By Benny Lim.    

Cross-border freight flows have been increasing for years but interest around shipping from Mexico and Canada into and out of the United States has amplified since the pandemic. And after Trump declared a trade war with China and began imposing tariffs on products made in China, many companies are reconsidering to move their supply chain from China to southeast Asia, Mexico in order to avoid the burden of additional tariffs, with some looking to bring manufacturing closer to end markets in North America. As this occurs, they will continue to search for ways to effectively ship goods into the country, including less-than-truckload cross border delivery.

The benefits of foreign companies to import goods and materials into Mexico for assembly or manufacturing could avoiding duties and valued-added taxes from China.

The process of cross-border shipping like shipment pricing particulars like class, base rates, discounts and minimums follow normal U.S. guidelines and pricing, which are much different that domestic shipments in Canada and Mexico. Pricing freight in Canada is typically based on hundredweight and pallet rates. This avoids digging through classifications and paying for a carrier or a neutral base rate like in the US. The extra layer of complexity in cross-border LTL exists because of the specific paperwork, customs clearing requirements and an additional party [a customs agent] being involved. There are more parties involved, potentially creating bottlenecks.

For the U.S LTL cross-border market, most carriers, particularly those with strong Canadian or Mexican partnerships, are actively seeking more cross-border business. This is partially due to the excellent handoff networks they’ve created with their counterparts in either country. They either have pickup or delivery cost eliminated in the transaction, and being the larger party in the deal they can negotiate favorable rates with Mexican or Canadian carriers.

Then there's the fact that there's quite a bit of freight consolidation happening at warehouses on both sides of the border, which is why truckloads have historically been more prosperous. This will continue to some extent – however, the need for just-in-time and more flexible supply chains will also grow, and North American cross-border freight is no exception. Most logistics providers rely on third-party relationships to provide intermodal services, essentially handing over trailers to partners with the proper authority to operate at the border.

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