will improve infrastructure and efficiency across the border, he’s concerned that the country will not adapt quickly to the influx of freight and manufacturing.
“Recently, the Mexican military has been put in charge of the ports and customs facilities, borders and ocean ports, but unfortunately I don’t think they’ve been strategic enough to prepare for the kind of growth we’re seeing,” Ryley said. “We’re already seeing inflation on personnel costs in this market because of the increasing need for labor and development.”
As a consequence, it seems likely that the relatively complex and unpredictable nature of shipping across the United States–Mexico border will continue to be a concern for shippers for the foreseeable future.
“Partnering with an expert who has a solution where you can improve efficiencies, reduce costs and avoid the worst hassles of an environment like Mexico just makes sense,” Ryley said.