Border Plan Starts Second Year; Participation Remains Low

A year after U.S. officials agreed to allow Mexican trucks into the country, only four Mexican carriers are participating, far below the number the United States has said would be needed to judge the safety of Mexican trucks.

Transportation Secretary Ray LaHood signed the agreement July 6, 2011, along with Mexican officials, setting forth the framework for a pilot program (7-11-11, p. 1).

But as of last week, only four trucking companies had been admitted to the program, compared with the 46 carriers the Federal Motor Carrier Safety Administration said would need to participate for it to be successful.

The program is set to run until October 2014. If federal officials do not get the data they need in the program, they will not be able to open the border to more Mexican carriers — and Mexico could reimpose tariffs on U.S. goods that were lifted when the program started last year, an FMCSA official said in May.

Mexican carriers have little reason to participate, experts told Transport Topics.

“The fact that you have to comply with a large universe of regulations, like engine standards, the inspections and everything else” discourages Mexican carriers, said Martin Rojas, vice president of security and operations at American Trucking Associations.

Carriers must comply with all U.S. regulations to enter the program. They must use ultra-low-sulfur diesel, operate trucks that meet emissions standards, employ English-speaking drivers and more.

Officials from both countries agreed to open borders to each others’ trucks in the 1994 North American Free Trade Agreement. Nafta also allows trucking companies in both countries to own carriers in the other country, and hundreds of Mexican companies have done so, FMCSA estimated.

“Some of them would rather set up a U.S. carrier” than wade through the pilot program, Rojas said.

In addition to the regulations, Mexican carriers don’t want to expose themselves to the expensive crash liabilities that come with U.S. operations, said Pete Montaño, vice president of sales at Con-way Truckload. Truck crashes typically cost much less for carriers in Mexico compared with the United States, he said.

“The carriers that understand it don’t want any part of it,” Montaño said.

Con-way Truckload works with about 80 Mexican companies to carry international freight, transferring trailers near the border, and the carriers he has worked with find that setup to work better than the cross-border program, he said.

Mexico also is dealing with a driver shortage, and it can be difficult to find drivers who volunteer to haul international freight, he said.

“Those that want to come across, they’ve already come across and formed U.S. companies,” Montaño said.

Those U.S. companies are not subject to regulations that prevent Mexico-based carriers from hauling freight between two U.S. points, Montaño said.

Neither Montaño nor Rojas had suggestions for FMCSA to increase participation in the program. “I really don’t know what the silver bullet is,” Rojas said.

In outlining the program’s rules in April 2011, FMCSA said that if Mexican trucks crossed into the United States 4,100 times, it could gather enough data to judge Mexican carriers, which is the purpose of the pilot project.

As of June 17, the four participating carriers had crossed a total of 47 times. Each had only one truck registered for the pilot program.

“The agency is extremely concerned about not having sufficient data,” FMCSA Associate Administrator Bill Quade said in May. Without proper data,  “we cannot normalize relations with Mexico and start accepting applications for authority,” and Mexico may reinstate tariffs, he warned (5-28, p. 4).

An FMCSA spokeswoman said the agency is confident it will get the data it needs. “Safety is our first priority, and we are efficiently working through our rigorous vetting process to bring more trucking companies into the program,” she said. When the United States ended its previous Mexican truck program in 2009, Mexico instituted $2.4 billion in annual tariffs on U.S. goods.

Mexico’s tariffs covered products such as potatoes, dairy products, corn, ham, fruits and personal products. The tariffs ended completely when FMCSA granted the first operating authority for the new program in October.

The prospect of bringing the tariffs back makes U.S. exporters uneasy.

“It is very important to us that the program succeeds and that there is a workable solution to address access for Mexican trucks,” said Corey Henry, spokesman for the American Frozen Food Institute. Some exported frozen foods, such as potatoes and corn, were subject to Mexico’s tariffs.

“Those tariffs tend to be very, very destructive, causing lost jobs and millions of dollars of lost sales,” Henry said.

FMCSA granted the latest operating authority under the program to Transportes del Valle de Guadalupe on June 12, the spokeswoman said.

The agency dismissed concerns from the Owner-Operator Independent Drivers Association and Advocates for Highway and Auto Safety, both of which complained that limited available data on Transportes made it difficult to judge the carrier’s fitness.