Cross Border Freight Transport Options: Truckload vs Intermodal
August 25, 2023 •Rick LaGore
Cross border freight transport between the United States and Mexico is a critical component of global trade that is increasing in importance as companies consider near-shoring or reshoring in their supply chain strategies.
This process, however complex it may seem, plays an instrumental role in the smooth functioning of international commerce. The intricacies involved in cross border freight transport range from understanding customs procedures to ensuring secure and efficient transit across borders.
Whether by road or rail, mastering these complexities can lead to significant cost savings, reduce transits and enhance operational efficiency for businesses engaged in international trade.
Cross-border freight transport between the US and Mexico is an intriguing topic, in that it brings opportunities to outflank the competition by choosing the freight mode that is the best fit for your company's business.
For those readers that want to understand some of the basics of cross-border shipping a good primer is Cross Border Shipments US-Mexico: How-to & Cost Considerations. In this article, we take a top level look at some of the challenges then jump into some of the specifics involved with transporting goods between the United States - Mexico.
- Cross-Border Challenges Shippers Face
- Outline Cargo Movements
- Discussion on Paperwork Process and What to Include
- Insurance Practices
- Specifics to Either Canada or Mexico Cross-Border Shipments
- Custom Broker Requirements
In this article, we are taking a closer look at the physical movement of products using either truckload or intermodal.
While truckload is the predominant cross border freight transport option shippers use, intermodal has made significant advances that make it a great option for shippers to improve transit, enhance security and bring cost savings over truckload. With that said and knowing many shippers are unfamiliar with the intermodal option for cross-border shipments we’ll cover significantly more ground on intermodal in this article.
Before jumping ahead of ourselves, it’s important to cover a key regulation that governs US trucking companies operating in Mexico and visa-versa and to walk through paperwork requirements of cross-border shipping. Both these topics are important topics for background and context to truckload and intermodal cross-border shipping.
Key US and Mexico Trucking Regulation
Both the United States and Mexican governments have laws on the books regarding trucking operations running in their country.
Mexico law restricts US carrier tractors to go further than 26-kilometers into Mexico. The US has similar rules. So, there are times it makes more sense to transload a shipment before sending it in either direction. This restriction can be a benefit for intermodal shippers because this rule does not apply for intermodal containers moving via rail, meaning the shipment does not stop at either border to be unloaded and re-loaded.
Paperwork Required for Cross-Border US-Mexico Shipments
- Commercial Invoice – This document contains detailed information about the goods being shipped, the buyer and seller, volume of goods and other relevant details for purposes of assessing tax and duty, which is important at the border.
- Bill of Lading (BOL) – Bill of lading bears detailed information about the owner of the shipment as well as the destination and exact pick-up point. The shipping company usually provides the lading bill to the recipient of the goods at the pick-up point.
- NAFTA Certificate of Origin – Completed by the exporter, the NAFTA Certificate of Origin (Form 434) certifies that the goods being shipped qualify for preferential treatment under the terms of NAFTA. The document is presented to the customs agent at the border as proof that the goods and/or materials originated in the United States, Mexico, or Canada. It can be completed in Spanish or English.
- Import / export form - In the US, a Shipper’s Export Declaration (SED) is required for any shipment valued at $2,500 or more.
- Export License – this document is necessary only for regulated products such as alcohol, tobacco, firearms, and others.
- Cargo Control Number – for easy identification of goods.
- Other documents include: Material Safety Data Sheet, Packing Slip, Letter of Instructions (La Carta de Instrucciones), Inward Cargo Manifest, and Freight Invoice.
Truckload Cross Border Freight Transport
The tried and true method of shipping cross-border is for companies to use trucks to move their product across the border into Mexico. There are two methods to ship via truck, which is transloading and direct trailer. Both cross-border service options ensure the safe movement of your products across the border, but each has upsides and downsides in cross border freight transport and neither get around the well-documented congestion at the border crossing points.
Transloading involves shipping the freight to a transload facility, in which facility operators transfer the cargo from one truck trailer to another. For the case of product moving from Mexico into the USA, a Mexican truckload freight carrier will transport the goods to the US border, where a cross-border truckload carrier will take over and move the cargo to the transload facility on the United States side. After the freight is transloaded to a carrier with a USDOT authority, the freight carrier will deliver the customer's product to its final destination.
Four stages to the transload cross-border shipment:
- Pickup and Secure Storage: A Mexican driver picks up the cargo and takes it to a secure yard. (Required for Transload and Direct Trailer Methods)
- Cross-border transport: A cross-border carrier transports the freight to a secured lot or transload facility in the United States. (Required for Both)
- Warehouse Transfer: The freight is transloaded to a US carrier at the cross-dock warehouse. (Transload Only)
- Final Delivery: The US carrier delivers the freight to its final destination. (Required for Both)
Direct Truckload Trailer Cross-Border Service
To eliminate the addition of transloading and the potential of damage during the cross dock process shippers use the direct trailer cross-border method. Under this cross-border transfer process the product remains on the same trailer from origin to destination. Keep in mind that while the product does not get moved from one trailer to another trailer , the seal may need to be broken for customs inspection driven by government regulations.
Three stages to truckload trailer cross-border shipment:
- Initial collection and storage: a Mexican driver, often working with a US partner, picks up the freight and transports it to a secure yard.
- Cross-border transport: A cross-border carrier transports the load to a US partner's yard.
- Final Delivery: A U.S. carrier picks up the shipment and delivers it to its destination.
Comparing Transloading to Direct Trailer Cross-Border Transport
Benefit of Transloading
- Transloading opens up the shipper to a wider range of truckload carriers, which makes for smoother options that could potentially bring more competitive freight rates that would reduce / eliminate the cost difference between transloading and direct trailer cross-border shipping method and reduce the likelihood of delays in finding a carrier to cover the load.
Benefit of the Direct Trailer Method
- Cost savings would come from not having the additional process of transloading the product from one freight trailer to another.
- There may be a chance to be as competitive on the freight rates found from the larger transload carrier base, if working with a 3PL that has long established relationships that hold the key to US-Mexico trucking partners that exercise this cross-border shipping method 24/7/365.
- The direct trailer method reduces the potential of damage by eliminating the additional touch of the product that is part of the transloading process.
Intermodal Cross Border Freight Transport
With CP Railroad purchasing the KCS Railroad to form CPKC, along with nearshoring, those are two catalysts that speed up the conversation on US-Mexico-Canada intermodal service. Now all North American class I railroads have stepped up intermodal service to where it is the better option than truckload cross border freight transport.
The class I railroads, along with IMCs that represent and sell the class I intermodal service, operate the end-to-end cross border shipping solutions for US-Mexico border crossings with advanced customs pre-clearance service that simplifies procedures involved with clearing shipments at the border. This service significantly saves companies valuable time and money, ensuring shipments move fluidly and minimizing idle times spent waiting in congested truck border crossings and customs clearance.
Couple the innovation of streamlined paperwork with strategic partnerships and the new cross border freight transport service has streamlined shipping operations...plus, it's available for refrigerated freight as well.
It is important to note that the intermodal cross-border service requires the same import and export documentation as is required for trucking.
Embracing Customs Pre-Clearance for Efficiency
At the heart of the intermodal cross border freight transport methodology is the efficiency pre-clearance brings to the equation. In an effort to minimize delays at border checkpoints for cross-border shipments, intermodal railroads have implemented a customs pre-clearance process designed specifically for cross-border shipments. This system enables goods to be cleared before reaching the actual border points, thus eliminating unnecessary waiting times found with truckload cross border shipping options that often cause various additional accessorial costs and delays lasting hours and sometimes days.
This approach offers several benefits. Firstly, it reduces overall transit time by minimizing potential hold-ups at borders. Secondly, it lowers costs related to detention or demurrage charges that could accrue due to extended wait periods at these checkpoints. Lastly, but importantly too, is its contribution towards keeping shipments moving fluidly without interruptions which can impact delivery schedules negatively.
The fluidity of cross-border temperature controlled intermodal service is even more appreciated because of the potential for excessive truck delays at the US-Mexico border can have on spoilage of the cargo.
Strategic Partnerships Extend Reach Across Borders
Apart from managing their own network efficiently, intermodal transportation providers collaborate strategically with other railroads, transload centers, intermodal facilities and ports throughout North America. These alliances ensure seamless transfer between different modes of transportation, such as trucks crossing into Mexico, maintaining timely deliveries while ensuring cargo safety and security during the entire journey from origin point to final destination within the region, which includes the United States, Mexico and Canada. In addition, the railroads and IMC's work closely with customs brokers who play a vital role in facilitating secure clearance, thereby enhancing efficiency and reliability of the service levels offered.
Navigating Security Concerns in Cross-Border Shipping
Securing cross-border shipments is a crucial aspect of international freight transport, particularly when discussing freight cargo liability for shipments that are in Mexico. The reason being is the majority of freight providers do not offer cargo coverage on the freight moved in Mexico, thus opening up shippers to 100% loss on lost or stolen claims. Shippers can choose to purchase additional cargo insurance coverage through other means to help get around the potential loss.
For truckload shipments, some shippers opt to increase security by either hiring a police escort on each shipment or on higher volume lanes that have multiple security officers along the entire route.
Railroads have the advantage when it comes to security for the following reasons.
- Freight is in constant movement, thus eliminating freight being stolen at a rest stop, restaurant or any other place a driver may stop along their route from origin to final delivery.
- Pre-clearance customs clearance is another factor that keeps freight moving in the cross border freight transport process for intermodal.
- Employ advanced surveillance equipment and trained specialists to ensure secure crossings at all times.
Ensuring Secure Customs Clearance
The customs clearance process plays an essential role in maintaining security during cross-border shipping operations. This stage involves verification of all documents by customs agents to ensure compliance with regulations on both sides of the border. Any error or oversight can lead to shipment delays, penalties, or even confiscation of product.
The intermodal railroads and truckload asset and non-asset providers take proactive steps towards streamlining customs clearance procedure, while adhering strictly to high-security standards by working hand-in-hand with experienced customs brokers who act as liaisons between shippers and government agencies handling import/export procedures.
As discussed earlier, the addition of pre-clearance by intermodal providers helps to further enhance the process. This collaborative effort facilitates a more efficient and secure customs clearance process designed specifically for end-to-end cross-border shipping service offerings provided by IMC's, ensuring that shipments move fluidly across borders without any hiccups at checkpoints.
The Efficiency of Rail Freight Shipping
When it comes to cross-border freight transport, rail shipping stands as a pillar of efficiency. This mode is particularly effective for moving goods across vast landscapes such as those spanning the United States and Mexico.
Advantages of Using Cross-Border Trains
Cross-border trains provide several benefits over other transportation methods. One significant advantage lies in their cost-effectiveness. Compared to trucks, trains have the capacity to move larger volumes at once, which can substantially lower per unit shipping costs.
Rail freight also contributes fewer carbon emissions than road-based modes like trucking do, making it an environmentally friendly choice for cross border shipments. According to the EPA, using rail instead of trucks could reduce greenhouse gas emissions by up to 75%.
Besides being economical and eco-friendly, utilizing cross-border trains mitigates many logistical challenges associated with road traffic congestion, especially near borders where wait times due to customs procedures or inspections can be lengthy.
Role of Intermodal Transload Facilities
Aiding significantly in the efficacy and effectiveness of rail freight are intermodal transload facilities; these hubs serve critical roles when different modes converge, facilitating seamless transition from one form (like train) onto another (such as truck), if a shipper chooses to change modes because either the origin or destination does not support a full end-to-end intermodal solution.
Transload centers are crucial components in the logistics industry, serving as strategic points where goods transition from one mode of transportation to another. They play a pivotal role in cross-border freight transport, enhancing efficiency and reducing dwell time.
Integrating intermodal transload facilities offers shippers greater flexibility over their supply chains, enabling them not only to track but also adjust routes based on real-time conditions.
Transload facilities offer unique advantages due to their ability to handle diverse types of cargo - be it bulk commodities or containerized goods. This versatility makes them an essential part of supply chains seeking efficient shipping options across North America.
In addition, Transload facilities provide more than just bridging gaps between various modes like trucks crossing borders, trains moving fluidly through states, or ships navigating oceans; they also present opportunities for significant cost savings and improved efficiencies via economies-of-scale shipping practices. These practices involve consolidating smaller shipments into larger ones before dispatching on long-haul routes using rail freight services or sea freights - resulting in reduced overall costs while improving service levels simultaneously. This article further explains how this can significantly reduce overall shipping costs while improving service levels at the same time.
Case Study - Automotive Facility Shipping Operations
An automotive facility in the Midwest of the United States faced numerous challenges with its cross-border shipments. The issues included frequent customs delays and escalating costs associated with their truckload freight service for shipping across the US-Mexico border.
To overcome these hurdles, they turned to a cross-border transportation provider, capitalizing on the extensive rail network and innovative customs pre-clearance process designed specifically for efficient transportation options of cross-border shipments. This partnership aimed at enhancing efficiency, reducing costs, and ensuring that all shipments arrive safely within Mexico.
Intermodal Cross-Border Solution
The solution offered was a tailor-made end-to-end cross-border shipping strategy crafted to meet this particular automotive facility's needs. It incorporated an intermodal approach combining both trucks crossing borders and rail freight shipping services for maximum operational efficiency.
A crucial part of this plan involved leveraging advanced transload facilities near the border where goods were seamlessly transferred from trucks onto trains or vice versa during transit between countries - thereby minimizing time spent on loading/unloading activities while also maintaining safety standards when handling cargo items.
Influence on Customs Clearance Process
Before partnering with the logistics provider, one major bottleneck experienced by said company had been dealing with lengthy procedures required for clearing international customs checks, which often led to shipment delivery delays. However, thanks to well-established relationships with trusted customs brokers, they were able to expedite secure clearance processes, thus significantly shortening wait times encountered previously.
Furthermore, they utilized a unique system allowing fluid movement of goods destined for Mexico, keeping them moving without unnecessary hold-ups at borders - marking a considerable advantage over traditional trucking services used prior to the collaboration.
Economic Benefits Realized
This shift away from solely relying on road transport towards incorporating railway resulted in substantial cost savings primarily due to two factors: lower fuel consumption rates for railways compared to motor vehicles, and decreased labor overhead since less manpower is needed to manage train consignments as opposed to road haulage ones.
Additionally, utilizing trains as opposed to cars brings about a noteworthy decrease in carbon outflows because of the more eco-friendly nature of rail travel.
Emerging Trends in Cross-Border Freight Transport
The landscape of cross-border freight transport is continuously evolving, with several trends on the horizon that promise to make these operations even more seamless. Let's delve into some of these transformative developments.
Digitalization: The Future Is Here
Digitalization stands at the forefront of this evolution, streamlining processes and enhancing visibility across supply chains. Sophisticated management systems provide real-time tracking information for shipments moving fluidly across borders while offering end-to-end shipping solutions that reduce logistics costs and improve service levels.
This technology isn't just a trend; it's rapidly becoming an industry standard - transforming how businesses manage their cross-border transportation needs.
Sustainability Initiatives: Greening the Transportation Sector
The push towards sustainability has become increasingly important within the transportation sector as companies strive for greener alternatives in their operations. Rail freight shipping offers an efficient option with significantly lower carbon emissions compared to trucking and airfreight methods. Trains are, on average, four times more fuel-efficient than trucks; a great pick for companies that want to minimize their carbon footprint without sacrificing operational effectiveness and capacity needs.
Growth of Intermodal Shipping
Last but not least, intermodal shipping continues its growth trajectory, primarily due to the cost savings and environmental benefits it offers over traditional road haulage alone, especially when dealing with long-haul transcontinental routes such as those found between North America and Mexico. Intermodal shipping keeps things moving smoothly despite the well-documented congestion issues often encountered at major ports-of-entry like the Laredo, TX / Nuevo Laredo, MX corridor, among others.
Understanding cross border freight transport is the first step to streamlining cross-border US-Mexico shipping operations.
For cross-border freight transport, rail shipping is a cost-effective and eco-friendly solution. It cuts down on carbon emissions, navigates logistical hurdles associated with road traffic congestion, and leverages intermodal facilities for seamless transitions between modes of transportation. Future digitalization trends promise to streamline operations further.
The role of the Class I railroads in this process cannot be overstated, with their innovative customs procedures and strategic partnerships.
Navigating security concerns is a major part of the journey, but advanced surveillance equipment and trained specialists are here to help ensure safe passage.
Rail freight shipping brings efficiency into play, making it an attractive option for many businesses involved in cross-border trade.
Overcoming challenges like different regulatory environments or language barriers can seem daunting, but with effective strategies, they become manageable hurdles rather than insurmountable obstacles.
When needed, transload centers serve as crucial junctions ensuring smooth transition from one mode of transport to another during these operations.
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