In today's interconnected global economy, businesses of all sizes are expanding their operations beyond their domestic borders. This has created a growing need for transportation and logistics companies to transport goods and materials across international borders.

However, with this increase in cross-border trading comes the risk of unforeseen events that can lead to loss or damage of cargo. This is where cargo insurance becomes essential for cross-border operators in borderlands.

Cargo insurance provides protection against financial loss due to damage, theft, or loss of cargo during transit.

In this article, we will discuss the importance of cargo insurance for cross-border operators in borderlands and how it can mitigate risks and protect your assets.

From understanding the different types of cargo insurance to the benefits of having a comprehensive coverage, we will provide valuable insights on how to secure your cargo and ensure a smooth and successful cross-border operation. So, whether you are a small business owner or a large corporation, read on to discover why cargo insurance is an essential aspect of your business strategy in the borderlands.

A Comprehensive Update

This report, Borderlands, offers a comprehensive update on the current happenings within the domain of United States-Mexico cross-border trucking and trade. In this edition, we present noteworthy insights, including the potential of cargo insurance to significantly enhance the business of cross-border operators.

Additionally, we bring you the news of Ryder System's recent leasing of a strategically located logistics center near the Dallas-Fort Worth area. Moreover, we highlight Paccar Inc.'s substantial investment of $50 million into a truck factory situated in Mexico.

Lastly, we shed light on the alarming increase in thefts from cargo trains in Mexico during the month of September.

The Advantages of Cargo Insurance for Enhancing Cross-Border Operators' Business Proficiency

Despite the challenges posed by cargo theft and trucking accidents in Mexico, the cross-border business market remains highly profitable for brokers, carriers, and shippers. In fact, Mexico has surpassed China as the top U.S. trading partner in 2023, thanks to a growing focus on bringing supply chains back to North America.

According to the U.S. Census Bureau, Mexico has maintained its position as the leading U.S. trading partner throughout the year, with a staggering $656 billion in two-way trade from January to November.

Although trucking accounts for nearly 70% of trade between Mexico and the U.S., the market for cross-border cargo insurance can be perplexing for many individuals involved. Mark Vickers, the executive vice president and head of international logistics at Reliance Partners, highlights the confusion surrounding this area.

A Significant Portion

He explains that large carriers often allocate a significant portion of their capacity to fulfill shipper-specific cross-border contracts. These carriers secure these contracts based on several factors, such as their linehaul rate, cross-border risk management strategy, insurance coverage, and asset allocation volume.

Overall, the cross-border business market between Mexico and the U.S. continues to thrive, despite the challenges it may face. The importance of understanding the complexities of cross-border cargo insurance cannot be understated, as it plays a vital role in ensuring a smooth and secure operation for all parties involved.

According to Vickers, many cross-border shippers prefer to work with larger carriers that can provide them with a high volume of trucks each week. This is because these larger carriers are able to negotiate better terms on their Mexican cargo insurance due to the high volume of shipments they handle and their established risk management practices.

Smaller Brokers and Carriers Can Still Win Business

As a result, it becomes challenging for small to medium-sized brokers or carriers to compete with these larger players. However, Vickers notes that smaller brokers and carriers can still win business by actively offering Mexican cargo insurance and highlighting their risk management protocols, as long as their rates are competitive.

Reliance Partners, a trucking insurance provider based in Chattanooga, Tennessee, acquired Vickers' company, Borderless Coverage, in 2021. Vickers started Borderless Coverage in 2018 in response to the demand from large shippers for an all-risk cargo insurance solution in Mexico.

Prior to starting his own company, Vickers gained experience in the industry while working at Total Quality Logistics for almost eight years, where he handled expedited shipments in the Laredo, Texas area.

Vickers emphasizes that liability insurance is not mandatory in Mexico. However, when the shipper does not declare the value of the merchandise, the liability is limited to a very low amount. As a result, pursuing liability actions in Mexico is uncommon due to the limited financial compensation available.

Evolved Significantly

In the past decade, the needs of freight brokers and shippers have evolved significantly. Back then, they sought a product that could be added to their existing global policy or self-insurance program, with coverage for theft and a deductible of $5,000 or less.

This prompted the development of Borderless Coverage, a solution that encourages collaboration among shippers, brokers, and carriers in the cross-border supply chain.

With an increasing number of global manufacturers relocating their supply chains to Mexico, it is crucial for small and medium-size brokers and carriers to be aware of the various insurance options available for transporting goods through the country. The accessibility and cost-effectiveness of cargo insurance in Mexico have improved, with over 30% of U.S.-based cross-border shippers now requesting it.

Mainly Attributed

This increase in usage is mainly attributed to the implementation of the United States-Mexico-Canada Agreement and the ongoing U.S.-China trade war, which have led to supply chain congestion and the need for nearshoring to Mexico.

However, despite these positive developments, cargo theft remains a persistent issue in Mexico. To address this problem, Reliance Partners has introduced the Mexico Cargo Hijacking Data Portal, which provides shippers, carriers, and brokers with valuable insights into the latest trends in cargo theft across the country.

According to Reliance Partners, there were 6,030 incidents of cargo theft in Mexico between January and September 2023, representing an 8% increase compared to the same period in the previous year. In November alone, the National Association of Vehicle Tracking and Protection Companies in Mexico recorded 306 cargo theft cases, averaging more than 10 incidents per day.

Back in August, the Mexican Alliance of Carrier Organizations issued a serious ultimatum, threatening to initiate a strike if federal and state authorities failed to implement additional protective measures on roadways. However, just before the work stoppage commenced, the authorities yielded to their demands.

Despite these concessions, Vickers, an industry expert, believes that federal and state authorities in Mexico still have a long way to go. In his view, the government should play a more active role in resolving the issue at hand. Vickers highlights the almost catastrophic strike by drivers, prompted by the alarming rise in violent hijackings, and the government's glaring inaction in addressing this problem. To effectively tackle the persistent issue of cargo theft, he emphasizes the urgent need for a more assertive and proactive stance from the authorities.

Ryder System secures a strategic lease for a cutting-edge logistics facility in close proximity to the bustling Dallas-Fort Worth region

Ryder System Inc. has recently secured a sizeable industrial space spanning 234,475 square feet in the dynamic Haltom City, Texas. This strategic move comes as the company recognizes the immense potential of the newly developed Northmark Commerce Center, a state-of-the-art establishment classified as Class A.

Boasting impressive features such as generous 32-foot clearance heights, versatile single- and multi-tenant functionalities, cross-dock configurations, and a remarkable 56 dock doors, this facility is designed to cater to diverse business needs.

Moreover, the Northmark Commerce Center provides ample convenience with its 132 parking spaces, ensuring smooth logistics operations. Additionally, the facility offers 19 off-dock trailer stalls, further streamlining transportation processes. Safety and security are prioritized with the inclusion of a secured drop lot comprising 104 additional trailer stalls, providing peace of mind for Ryder System Inc.

Headquartered in Miami, Ryder System Inc. (NYSE: R) is a renowned industry leader in leasing, fleet management, transportation, and supply chain solutions. With a strong focus on delivering exceptional services, Ryder System Inc. continues to drive innovation and efficiency in the ever-evolving business landscape.

A Strategic Position

Haltom City occupies a strategic position nestled between the bustling cities of Dallas and Fort Worth, offering convenient access to both. Moreover, it is conveniently situated in close proximity to AllianceTexas, a sprawling 27,000-acre development that encompasses a well-planned blend of industrial, mixed-use, and residential spaces.

In recent news, the renowned Newmark Group, a prominent real estate firm, has facilitated the sale of the Northmark Commerce Center to an undisclosed institutional buyer. Although specific details regarding the buyer and transaction remain confidential, this significant development highlights the immense investment potential of Northmark. Its highly sought-after location in the thriving industrial submarket of North Fort Worth has undoubtedly positioned it as a lucrative opportunity for astute investors.

The acquisition of Northmark Commerce Center underscores the remarkable appeal of this prime location for last-mile logistics. Newmark's Vice Chairman, Dustin Volz, lauded the property's exceptional investment prospects in a recent press release, further emphasizing the strategic advantage it offers within the North Fort Worth area.

Paccar Inc. Announces $50M Investment In Mexico Truck Factory

According to an official statement, Paccar Inc., a renowned truck manufacturing company, has recently announced a substantial investment of $50 million in its Kenworth Mexicana facility located in Mexicali, Mexico. This significant capital infusion will primarily be utilized to establish a cutting-edge testing center dedicated to electric, diesel, and natural gas vehicle engines.

Furthermore, the investment will facilitate the expansion and renovation of the facility's existing cafeteria, along with the addition of administrative offices. Currently, the Kenworth Mexicana plant employs an impressive workforce of approximately 3,500 individuals.

Paccar, traded on the Nasdaq under the symbol PCAR, specializes in the production of a wide range of heavy-duty trucks, including Class 5 to Class 8 Kenworth and Peterbilt models. Spanning an impressive area of 590,000 square feet, the Kenworth Mexicana plant has been instrumental in manufacturing 15,500 vehicles during the year 2022 alone.

These vehicles, predominantly destined for the United States and Canada, have consistently met rigorous quality standards.

Situated in the northern region of Mexico, Mexicali is conveniently located just across the U.S.-Mexico border from Calexico, California. This strategic location enables seamless cross-border operations and facilitates efficient distribution of the manufactured trucks to their target markets.

The incidence of cargo train thefts in Mexico experienced a notable increase during the month of September

In September, the most recent monthly data from Mexico's Railway Transport Regulatory Agency (ARTF) revealed that there were a total of 312 theft events reported from cargo trains in the country. This marked a significant increase of 108% compared to the same month in 2022, when only 150 incidents were recorded.

Analyzing the nature of these thefts, it was found that agricultural grains accounted for 21% of the incidents, followed by industrial and raw materials at 17%, and auto parts at 16%.

Unfortunately, the ARTF did not provide specific information regarding which Mexican states experienced the highest number of cargo train thefts during this period.

In Conclusion

Cross-border operators in borderlands must prioritize cargo insurance in order to protect their assets and mitigate financial risks. With the constantly changing regulations and potential for accidents or theft, having proper coverage can provide peace of mind and ensure the smooth operation of businesses.

By staying informed and working with reputable insurance providers, cross-border operators can navigate the complexities of international trade with confidence and safeguard their assets for the long term. After all, in the unpredictable world of cross-border operations, it's always better to be safe than sorry.

If you want to stay updated with a wide range of trends, actionable insights, and innovative solutions in the trucking, freight, and logistics industry, stay connected to us.

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