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New alternatives to crossing the border

Dr. James R. Giermanski -- Logistics Management, 3/1/2002

For years, shippers that wanted to move goods into Mexico had few alternatives to crossing the land border by truck and clearing their shipments at the border. Now, they can look forward to some new options, including new transportation services, the creation of U.S.-style foreign trade zones in Mexico and the development of an innovative "one-stop shopping" logistics service. Here's a rundown of these new opportunities:

  • Osprey Line, a regional ocean and inland water carrier based in Houston, is developing all-water service between U.S. Gulf ports and major ports on the east coast of Mexico. The company currently offers only inland, in-bond service into Mexico, primarily as a feeder service for larger steamship companies, but Bill Ewing, Osprey's port captain, expects the line will begin service to Mexican ports later this year.
  • Established as a short-line carrier connecting railroads in southern Mexico with railroads serving the eastern United States and Canada, CG Railway, a subsidiary of International Shipholding Corp., now provides combined vessel/rail services from Mobile, Ala., to Coatzacoalcos, Puebla and Mexico City on a through bill of lading. Each vessel can handle 60 railcars. George Nahas, vice president for sales and marketing, says that depending on the product, CG Railway can save rail shippers between 10 and 25 percent over the cost of current land-border crossings.
  • In 1998, Jose Guzmán, then director of operations for Mexican Customs (Aduana), met with principals of a proposed foreign trade zone and with Marshall Miller, an attorney specializing in U.S. customs law, to write the rules establishing a Mexican version of U.S. foreign trade zones (FTZs). Aduana instituted regulations that would allow the establishment of FTZs, but those measures required enabling legislation. In January of this year, the Mexican Congress passed a law that should have allowed the establishment of U.S.-style FTZs, but thanks to political pressure, the "new" law did not change the existing regime. That pressure reportedly came from business groups that opposed the establishment of FTZs in Mexico because importers that use them would no longer need to employ Mexican-owned brokers, freight forwarders, and warehousing and drayage services on the U.S. side of the border. Guzmán, now the director of Aduana, is working to get that law amended to allow importers to take full advantage of FTZs'duty- and tax-deferral benefits. Although FTZs are not yet a reality, the state of Tamaulipas is so confident in the future of these zones in Mexico that it has already hired its first director of foreign trade zone development.
  • Multilogik S.C., a logistics company located in Monterrey and Nuevo Laredo, Mexico, aims to reduce costs and transit times by arranging specialized services through a mix of carriers and financing methods, all managed via the Internet. Multilogik offers a wide range of reduced-price services, including U.S. and Mexican brokerage services, audits of northbound and southbound customs brokerage services and consulting on specialized logistics needs, including seaport and airport development. According to its president, Miguel Pedraza, "At a time when Mexican labor costs are escalating, we must provide a logistics service [that makes use of] a tight, transparent, secure and low-cost supply chain to offset increased labor costs and compete head on with the current Mexican broker services and charges."

Author Information
Dr. Giermanski is professor and director of International Business Studies at Belmont Abbey College in Belmont, N.C. He has frequently written, commented and testified on issues affecting international logistics in North America. Phone: (704) 825-6218. E-mail: JimGiermanski@bac.edu.

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