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"A NAFTA arbitration panel was finally established last year to resolve the dispute. A ruling was supposed to be issued in June, but that too has been delayed," says Martin Rojas, director for cross-border operations with the American Trucking Association (ATA). "Another NAFTA provision, this one to allow truckers full entry into the other country, not just along border states, was scheduled to become effective January 1 of this year and it's also been postponed," he adds. It's likely that NAFTA arbitration panel will rule against the US. In that case, Mexico may be allowed to estimate the damages caused by the delay in opening the border and levy special tariffs to compensate for its economic loss.
North-South Differences"In the meantime, we'll continue to work within the system," says Bob Carr, vice president, international for Roadway Express. In general, most transportation executives agree that shipping to and from Mexico tends to be more challenging than Canada. However, according to Carr, there was a time when Canadian shipments were subject to more problems. "Now, ninety-five percent of our northbound shipments into Canada are precleared through customs before the freight arrives at the border," he notes. Roadway Express uses PARS, or Canadian Customs' Pre-arrival Review System, to electronically expedite clearance of its shipments. The ATA's Martin Rojas concurs that Canadian shipments typically encounter fewer problems than those along the southern US border, although there are still areas that need to be addressed. "The outstanding issues with Canada are related to improving existing infrastructure, giving more manpower to Customs, and the possibility of building a 'twin' Peace Bridge," he says. On the plus side, Canadian Customs is developing a self-assessment program, similar to a voluntary compliance program, to help facilitate trade flows. According to Richard S. Brooks, managing director, Canadian business development, USFreightways, "Customs self-assessment (CSA) will be the newest service option from Canada Customs, and USFreightways is already taking the necessary steps to register our drivers and go through the Customs audit that will allow us to be 'CSA approved.'"
One of the key differences within the Nafta territory has to do with customs procedures, explains Bob Carr of Roadway Express. "Mexican customs brokers are not only responsible for verifying accurate documentation, they're charged with making sure the freight itself is in proper order. In the US, brokers are responsible only for the documentation. The importer bears the burden of making sure the boxes contain what they're supposed to and that they're labeled correctly." Part of the reason for entrusting Mexican customs brokers with both the documentation and physical freight has to do with stemming the flow of contraband. "All southbound shipments into Mexico, whether less-than-truckload or truckload, must be passed to a US forwarding agent who in turn takes them to a Mexican customs broker for processing," says Carr. "The trucker can retrieve the shipment across the border once it's been processed, which takes anywhere from one to three days." This particular procedure is not covered under NAFTA, though, and obviously Mexican customs brokers have a vested interest in retaining control over this aspect of the supply chain. "Changes will occur when business begins to drive the process," remarks Carr. In the meantime, he says there have been positive developments along the southern border, such as the new World Trade bridge in Laredo, Texas.
The World Trade bridge opened this past spring, and like the Colombia bridge located about 20 miles outside of Laredo, it handles only commercial traffic. Other carriers have noticed improved traffic flows in Laredo, the busiest crossing point between the US and Mexico. "The majority of our shipments cross at Laredo, and in our estimation things are running pretty smoothly now," comments Dennis Saverd, executive vice president of sales for Gilbert Companies. The border port's two other bridges, Convent Street and the Lincoln-Juarez bridge, are for pedestrian and vehicular traffic. Meanwhile, US Customs' Automated Export System has been in force in Laredo since spring, which has also aided the movement of goods across the border.
Another issue that concerns shippers is cargo theft. However, this problem has also seen some improvement. Statistics from the Federal Preventative Police, the agency responsible for patrolling Mexico's highways, show that cargo theft was down 40% last year from the year before, or 473 incidents in 1999 versus 794 in 1998.
Rail Rivalries: If You Can't
Beat 'Em, Join 'Em A significant portion of North American rail traffic is controlled by Canada's leading carriers, Canadian National Railway and Canadian Pacific Railway. In a surprise move, the two companies announced in July they would begin sharing trackage rights in certain areas to increase market share. The first agreement gives CN access to CP's northeastern US network in New York, New Jersey, and Pennsylvania. In a separate agreement, CN will give CP access to its main line between Toronto and Chicago. The agreements will not only boost productivity for both rail carriers, but nonrail shippers will now have new transportation options. Although CN and CP tried three times before to link their networks, this latest announcement was somewhat unexpected because it came one day after CN and Burlington Northern Santa Fe (BNSF) terminated their proposed $5.1 billion merger.
BNSF has been working on other deals, though, such as a newly formed partnership with Mexico's Transportacion Ferroviaria Mexicana and Tex-Mex railroads. This arrangement allows BNSF to offer rail service between the US and Monterrey, Quertaro and Mexico City, Mexico. BNSF is hoping to expand its market share with new intermodal traffic from the upper Midwest, Chicago, and the Ohio Valley.
Although the failure to implement NAFTA provision for cross-border trucking on time has been a setback for certain interests, trade between the US, Canada, and Mexico has apparently not suffered too much, as growing trade volumes clearly indicate. Overall, what's most important for shippers is that moving goods within NAFTA region is easier today than it has ever been and will continue to improve in the future.