When the U.S. Supreme Court ruled earlier this year that the Bush administration could open U.S. highways to Mexican trucks, it appeared that the last barrier to cross-border trade was being torn down.

Since that decision, U.S. and Canadian companies doing business with Mexico have been keen to see how the admission of Mexican trucks might affect their supply chain costs. They have high hopes for less border bureaucracy, faster crossing times, and access to Mexico-based drivers as a possible answer to the current driver shortage. Those potential benefits are especially tantalizing for any company whose shipments are queued at notoriously congested crossing points such as Laredo, which handles about 40 percent of the $220 billion in annual U.S.-Mexico trade.

Perhaps they shouldn't get their hopes up too high. For one thing, some industry observers see few major changes coming out of the Supreme Court ruling. "It's really not a watershed," says Martin Rojas, director of safety and security at the American Trucking Associations. "You're not going to see long-haul Mexican trucks in Ohio or Indiana or New York any time soon."

Nor will the court decision bring immediate change for motor carriers that have long had a presence in Mexico, working with a wide range of local partners. Truckload carrier Schneider National, for instance, expects its revenues in Mexico to more than double to $400 million in the next four years regardless of how the cross-border situation plays out. "Our approach is not going to change, even into next year," says Todd Jadin, a vice president in Schneider's operations group.

Experienced shippers, though eager for more time and cost efficiencies, are containing their optimism. "It's too early to determine what type of economic impact this ruling may have on Delphi or its North American logistics providers," says a spokesperson for the giant automotive supplier.

Despite their cautious outlook, many shippers and carriers believe that the Supreme Court ruling will soon make border crossings easier, if only incrementally. To get a clearer picture of the potential impact of the decision—particularly in light of the hyperbolic headlines about unsafe trucks entering the United States at the command of poorly trained drivers—let's clear up some misconceptions about what the verdict will mean.

First and foremost is the idea that the ruling magically opens the border right away. That erroneous belief is based on a fundamental misunderstanding of the reason for the court's decision. "It's not about 'letting Mexican trucks in.' It's about allowing the same access and regulation that Canadians already have under the North American Free Trade Agreement," explains Garrick Taylor, executive director of the Border Trade Alliance, a pro-trade lobbying group. The Federal Motor Carrier Safety Administration (FMCSA), moreover, is still working with Mexican authorities on how to conduct safety inspections for Mexican carriers. That situation must be resolved before Mexican trucks can move freely within the United States.

The second big misconception—expounded by U.S. labor unions—is that the Supreme Court has suddenly cleared the way for U.S. carriers to hire Mexican drivers, who earn roughly half of what their U.S. counterparts make. But that's not something on which the court passed judgment, and U.S. carriers already were allowed to hire non-U.S. drivers under certain conditions. "That's an immigration issue, not a NAFTA issue, and the Department of Homeland Security has not ruled on that yet," says Derek Leathers, senior vice president for truckload carrier Werner Enterprises.

Another misconception is that open borders will quickly eliminate the drayage system used in some areas (chiefly Texas) for transferring truck trailers between depots on both sides of the border. Although some carriers will choose to bypass that step, local drayage is unlikely to disappear altogether. "Drayage is more efficient than it's given credit for," says one carrier executive.

The ruling has also created the false impression that it affects all motor carriers. From a practical point of view, it largely affects longhaul truckload operations and not less-than-truckload, which relies on a hub-and-spoke system.

Finally, it's important to correct incorrect assumptions about the poor condition of Mexican trucks. During the NAFTA debate, environmentalists argued that Mexican trucks would be chronic polluters, and safety advocates charged that the trucks would be unsafe.

It's true that in general, Mexican carriers operate older vehicles than do U.S.-based fleets; and the old, broken-down drayage trucks that run back and forth across the border make for sensational news photos because they emit plenty of black smoke. But the flaw in the NAFTA opponents' argument is that much of Mexico's truckload equipment is made in the United States and is powered by the same U.S.-built engines that American motor carriers use. Indeed, Mexico's top TL companies—the firms that would be first to cross the border—operate trucks that meet the same air-quality standards as comparable U.S. vehicles.

Now that we've established what the Supreme Court's decision doesn't do, let's examine how it might make a difference in shippers' and carriers' operations. Here are five areas where access to Mexican motor carriers and drivers has the potential to bring about positive change:

Experiments with short runs: A few U.S. truckload carriers are experimenting with Mexican drivers journeying beyond the border-hugging commercial zone, where Mexican truckers have long been allowed to operate. One example: Celadon, a truckload carrier that does 40 percent of its business with Mexico, has Mexican truckers delivering inbound loads to its Dallas terminal.

The benefit of such a move lies in the potential time savings, says CEO Steve Russell. Today, he notes, it typically takes a week for freight to travel from Guadalajara to Chicago, including four hours or more spent at customs and another 10 hours waiting for drayage carriers to move trailers across the border and deliver them to a local truck terminal or warehouse. If Celadon can cut even part of that waiting time by skipping the local drayage step, it will become more competitive by tightening its customers' supply chains.

"I could see where, in a few years, you could go from Guadalajara to Chicago in three days instead of eight days," Russell says. "For a $1 million cargo at today's interest rates, that's $1,000 saved."

Future hiring of Mexican drivers: The Teamsters fear that Mexican drivers will take American truckers' jobs away. The carriers, which are struggling to find enough qualified drivers, see it differently. "The driver shortage is real, and it's not going away any time soon," says Werner's Derek Leathers. Indeed, the dearth of drivers has become the primary growth constraint for many U.S. carriers as their business has rebounded.

Most U.S. carriers are understandably non-committal on such a touchy topic. Indeed, the cost of insuring Mexican drivers is daunting, and the cultural and linguistic challenges for those drivers will be significant. But over time the economics of hiring them may prove to be irresistible. U.S. carriers with equity in Mexican trucking firms and those with strong partnerships south of the border are likely to be the first to experiment with putting Mexican drivers in U.S. truck cabs.

A moveable border: There's a fair chance that the concept of "the border" will be tweaked to adapt to commercial realities. A pre-screened Mexican TL carrier, for instance, might haul goods in-bond and undergo full customs checks at a destination well inside a border state.

Some Texas towns are very much in favor of that approach. A group known as The Free Trade Alliance San Antonio has been working to develop the city into an official inland port—a hub for transportation and logistics companies, customs brokers, light manufacturing, and distribution. Critical to the group's strategy will be Mexican carriers' ability to drive trucks beyond the border commercial zone. Once that's feasible, Free Trade officials say, the open border will spur Mexican manufacturers to consider distribution space in San Antonio.

Fast-track processing: The U.S. government is introducing a border checking procedure, known as FAST (Free and Secure Trade), that attempts to balance appropriate security measures with easier border crossings. To qualify for FAST, the cargo, shipper, motor carrier, and even the driver must be pre-approved by customs authorities. Shipments that meet those criteria are funneled into separate lanes, where they are processed more quickly than the norm.

To date, FAST has been rolled out at a few border crossings, and only a small percentage of shipments are moving under that program. However, if Mexican carriers can qualify for the FAST program, they will be able to offer shippers speed as well as lower cost.

Equity in Mexican carriers: It's likely that aggressive U.S. carriers will acquire selected Mexican TL haulers over the next five years. Big carriers that depend on cross-border trade, such as Celadon and Contract Freighters Inc., have already bought companies south of the border. And there are still opportunities for U.S. carriers to acquire or take minority stakes in Mexican trucking companies, as well as abundant opportunities for joint ventures. Such close ties will make it easier for U.S. carriers to utilize Mexican drivers when they need to.

It's safe to say that the Supreme Court ruling won't provide a fix-all for border trade problems. But it does give U.S.-Mexico trade participants the chance to reexamine the efficiency of their North American supply chains.

It also will help formulate a clearer picture of what longhaul, cross-border trucking will look like a few years from now. Observers expect that U.S.-Mexico traffic will steadily increase, with most of the volume heading northbound, as it does today.

But Mexican trucks on U.S. roads will remain a rarity for mundane reasons. Like their U.S. counterparts, Mexican drivers don't like being away from home, especially in a country where they may need to speak another language. And trucking insurance rates in the United States are astronomically high compared to Mexico's, which may scale back Mexican carriers' cost advantage.

For the moment, there's also the political dimension. "Nothing much will happen before the 2004 election," predicts Schneider's Todd Jadin. "If Bush wins, you'll see some movement. If Kerry wins, the whole process could be up in the air again."

In the meantime, U.S. shippers doing business with Mexico can press their carriers for any improvements possible under existing law, and keep an eye on some of the developments we've outlined here. But don't bet on open borders just yet.