The U.S.-Mexico cross-border freight market: Prospects for Mexican truckers

The North American Free Trade Agreement provided that Mexican carriers can legally take goods from Mexico and deliver them anywhere in Texas, Arizona, New Mexico, and California after December 18, 1995. Although this opportunity has been postponed, empirical data suggest that over 70 percent of all Mexico to U.S. truck freight will be covered by this liberalization. The market opportunity is thousands of loads per day, and varies from area to area along the entire U.S.-Mexico border. NAFTA provisions should make it possible for Mexican carriers to operate a cross-border service, although satisfying both U.S. federal authorities and individual state requirements will be a complex task. Mexican carriers will also have to address two separate market segmnents, one based around the goods flowing to and from the Mexican interior, and the other keyed to the maquiladora border manufacturing operations. In their favor, Mexican carriers have a significant labor cost advantage, which results in lower overall costs. But their long-term success in the cross-border market also depends on whether they can find the equipment, drivers, and control systems to provide adequate service binationally in the face of governmental barriers and currently entrenched competition.