“Time is Money” – And Intermodal Can Save You Both

Posted - July 24, 2014

“Time is Money” – And Intermodal Can Save You Both

Left to right: Dan Beers, Ben Enriquez

By Dan Beers and Ben Enriquez, Transplace

The U.S.–Mexico border is one of the busiest and most economically important borders in the world, with nearly a billion dollars’ worth of goods crossing each day – 80% of which are crossing by truck or train.¹ Driving this trend are manufacturers and CPG companies that are seeking out Mexico as the preferred location for near-sourcing their operations. A growing number of U.S. retailers have begun opening stores in Mexico to grow their customer base and drive profits by capitalizing on the country’s developing middle class.

Land (and lanes) of Opportunity?

Mexico has presented significant growth and cost savings opportunities for many companies looking to:

  • Decrease time-to-market
  • Reduce inventory warehouse space
  • Speed up cash-to-cash cycles
  • Cut transportation costs

This low-hanging fruit has led to operational efficiencies for companies doing business in Mexico – yet, for many, there is still significant untapped opportunity by shipping freight using intermodal. To take advantage of the reduced transportation costs and time savings afforded by rail, shippers are starting to convert their domestic shipments from over-the-road (OTR) modes to intermodal.

Presently, many shippers still don’t fully understand the process and opportunity of shipping into and out of Mexico using multiple transportation modes. This hesitation has also harbored concerns from some shippers that view intermodal as a slower, lower quality service. However, cross-border opportunities have changed over the last few years to allow for seamless transportation of goods and quicker service at lower costs.

Intermodal Benefits Abound

When shipping by truck alone, wait time at the border can vary from a couple of hours to several days. This is due to both the large volume of trucks going across the border and the lengthy, complex, yet necessary inspection processes required by U.S. and Mexican Customs. In contrast, there are multiple time and cost benefits to shipping via rail:

  • Wait time can be significantly reduced if not avoided, as containers are not subjected to the same inspections as OTR trucks
  • Therefore, containers will never have to be inspected at the border when moving inbound into Mexico, and companies can ship door-to-door without their products ever having to be unloaded for inspection
  • On average, rail is four times more fuel efficient than over-the-road truck, and each ton-mile of freight moved by rail rather than highway reduces greenhouse gas emissions by 75% ²

Shippers should certainly be aware of how to take advantage of the opportunities and benefits presented by intermodal, allowing them to bypass border crossing issues with customs and congestion at the border while reducing transportation costs.

What complexities of crossing the U.S.-Mexico border are you currently facing?

¹ http://www.state.gov/r/pa/prs/ps/2010/05/142020.htm

² Association of American Railroads. Freight Railroads Help Reduce Greenhouse Gas Emissions.