Cargo insurance can boost cross-border operators’ business
Despite the prevalence of cargo theft and trucking accidents in Mexico, cross-border business stays a lucrative marketplace for brokers, carriers and shippers.
An increased concentrate on bringing supply chains back to North America helped Mexico replace China as the highest U.S. trading partner in 2023. Mexico has been the highest U.S. trading partner because the starting of the 12 months, reporting $656 billion in two-way trade from January through November, in accordance with the U.S. Census Bureau.
Even with almost 70% of the trade between Mexico and the U.S. happening through trucking, the marketplace for cross-border cargo insurance might be confusing for a lot of, in accordance with Mark Vickers, executive vp and head of international logistics at Reliance Partners.
Vickers said large carriers dedicate a major amount of their capability to shipper-specific cross-border contracts.
“They win these contracts on account of numerous aspects, but paramount is their linehaul rate, cross-border risk management strategy and insurance, and volume of asset allocation,” Vickers said.
Cross-border shippers often prefer to work with a carrier that may provide them 100 trucks per week versus smaller carriers, in accordance with Vickers.
“These large carriers are then in a position to get preferential terms on their Mexican cargo insurance due to the quantity they’re moving, and due to static nature of their risk management,” Vickers said. “This makes it difficult for a small to medium-sized broker or carrier to compete against the massive dogs. Cargo insurance rates in Mexico might be a lot better for a big carrier that has standardization of their risk management than for a broker that’s attempting to maneuver a single spot shipment or for a carrier that’s moving a lower volume. Nonetheless, we’re seeing brokerages and smaller carriers get awarded business after they are proactively offering Mexican cargo insurance and are spotlighting their risk management protocols if their rates are in line.”
Chattanooga, Tennessee-based Reliance Partners is a trucking insurance provider with nine locations nationwide. Vickers joined Reliance Partners in 2021 after the corporate acquired Borderless Coverage, which he founded in 2018.
He began Borderless Coverage because many large shippers were asking for an all-risk cargo insurance solution in Mexico.
“I used to be at Total Quality Logistics for nearly eight years before I began Borderless Coverage, and through my time there I used to be handling a whole lot of expedited inbound and outbound shipments from Laredo, Texas,” Vickers said. “All of those shippers on this industry, they’re using me for brokerage services domestically after which they began to say, ‘Hey, you’re doing an ideal job handling all of our expedited shipments. Can you furthermore mght start handling our Mexican business?’”
Liability insurance isn’t required in Mexico. Nonetheless, when the shipper doesn’t declare the worth of the merchandise, the liability is proscribed to $90.52. Given the extremely low limit, pursuit of liability actions is unusual in Mexico, Vickers said.
“What I needed as a freight broker and what my shippers were asking for 10 to 12 years ago was a product they might layer on top of their global policy and/or self-insurance program (that typically carries a deductible of $100,000), which covers theft and has a deductible of $5,000 or less,” Vickers said. “Borderless Coverage does just that and forces shippers, brokers and carriers to work together higher in a siloed cross-border supply chain.”
With more global manufacturers moving parts or all of their supply chains to Mexico, Vickers said small and medium-size brokers and carriers need to grasp all of the insurance options they’ve for loads moving through the country.
“Cargo insurance in Mexico is now rather more accessible, less expensive, and now being requested by over 30% of U.S. based cross-border shippers,” he said. “It’s less expensive because logistics firms are using it at over 500% greater than it was getting used prior to the pandemic, prior to the implementation of the United States-Mexico-Canada Agreement (trade pact) and the continued U.S.-China trade war, which accounts for much of the explanations behind the provision chain congestion that has resulted in nearshoring to Mexico.”
As more cross-border freight moves between the 2 countries, cargo theft continues to be a difficulty in Mexico. Reliance Partners has launched its Mexico Cargo Hijacking Data Portal, where shippers, carriers and brokers can see a number of the latest trends across Mexico.
There have been 6,030 incidents of cargo theft across Mexico between January and September 2023, an 8% year-over-year increase from the identical period in 2022, in accordance with Reliance Partners.
In November, Mexico’s National Association of Vehicle Tracking and Protection Firms recorded 306 cargo theft cases across the country, averaging greater than 10 a day.
In August, the Mexican Alliance of Carrier Organizations threatened to go on strike if federal and state authorities didn’t implement more protective measures across roadways, which they agreed to before the work stoppage took place.
Vickers said federal and state authorities in Mexico still must do more.
“The federal government must get more involved; that’s why there was almost a really large strike in Mexico from drivers due to violent hijackings, and the federal government wasn’t doing anything in any respect to assist that,” he said. “They should take a more aggressive stance on cargo theft.”
Ryder System leases logistics center near Dallas-Fort Value
Ryder System Inc. has leased a 234,475-square-foot industrial space in Haltom City, Texas.
The space is within the recently constructed Northmark Commerce Center, a Class A facility that features 32-foot clearance heights, single- and multi-tenant functionalities, cross-dock configurations, 56 dock doors, 132 parking spaces, 19 off-dock trailer stalls, and a secured drop lot with 104 additional trailer stalls.
Miami-based Ryder (NYSE: R) is a leasing, fleet management, transportation and provide chain solutions provider.
Haltom City is between Dallas and Fort Value and in close proximity to AllianceTexas, a 27,000-acre, master-planned industrial, mixed-use and residential development.
The Northmark Commerce Center was also recently sold to an institutional buyer, in accordance with the Newmark Group, which handled the sale. Details of the customer and transaction weren’t disclosed.
“With its prime last-mile location within the coveted North Fort Value industrial submarket, Northmark presented an exceptional investment opportunity,” Newmark Vice Chairman Dustin Volz said in a news release.
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Paccar Inc. declares $50M investment in Mexico truck factory
Paccar Inc. is investing $50 million at its Kenworth Mexicana truck manufacturing facility in Mexicali, Mexico, in accordance with a news release.
The investment might be allocated to a brand new testing facility for electric, diesel and natural gas vehicle engines, in addition to additional administrative offices, and expansion and remodeling of the ability’s cafeteria. The plant employs 3,500 employees.
Paccar (Nasdaq: PCAR) produces Class 5 through Class 8 Kenworth and Peterbilt trucks on the 590,000-square-foot Kenworth Mexicana plant. In 2022, the plant produced 15,500 vehicles that were exported mainly to the U.S. and Canada.
Mexicali is in northern Mexico, directly across the U.S.-Mexico border from Calexico, California.
Thefts from cargo trains in Mexico rose in September
There have been 312 theft events from cargo trains in Mexico in September, in accordance with the newest monthly data from Mexico’s Railway Transport Regulatory Agency (ARTF).
Cargo train thefts were up 108% 12 months over 12 months in September in comparison with the identical month in 2022, when 150 incidents were recorded.
Agricultural grains accounted for 21% of the thefts in the course of the month, followed by industrial and raw materials at 17% and auto parts at 16%.
ARTF didn’t provide details on which Mexican states recorded probably the most cargo train thefts.
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