Why it's so hard to cross the border

By Dr. James R. Giermanski -- Logistics Management, 7/1/1999

Many people who ship cargo to and from Mexico say they don't understand why there are so many delays crossing into Mexico by truck compared to crossing into Canada. A look at two ports, one on the U.S.-Canada border and one on the U.S.-Mexico border, reveals stark and striking differences.

- At the Ambassador Bridge in Detroit, approximately 13,000 commercial trucks cross the bridge each day. At Laredo, approximately 8,000 trucks cross to and from Mexico daily.

- The privately owned Ambassador Bridge has only four lanes, which are shared with passenger vehicles. Laredo has three city-owned bridges, totaling 18 lanes. A fourth bridge that will add eight more lanes now is under construction, bringing the total to 26 lanes.

- In Detroit, the bridge is congested at times, but there are no lines of vehicles downtown, nor are there hundreds of warehouses located nearby. About 25 percent of commercial vehicles crossing the bridge are empty. In Laredo, there are long lines of vehicles stretching into the city, more than 300 warehouses are located near the bridges, and about 45 percent of the commercial vehicles crossing the bridges are empty.

There are many potential causes of delays and congestion on the southern border. These include federal and state inspections of cargo and motor vehicles, inadequate infrastructure, limited hours of bridge operation, and seasonal traffic surges. Equally important is the pressure on U.S. Customs to cut the northbound flow of illegal drugs and aliens, and on Mexican Customs to prevent contraband from entering that country.

In addition, the business practices of the Mexican customs brokers and their forwarding agents in the United States appear to contribute to border crossing delays. Over a four-month period, two dozen graduate students at Texas A&M International University independently studied the southbound crossing problem. They overwhelmingly concluded that the major cause of congestion and delay was the local business culture and practices. Here's what they found:

Mexican customs brokers require that all goods entering Mexico through Laredo and many other southern ports be delivered to their forwarding agent's warehouse on the U.S. side. The Mexican broker's agent counts, identifies, and classifies the goods so the proper tariff classification can be shown on a document called a pedimento, which is executed by the Mexican broker. If all of the necessary documents do not accompany the cargo, the forwarding agent waits for the U.S. exporter to send them. Frequently, the forwarder receives no advance notice of an arriving shipment, which means it may not have a trailer immediately available to move the cargo into Mexico.

While the cargo is in the forwarding agent's possession, the Mexican broker informs the importer that the goods are ready on the U.S. side for entry into Mexico. At that point, the importer must pay any duty or other taxes owed as well as the Mexican broker's fee before the broker will authorize its agent to release the shipment. Typically, the paperwork is not processed in one day. In addition, some observers report, some Mexican brokers may hold an importer's payment in the bank to earn interest, while the forwarding agent may hold trailers on the U.S. side to earn storage revenue.

And there are more potential holdups. Certain products must cross the bridge at specific times; failure to cross during that "window" means more delays. These business practices create a peak crossing period from about 3:00 p.m. to 9:00 p.m., which overloads customs personnel on both sides. In Laredo, moreover, Mexican customs brokers do not handle border crossings late at night or early in the morning, even though customs authorities have said they would extend their hours of operation if the brokers and forwarders would use the extended hours.

It appears that the Mexican brokers' business practices, the customs authorities' response to those practices, and the respective federal mandates that U.S. and Mexican customs authorities interdict drugs and other contraband make transporting goods into Mexico time consuming and expensive. As a result, Detroit handles about 150 percent more merchandise with less than one-fourth the amount of infrastructure than Laredo has. In other words, Laredo, with 78 percent more bridge capacity, processes less than half as much actual cargo with more forwarders, more warehouses, longer lines, and at a higher cost. The solution to the southern crossing problem is not more infrastructure--it's simply to find a smarter way of doing business.

Dr. Giermanski is Regents professor at Texas A&M International University in Laredo, Texas. He has frequently written, commented, and testified on issues affecting cross-border trade with Mexico.