Mexico: Making the Connection

By Todd Drennan

It’s a discouraging sight for someone wanting to reach the Mexican market–lines of trucks on I-35, waiting to enter Mexico. But a little savvy and good networking skills can save U.S. exporters big border headaches.

Some exporters think that getting their product across the United States is the end of their worries. They couldn’t be more wrong.

It’s true that Mexican importers hire the principal handlers responsible for clearing U.S. goods. Importers also pay the duties. But taking the extra time to understand the process and work with the key players can save a U.S. company time and money.

Taking a Look at Laredo

To get a sense of shipping to Mexico, an exporter might want to visit Laredo, the busiest border crossing between the United States and Mexico. In 1998, approximately 800,000 trucks crossed the border from here–a 23-percent increase over the previous year.

The Mexican customs facility is open only between 8:00 and 10:00 a.m., but perishable shipments are permitted to cross until noon.

Truckers hauling food, fiber or forestry products must next stop at Mexico’s Ministry of Agriculture Inspection (SAGAR). That office closes at 4:00 p.m.

The cargo usually gets into Mexico by 4:00 to 8:00 p.m.

Communication Is Critical

It’s a good idea to first visit the border and meet with the Mexican officials; the Office of Agricultural Affairs in Mexico’s Nuevo Laredo can help arrange this. The relationship that business owners foster with Mexican handlers can prove critical.

The first step is to learn who they are and what they do.

Forwarders and Brokers

Two main teams are involved with moving U.S. products into Mexico:

Forwarders: These U.S. companies, located on the northern side of the border, are the first to receive a shipment. A forwarder will classify shipments, count merchandise, check paper-work and arrange agricultural inspections. If the product requires refrigeration, the forwarder will arrange to move the cargo to a Mexican trailer. If the U.S. trailer is in for the "long-haul," the forwarder may verify that the exporter possesses a bond to ensure its return.

Mexican Customs Broker: Only brokers, who are legal representatives of the importing firms, can clear products for entry into Mexico, and they alone can give a shipment its critical documentation, called the Pedimento de Importacion. The pedimento will be checked numerous times throughout the clearance process. In Nuevo Laredo, on the Mexican side of the border, brokers can transfer pedimentos electronically.

Under Mexico’s customs law, brokers must be Mexican citizens.

Getting the Most From Handlers

Virtually all forwarders are owned fully or partially by brokers. Forwarders are not required by Mexican law, but brokers feel they are essential to ensure customs compliance. Importers like them, too, because it is easier and cheaper to resolve problems before the goods reach Mexico.

U.S. exporters can reduce their costs by agreeing to pay forwarding expenses. This means they can choose the forwarder and can negotiate for lower fees–especially if they understand what they are getting for their money.

Before closing a sale with Mexico, it pays for U.S. exporters and Mexican buyers to have settled on fees for both brokers and forwarders. The exporter should request the contact name for both in case any problems arise.

First-time exporters to Mexico, and firms shipping new products, can ask the importer to use a broker who’s experienced in moving that particular good. New exporters might also want to explore using brokers providing special southbound shipment services. These raise costs but lower the learning curve.

Some U.S. exporters complain about brokers and forwarders, but they provide an important service. Mexico’s import requirements can’t be effectively handled from the United States. Moreover, Mexican customs law is tough on brokers who don’t comply with regulations, but less so for importers. There are 470 brokers in Nuevo Laredo alone, so Mexican importers and the U.S. companies they deal with are free to shop around.

U.S. agricultural exporters have a special incentive to seek out favorable relationships with handlers. Thanks to helpful forwarders and brokers, many U.S. exporters have been forewarned of sudden changes in Mexican import requirements for food, fish and forestry products.

The broker or importer can also give exporters the "import requirement sheet," a valuable checklist of things to get done prior to shipping.

A Few More Helpful Hints

Here are a few more tips from veteran exporters to speed your shipments to Mexico.

• Use invoices to speed customs clearance. Consolidate invoices to avoid multiple Mexican customs entries. Add a column for the Mexican Harmonized Tariff Schedule. (That makes it easier to prepare the pedimento–and saves time.) It’s also good to have a column for shipments of multiple items, country of origin and to make a note of any NAFTA-qualified products.
• A reputation for compliance can speed up processing time. Make sure you are up-to-date on requirements before sending a shipment.
• Go all the way if you can. The trucker and his "bobtail," the tractor that moved your trailer full of goods to the Mexican border, will probably be picking up another cargo load in Laredo and heading back north. But exporters can sometimes arrange for the trailers that carried their goods to the border to transport them all the way to the final destination in Mexico. This saves time and money because the cargo doesn’t have to be moved. Bonds to insure the trailer can be expensive, though, so check to make sure this is the most economical option.
• Palletize if possible. Most U.S. companies know that palletized cargo–goods shipped on top of shallow crate-like platforms that work like shelves–make it easier to move shipments and reduce handling damage. They’re an especially good idea when exporting to Mexico.

The number of U.S. firms that reap profits in Mexico gets bigger every day. With patience, planning and plenty of communication, Mexico can be a great place to increase customers and sales.

_____________________________
The author is an agricultural officer with the Office of Agricultural Affairs, Nuevo Laredo, Mexico. Tell.: (52) (87) 19-16-03; Fax: (52) (87) 19-16-05; E-mail: agrnl@nid.bravo.net

Last modified: Thursday, October 14, 2004 PM