Pressures at the US’s southern border, from rising volumes and diminished trucking capacity, are causing shippers to evaluate transloading.
According to Uber Freight, this is turning from an emergency solution into a structural network element.
Uncertainty about the future of Mexico’s free-trade agreement with the US has not made a dent in the rise of truck border crossings. Trade between the neighbours rose to $94.8bn in July, up 27.5% from a year earlier, and more than 70% of this crosses the border on trucks.
While volume kept growing, capacity has been hit by US enforcement of trucking regulations, notably English language proficiency rules and cabotage restrictions. The pool of B1 drivers, who pick up freight in Mexico and deliver it to the US, has been reduced by 25,000 between April of last year and this month.
The strain has been building: Uber Freight has counted three occasions this year so far when shippers, reliant on B1 drivers, “got stuck with backlogs of 30, 40, sometimes 50 loads, when that capacity wasn’t there”.
All of these blockages occurred at the Laredo crossing, which handles about 40% of US-Mexico commercial traffic. Official numbers of daily crossings at the bottleneck vary between 17,000 and 21,000 trucks a day.
CANACAR, Mexico’s national trucking association, has acknowledged the importance of combating illegal cabotage, but warned of operational challenges for Mexican operators, and additional delays at the border due to increased inspections and documentation requirements that complicate driver scheduling, equipment positioning, and delivery times.
Washington appears unlikely to ease its enforcement drive on the trucking industry. Logistics providers like CH Robinson have warned customers that cross-border capacity could tighten further this quarter.
The driver shortage is not a temporary setback but a structural issue, said Kyle Toombs, SVP of capacity solutions at Uber Freight.
“Some of these drivers may requalify over time, but losing a visa is hard to come back from, and in the meantime that capacity isn’t paused, it’s gone,” he commented.
On top of the driver shortage, rising operating costs, higher interest rates, and tighter lending conditions are discouraging new trucking companies from entering the market.
Now, the disparity between capacity and volume is causing a growing number of cargo owners to look at transloading as a strategic measure to limit the impact of border disruptions and driver shortages, Mr Toombs reported.
Historically the concept has been viewed as a stopgap measure used by smaller shippers, but it is now getting attention from larger firms as well, including industries like automotive and electronics that eschewed transloading.
Mr Toombs said: “A lot of large, middle-market enterprise-type companies are now looking at it.”
And the concept itself is being viewed in a new light, he added.
“Over the past year, transloading has shifted from an emergency workaround into something shippers deliberately design into their networks from day one. It isn’t a reaction to a rough patch. It’s a structural response to a labour pool that isn’t coming back the way it was,” he said.
Transloading serves as a pressure valve to deal with disruptions to cross-border flows, tapping into a larger pool of drivers, but it can be elevated to become a plank in a shipper’s transport strategy.
“If a product can transload, it can also run through trailer. That means transloading isn’t a trade-off against existing through-trailer capacity; it’s incremental volume added on top of it. The shippers getting this right aren’t treating it as either-or. They’re building both capabilities, putting the right controls around the warehouses and cross docks they use to protect product integrity, and making the cost-versus-service call lane by lane. Often, they don’t have to choose at all,” Mr Toombs explained.
According to him, capacity for transloading is “fairly sufficient”, as it does not require much warehouse capacity and there is an ample labour pool available.
The cost differential between transloading and end-do-end trucking fluctuates, but on balance through-trailer cost is “a bit higher”, he said, adding that transloading charge at the border is about $150-$200.
Companies that want to build up a transloading leg should start out by mapping their network lane by lane, tracking the regulatory signals, and building the necessary relationships and warehouse controls, he advised.
“Make sure your customs broker is looped in and that you use C-TPAT-certified carriers,” he added.
In terms of mixing transloading with through-trailer use, Mr Toombs recommended “at least 10-15% of total volume” to the former. “
You can increase this if, and when, you want,” he said.
While most transloading is happening at Laredo, firms are also using other border points like El Paso, and a growing number are using more than one location for transloading, he noted.