According to the Brookings Institute, the U.S. contributed $13.5 billion in foreign direct investment with Mexico in the first nine months of 2023 as nearshoring continues to reshape global supply lines. Unlike offshoring, nearshoring brings manufacturing and production closer to end-user markets, enabling businesses to get products to consumers faster and at lower costs. Hand-in-hand with this trend is the growing demand for cross-border freight solutions, which experts predict will continue to grow at a CAGR of 3.4% through 2032. Filling this demand represents a significant opportunity for U.S. carriers to expand their businesses and keep their fleets moving during the ongoing freight shortage.
However, the world of cross-border freight comes with heightened regulations and considerations. Companies must ensure their drivers have the appropriate licensing and insurance coverage. They also must know how to navigate customs, provide the proper documentation for both their drivers and cargo, assess and pay the right taxes and fees, and, as if that weren’t enough, follow the laws and regulations of two sets of government.
In addition to the paperwork and red tape, it also takes considerable time and money to set up your own cross-border freight business. While larger companies may have the resources to do so, smaller carriers do not. However, there is another way to tap into the cross-border opportunity: working with a cross-border 3PL.
Read on to see how the right provider can position you to grow your business and how to choose one that’s right for you.
The Benefits of Working with a Cross-Border 3PL
Just like in the states, cross-border 3PLs act as the connection point between shippers and carriers, arranging loads and negotiating rates. They also handle all administrative details such as fee assessment, documentation, regulatory compliance and route planning. Not only does collaborating with a 3PL mean you have less red tape to deal with, but it also helps avoid legal trouble. International trade regulations and compliance are strict and heavily enforced. Not having the correct documentation or failing to adhere to freight regulations can result in delays or confiscation of cargo, heavy fines and even legal action.
Working with a 3PL also provides significant business benefits, including the potential to expand your business, improve workflow efficiencies, and reduce costs and transport times.
However, selecting a 3PL provider takes careful consideration. There are many providers to choose from, but finding one with the right mix of experience, resources and opportunities is key. Here are four things to look for in a cross-border logistics provider:
Experience
Just like it isn’t easy for carriers to jump into cross-border freight, the same can be said of 3PLs. There is an existing learning curve to overcome. An experienced 3PL will be better equipped to anticipate the challenges of the customs process and resolve any unexpected issues. Their experience also enables them to adapt to changes in regulations and laws faster than less experienced companies. They’ve also had time to establish their border presence, build relationships with shippers, and refine their processes to be more efficient.
International Relationships
Networking is key to successful business operations, and transportation is no exception. A strong cross-border business needs relationships on both sides of the border to survive. When building international relationships, culture is a big consideration. For example, in Mexico, business partnerships are highly personal and loyalty is a matter of great importance. Having the best rates or high-quality service isn’t enough – people need to trust you. Building and maintaining business relationships takes a considerable amount of time and effort. Established providers will already have such relationships in place, enabling you and your drivers to start hauling immediately.
Owned Facilities
Loading times are a huge source of friction for drivers and carriers. In addition to taking hours out of a driver’s day, this time typically isn’t compensated for either. When you factor in the ongoing slowdowns at the Mexican border, delays and unpaid time can be a big problem for carriers. One way 3PL providers can alleviate these problems is through owned cross-docking facilities. Not only do these facilities enable freight to move seamlessly from one truck to another, but having a facility at the physical border puts logistics experts on hand to help with problems. And because 3PLs handle all the logistics and coordination, all drivers have to do is show up and roll out.
Freight Options
The world of freight is changing. Increased demand and shrinking delivery windows require more efficiency than ever before, which requires some innovation on the logistics side. LTL, FTL and intermodal transport are just a few of the transportation solutions meeting the shifting market demands. Sticking to one or two modes of freight is too limiting these days. Carriers and 3PLs cannot survive without diversifying. Look for 3PLs who have diverse transportation portfolios to ensure you and your drivers will have consistent work. After all, that’s the main reason for working with a 3PL in the first place.
Driving Forward
Cross-border freight is not a one-size-fits-all solution for the transportation industry. It comes with its own set of problems to address, such as the growing gap between north- and south-bound freight. Experienced 3PLs will have the foresight to look ahead and start addressing these problems before they get out of hand, and the carriers who partner with them will see the greatest benefits.
