Nearshoring, the act of transferring manufacturing and production lines away from its foreign location and closer to the United States, is increasing in popularity. More U.S. parties show significant interest in better understanding the cross-border shipping process. The increased interest has exposed many misconceptions within the shipping community, which otherwise cloud the fundamentals of cross-border transportation. Clarifying these assumptions helps improve efficiencies, increase visibility, and grow U.S./Mexico trade relationships. Listed below are three common and incorrect assumptions shippers make about the cross-border shipping process.
False Assumption #1:
Exporters of Record empower Mexican Customs Brokers
When shipping to Mexico, only the Importer of Record can empower a Mexican Customs Broker. Unlike the United States, Mexico does not allow foreign Importers of Record. Importers must meet rigorous requirements. Regulations specify the importer must be a legal Mexican entity, register as an active importer with the Mexican equivalent of the IRS, and verify they are established with specific Mexican Brokers who are authorized to clear shipments on the importer’s behalf. This rule is essential and helps to identify responsible parties throughout the shipping process.
False Assumption #2:
Only a U.S. Customs Broker is needed when importing from Mexico
When importing from Mexico, the Exporter of Record must employ a Mexican Broker to clear the shipment through Mexican Customs. The Importer of Record also employs a U.S. Customs Broker to clear the shipment through U.S. Customs. The Mexican Broker provides the bridge transfer across the border and coordinates the U.S. entry with the U.S. Customs Broker. However, importers often overlook the requirement for a Mexican Customs Broker during this process, which causes confusion when the shipment arrives at the border.
False Assumption #3:
Direct loaded shipments are a better option than transloaded shipments
Transportation service providers offer different answers when asked about direct versus transload shipments. Asset-based carriers argue that direct loaded trailers offer more security and better protection against damaged goods, especially for high value shipments. Non-asset based service providers point out the cost difference between the two options; transloading often can be more cost effective for shippers. They also call attention to the physical inspections that Mexican Brokers commonly require prior to clearing shipments, which involves offloading the shipment regardless of trailer type. The fact is, direct loaded trailers do not determine whether the shipment will be offloaded at the border or not. Direct loaded trailers only ensure the shipment will be delivered in Mexico on the same trailer provided at origin, not that it wasn’t unloaded and reloaded at the border.
Understanding the cross-border shipping process increases accountability, as you know who is responsible at all times of the process. If you are unfamiliar with the process, reach out to your service provider and ask for help. In the meantime, don’t make false assumptions.
Disclaimer: This blog was originally published May 2013.