U.S.-Mexico Cross Border Trucking Project Extended for 2 More Years

In early August 2008 the U.S. Department of Transportation extended for two years the cross border trucking demonstration project, a reciprocal agreement that allows up to 100 Mexico-domiciled motor carriers to operate beyond the U.S. border commercial zones, and the same number of U.S. carriers to operate in Mexico.

The project was authorized by Congress last year under the North America Free Trade Agreement. It was authorized for three years but initially was expected to run for one. The transportation department’s Federal Motor Carrier Safety Administration (FMCSA) said extending the timeline for the project will give trucking operations more time to realize a return on their investment in the project.

“I am pleased with the success of our demonstration project, but the participation has been limited by the uncertainty of the project’s longevity. A number of potential companies have been unwilling to invest the time and resources necessary to participate due to uncertainties concerning the project’s longevity,” FMCSA Administrator John H. Hill said in a statement released by the agency.

The FMCSA reported that only 27 Mexico-based carriers operating 107 trucks are participating in the project, a smaller number than expected. These carriers have made 9,983 trips into the United States since the project began, but most of the destinations have been in the commercial zone, limited to 25 miles inland along the border. They have made 1,272 long-haul trips beyond commercial zone.

Only 10 U.S. carriers operating 55 vehicles are participating in the reciprocal agreement, according to the FMCSA. U.S.-based carriers have made 2,245 trips into Mexico as part of the pilot project. Partly to blame for the lack of interest among U.S. carriers are the high cost of maintaining an official legal representative in Mexico and the belief that it takes at least two years to develop sustainable business relationships with Mexican shippers.

The FMCSA also acknowledged that some Mexican-domiciled carriers “who received approval for project participation are not participating because they are reluctant to incur substantial costs related to obtaining insurance to operate in the United States and developing a customer base for long-haul operations, in the face of these uncertainties.”

Alan Kohl, a consultant and a contract broker for Lovitt and Touché Inc., a large regional broker based in Phoenix, told Insurance Journal earlier this year that trucking companies have been frustrated with the on-again, off-again process of implementing the NAFTA provisions. He said the limitations of the program also have dampened the enthusiasm of truckers on both sides of the border. A truck coming into the U.S. from Mexico, or vice versa, can travel across the border carrying goods from one country to the other but they can’t pick up and deliver goods within the country that is not the truck’s country of origin.

“A trucking company that runs empty is not making money. So if a truck that leaves Mexico, drives to Chicago and leaves off a load and doesn’t have a return load going to Mexico it’s going to lose money.”

According to the FMCSA, 75 percent of the U.S.’s trade with Mexico moves by truck. “This project supports our economy by saving consumers’ money, reducing shipping costs and giving U.S. trucking companies and drivers new opportunities,” Hill said. “At a time of surging goods exports, we could hardly choose a worse time to turn our back on open trade and investment and embrace a protectionist agenda, especially in the very sector that makes trade in goods and services possible.”

Detractors of the program have expressed concern about the safety of allowing Mexican carriers into the U.S. for cross country hauls. However, the FMCSA asserted in its notice announcing the extension that “the project has shown that U.S. and Mexican carriers can engage in cross-border trucking operations in compliance with applicable laws and with no compromise to public safety or security. In fact, Mexican trucks and drivers have established compliance rates equal or better to those of U.S. trucks and drivers.”