truck (the one exception being shipments of cars, which
generally are moved via rail). For the most part, Mexican
truckers are still mom and pop enterprises, although many
have formed relationships with major U.S. motor carriers
and third-party logistics service companies.
Companies looking to hire truckers in Mexico should be
aware that practices differ south of the border, says Paul M.
Karon, president of The Entrada Group, which helps clients
set up manufacturing operations in Mexico. For example,
he says, they can’t assume the carrier will provide insurance
coverage for their cargo. “None of the [Mexican] trucking
companies carry insurance,” he says. “You have to make sure
that the shipment is insured door to door.”
At the moment, Mexican truckers haul cargo only as far
as the U.S. border, where they interchange trailers with U.S.
carriers for delivery to destinations in the United
States. That’s because Mexican motor carriers
are prohibited from operating in the
United States beyond a 25-mile commer-
cial zone along the border. A tentative
deal announced by President Barack
Obama and Mexican President Felipe
Calderón in March would change all
that, allowing Mexican truckers to operate
deeper into U.S. commerce. But most experts believe that
even if the ban is lifted, the practice of swapping trailers at
the border will continue for the foreseeable future. “We’re
not banking on overcoming that restriction anytime soon,”
says Chad Spence, a director in the enterprise improvement
practice of the consulting firm AlixPartners LLP.
lines have relationships with trucking companies to handle
the freight movement to the port, explains Guillermo
Coindet, a lecturer in logistics at UNITEC (Universidad
Tecnológica Centroamericana), a university in the
Honduran capital of Tegucigalpa.
Costa Rica. Costa Rica’s highly educated work force has
proved a powerful draw for makers of electronics and medical
devices, prompting a number of manufacturers to shift operations from Puerto Rico to this nation.
As for transportation options, the country has a major
port, Puerto Limón, on the Atlantic Coast as well as a smaller port, Puerto Caldera, on the Pacific side.
Karon says that companies manufacturing in Costa Rica
generally set up shop within 10 miles of the airport in San
José, the country’s capital. That’s because most of them are
makers of high-value products, which typically ship their
goods via air freight rather than ocean, as is common in
other Central American countries.
Brazil. Because of the country’s protectionist laws, most
of the foreign-owned plants in Brazil produce goods strictly for domestic consumption. Still, Brazil has considerable
promise for near shoring. For one thing, unlike other Latin
American nations, it offers an abundance of domestic
sources of raw materials and parts. For another, Brazil is
much closer to the United States by ocean than, say, China.
“From Brazil, it’s 8,000 miles to the United States [by sea]
versus 12,000 miles from China,” says Harry Moser, founder
of the Reshoring Institute, a non-profit group
that promotes near shoring.
Brazil’s railroads are used mostly to
haul commodities, minerals, and agricultural products, making trucking the
default choice for companies looking to
move goods to one of the seaports on Brazil’s
Atlantic coast.
But trucking in Brazil presents some challenges, says
Carlos Thome, a vice president with AlixPartners.
Individual states within Brazil tax truckers at different rates,
and the government imposes onerous insurance regulations on cargo shipments, he says. Plus, some truckers will
refuse to move shipments at night for fear of hijacking.
On the plus side, shippers don’t have worry about sudden
rate hikes due to a spike in fuel prices. “Petrobras [the gov-ernment-owned energy monopoly] controls the price of
diesel, so you don’t see fluctuations or fuel surcharges like in
Europe or the United States,” Thome says. (For more on
Brazil, see “The rocky road to Rio: What shippers need to
know about doing business in Brazil,” www.dcvelocity.com.)
The challenges don’t necessarily end once a shipment
reaches a port. It’s not uncommon for shippers to
encounter transit delays due to port congestion, a byproduct of Brazil’s thriving export trade. “These ports are saturated in terms of capacity because export movements have
doubled,” says Thome.
Honduras. Low labor costs have attracted a number
of apparel makers to Honduras. And easy access by water
has only added to this nation’s appeal. The country boasts
the only deep-water harbor in Central America, the Port of
Puerto Cortés. “The logistics are good in Honduras, if you
can live with moving your product by boat,” says Karon.
Most of the manufacturers that do business in Honduras
set up plants near Puerto Cortés and truck their finished
goods to the port. In many cases, they don’t even have to go
out and find their own truckers. Typically, major steamship
TIME TO MARKET
In the end, of course, transportation is just one of many factors companies consider when weighing the near-shoring
decision. Taxes, wage rates, labor availability, tariffs, and
duties all play a role as well.
Nonetheless, the prospect of slashing time to market and
reducing the amount of overall inventory in the supply
chain pipeline holds undeniable appeal for corporate deci-sion-makers. “Companies are looking at near shoring
because of speed to market,” says Karon. “Being closer to
the U.S. market is the number one reason to be in Latin
America as opposed to Asia.” ;
