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Nov.30, 2015

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SURFACE & DOMESTIC TRANSPORTATION TRUCKING | RAIL | INTERMODAL | AIR & EXPEDITED | DISTRIBUTION 40 THE JOURNAL OF COMMERCE www.joc.com NOVEMBER 30.2015 By William B. Cassidy THE DYNAMICS OF cross-border trucking between the U.S. and Mexico are chang- ing. More U.S.-bound shipments are being sent to transloading facilities at the border before heading north, logistics operators say. That opens new opportunities for U.S. companies importing goods from Mexico and may actually reduce cross-border transportation costs and speed shipments. Deconsolidating and reloading ship- ments at a cross-dock is a departure from the standard practice of simply swapping tractors at the border and hauling the ship- ment directly to its destination. Several factors are driving the trend, in particular the growing imbalance in truck capacity along the U.S.-Mexican border, where more loads move north than go south. Transloading is alleviating some of the peak-season capacity issues shippers and carriers face along the U.S.-Mexico border, according to Troy Ryley, managing director of Transplace Mexico. "Remember the doom- and-gloom stories about peak season?" he asked, referring to the spring produce season. "I'm not saying it was easy for us, but it was much better than in prior years." A shortage of U.S. trailers in Mexico is part of the problem, according to Ryley. "From Transplace's perspective, fewer U.S carriers are allowing equipment in Mex- ico," he said. "As a result of having less U.S. equipment in Mexico, Mexican carriers are making up the difference and shifting to a cross-dock model. That's part of the reason why peak season wasn't so bad this year." Transloaded shipments at Transplace's Laredo, Texas, facility are at an all-time high, having more than doubled over the past year, Ryley said. He expects even more transloading next year. "We've gone from 10 percent of our volume managed cross- dock to roughly 30 percent, and I assume we'll hit 50 percent this coming year," he said. "The dynamic has changed." One factor driving that change is the strength of the U.S. dollar compared with the Mexican peso. The Mexican peso has been losing ground swiftly against the U.S. dollar since the start of the year, with the value of the dollar in Mexico rising from about 14.7 pesos per dollar on Jan. 1 to nearly 17 pesos per dollar by early November. The strengthening of the dollar makes U.S. goods — from consumer products to heavy trucks — more expensive in Mexico. U.S. goods shipped to Mexico declined 3.6 percent in value year-over-year in August, the latest month for which data is available, according to the U.S. Bureau of Transportation Statistics. In the same month, the value of goods destined for the U.S. increased 4.2 percent, according to the BTS. The number of trucks crossing the bor- der also is rising. At Laredo alone, truck crossings were up 4.4 percent in the first half of 2015, topping 1 million for the first time, according to BTS data. The agency's data doesn't differentiate between northbound and southbound crossings. At Yusen Logistics (America), Laredo Branch Manager Ben Escarcega sees an increase in shippers opting for transloading, prioritizing tractor capacity over keeping freight in the same trailer. "I believe the need for capacity is driving the transload - ing trend," he said. "Much of the urgent northbound freight crosses the border in the evenings, after most of the U.S. truck capacity has already been dispatched. DRIVING CHANGE AT THE BORDER An imbalance in north-south capacity and the strong dollar spark a surge in transloading at the U.S.-Mexico border "Our cross-border business is growing tremendously because the capacity is just not there."

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