newsworthy
Mexican truckers’ lack of
interest threatens to derail
safety program
The next knock on the U.S. door you hear will likely not be
Mexican truckers clamoring to enter U.S. commerce
beyond the traditional 25-mile commercial zone on the
U.S. side of the border.
On Oct. 21, 2011, the U.S. government granted the first
operating authority to a Mexican trucker—Transportes
Olympic—to serve the U.S. market beyond the commercial
zone. Since then, only nine Mexican carriers, 17 trucks, and
20 drivers have been granted similar rights, according to
third-quarter data from the U.S. Department of Agriculture
(USDA). Applications are pending from 13 additional carriers, USDA said.
If the sluggish pace continues, it will be difficult for the
Federal Motor Carrier Safety Administration (FMCSA)—
the Department of Transportation (DOT) sub-agency that
grants the permits—to validate the safety performance of
Mexican carriers operating under a three-year pilot program agreed to by both countries in the summer of 2011.
The FMCSA estimates that at least 46 carriers would have
to receive U.S. operating authority for the agency to hit the
target of 4, 100 inspections needed to develop a statistically
valid analysis of the program’s safety record. However, only
168 inspections were performed in the program’s first year,
according to information on the USDA’s website.
FMCSA spokesman Matthew Chambers said the agency
“anticipates sufficient participation” from Mexican carriers to
be able to properly evaluate the program’s safety implications.
The data, for now, appear to validate long-standing
assertions that Mexican truckers have little interest in serving the U.S. market beyond the border territory. Among
other things, Mexican carriers would need to find freight
to haul back to Mexico, not an easy task if the truck’s head-haul leaves it far from the border. Language barriers could
create problems for all involved. And the high cost of
labor, maintenance, facilities, and equipment is a high bar
to scale for the typical Mexican carrier that only has five to
10 trucks.
Perhaps the biggest concern for Mexican carriers, though,
is the liability exposure they would face in the event of an
accident. The high cost of insurance, combined with the
threat of a large jury award if a Mexican trucker were found
at fault in an accident, is often enough to keep Mexican carriers out of the U.S. market.
Tom Sanderson, CEO of Transplace, a Dallas-based third-party logistics service provider with a sizable presence in
Mexico, said he sees little activity for Mexican truckers
beyond markets like Houston, Dallas, and San Antonio,
Texas, and similarly located cities in other border states. “It
ground breakers
Prologis Inc. is converting a former New Jersey landfill site into a LEED-certified logistics property and
has signed two leases totaling 740,000 square feet
prior to the start of construction. … Air and ocean
freight company SDV has opened the first Green
Mark Platinum Certified warehouse in Singapore.
will be a very long time before we would see Mexican truckers delivering freight throughout the U.S.,” Sanderson said.
The pilot program was created by a July 2011 agreement
between the two countries that ended a 28-month dispute
after the United States terminated the first pilot in early
2009. In response to the U.S. action, Mexico slapped punitive tariffs on nearly 100 U.S. import products, costing U.S.
agricultural and industrial producers more than $2 billion.
The value of agricultural trade between the two countries
was estimated at $35.2 billion in the 2012 fiscal year,
according to USDA data. The United States held a $2.6 billion positive balance of agricultural trade with Mexico in
that period, the agency said.
COURT CHALLENGES
Under the North American Free Trade Agreement
(NAFTA) that took effect Jan. 1, 1994, U.S. and Mexican
truckers were to be allowed unfettered access to the other
country’s roads by 2000. However, Mexican truckers have
been kept out of the United States by a barrage of lawsuits
alleging that their operations are unsafe and that low wages
paid to Mexican drivers pose a threat to U.S. driver jobs.
U.S. truckers have shown scant interest in operating deep
inside Mexico, citing concerns for their personal safety.
The Teamsters union and the Owner-Operator
Independent Drivers Association (OOIDA) are suing to
shut down the pilot program, saying it is dangerous and
illegal. Last month, they told a federal appeals court in
Washington, D.C., that the program violates multiple U.S.
laws and sets different safety standards for Mexican drivers
than for their U.S. counterparts.
For example, the Teamsters argued the agreement
requires Mexican drivers to be able to identify only the
color red. By contrast, U.S. drivers are required to identify
the colors red, yellow, and green, the union said. “Color
recognition has been determined by the DOT as essential to
highway safety,” the union said in a statement.
Ironically, the legal actions could have a boomerang effect
on U.S. companies. According to the U.S. Department of
Agriculture, Mexico stands ready to reinstate the punitive
tariffs if the program is terminated or similarly disrupted
within the three-year window. A resumption of the Mexican
tariffs could wipe out most, if not all, of the ground U.S.
growers have regained since the levies were lifted. ;
—M.S.
