The COVID-19 pandemic has resulted in many shippers and carriers feeling uncertain about what the market will look like through the remainder of 2020 and into 2021. To prepare for what’s to come, those that rely heavily on cross-border shipping should consider optimizing their supply chain strategies in order to most efficiently utilize the available cross-border options, which include through-trailer and transloading. Both options have their merits but differ greatly in approach. We’ll look into these variations using examples of shipments moving from Mexico to the United States.
Through-trailer shipping is often the first option considered. It’s the process of moving shipments through border crossings using one trailer. Here’s how it works:
● A Mexico carrier with a trailer interchange agreement with US carriers picks up the freight and moves it to a secure yard at the border
● A border drayage driver moves the trailer to the yard of the US carrier
● The US carrier picks up the trailer and completes the final delivery
Shipments moved in this manner don’t ever leave the original trailer, leading shippers to assume it’s safer because the security seal goes unbroken. However, this is not the case. Government regulations require customs officials in both Mexico and the United States to break security seals for inspection during border crossings regardless of shipping method. For shipments entering Mexico, customs brokers also break seals to validate product information.
The second option is transloading, which is where goods are moved from one trailer to another at a border crossing. This process is composed of the following steps:
● A Mexico carrier acquires the load from the shipper and moves it to a secure yard at the border
● A border drayage carrier then moves the trailer across the border to the transloading facility
● The facility trades the shipment to a US carrier, moves the goods into this carrier’s trailer, and then the carrier makes the final delivery
Some shippers tend to think that transloading is a less secure method of cross-border shipping than through-trailer. However, when done correctly, both can be safe options.
True success with cross-border shipping means knowing the options and when to use them.
Let’s take a look at the advantages of transloading, which fall into three categories:
- Lower Shipping Costs: Transloading is often the less expensive cross-border shipping option. Access to a larger capacity pool on either side of the border grants shippers access to more carriers, which are often times more efficient. Shippers identify carriers with networks best matching their own, driving more cost-effective rates. Those looking to cut costs benefit from this efficiency.
- Additional Carrier Capacity: Transloading provides shippers additional carrier capacity because it allows access to two independent carrier bases. Any Mexico carrier can match with any US carrier on any shipment and vice versa. In contrast, through-trailer service limits shippers to carriers that have established an interchange agreement with a counterpart carrier on the other side of the border. This greatly reduces the capacity available to shippers. At a time when truckloads are not full due to low demand, additional carrier capacity keeps shipments moving to meet consumers’ needs.
- Prevent Border Delays: The variety of available carriers makes it easier to identify available trucks on both sides of the border. More options allow for easier matching to desired time frames for pickup and delivery. Through-trailer shipments are dependent upon the limited capacity of the two carriers with an interchange agreement. This can result in border and shipment schedule delays, made worse by the current imbalance of northbound versus southbound freight.
Ideal Freight Types for Transloading
Any experienced transloading facility near a major border crossing should be able to manage most types of freight, but some goods are better suited than others. This includes freight loaded on pallets or slip sheets, especially food and beverage, raw materials, and consumer packaged goods. It is also beneficial when shipping to warehouses with strict palletization and labeling requirements. Freight best suited for through-trailer shipping includes goods that require specialized loading, flatbed trucks, or contain over-dimensional products.
What’s Next for 2020 and Beyond?
Every shipper’s international supply chain poses unique obstacles and requirements, and what works best for one shipper is not always the right option for another. Since COVID-19 has had a significant impact on market conditions, shippers should know the available cross-border options so they can adjust their strategies and prioritize flexibility during unforeseen circumstances like we’re experiencing in 2020. This will allow them to keep up with demand and maintain business operations based on what the priorities are at any given time, whether it’s reduced prices, faster shipping times, or increased carrier capacity.
Kyle Toombs is VP and Head of Mexico and Canada at Coyote Logistics.