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Logistics Viewpoints: “Combating the Capacity Crunch for Mexico’s Cross Border Shipments”

You could call it the perfect capacity storm, as a number of the same challenges that U.S. domestic shippers are encountering are also impacting cross-border logistics in Mexico. In addition to factors such as the ELD mandate and recent extreme winter weather conditions, the upcoming peak produce shipping season in Mexico is set to put additional pressure on capacity and create unexpected costs for carriers and shippers alike. So, how can cross-border shippers combat some of the challenges currently accumulating in the market?

The Capacity Crunch: A Cross-Border Perspective

Capacity is tightening. According to the Wall Street Journal, “A nationwide truck shortage is forcing thousands of shippers into a tough choice: postpone all but the most important deliveries, or pay dearly to jump to the front of the line.” Trucking companies are losing the ability to choose the freight they ship – the drivers currently have the upper hand.

Many large enterprises are facing the difficult decision of either postponing deliveries or paying a premium to get their highest-priority shipments out on time. Current spot-market prices for dry vans are up more than 20% year-over-year, and analysts expect long-term contract rates to rise by between 5% and 8% in 2018.[1] So, what’s intensifying this recent capacity crunch?

From a cross-border perspective, peak produce shipping season in Mexico is right around the corner (occurring in late spring and early summer) and could certainly intensify these capacity challenges. The seasonal spike in demand for time-sensitive agricultural products can cause a disproportion in the flow of north and south bound freight, and the lack of trailer space available to match rising northbound demand could exacerbate the situation.[2]

Read more here.

May 1, 2018