The Disinterest of Mexican Truckers

 B4T Editorial Staff

What if the U.S. finally opens its borders to Mexican trucks and they don’t show up?

A Matter of Non-interest
Ironically, the long simmering feud between the U.S. and Mexico over letting Mexican truck companies carry Mexican goods to U.S. destinations may be a matter of little interest to Mexican truckers.

Not to everyone else. It’s been a matter of irate interest to the Mexican government, which after enduring years of U.S. stalling, finally countered by charging tariffs on selected American goods. It’s been a matter of intense interest to parties such as the Teamsters and environmental groups, which oppose cross-border trucking (though for different reasons). It’s been a matter of uncomfortable interest to the presidents of three U.S. administrations: Clinton (against), Bush II (against and then for), and Obama (for, but only after a lot of lobbying). 

Didn’t anybody ask Mexican truckers if they were interested? 

Gracias, But No Gracias
The first clue that this might be a non-starter was in September 2007, when the Bush administration decided to try a one-year pilot program limited to one hundred Mexican trucking companies. They finally got twenty-nine, which ultimately resulted in only 98 Mexican trucks on American highways. According to one industry source, the Bush administration “literally had to beg” Mexican truckers to participate. 

"The majority of Mexican truckers don't want any part of the continental U.S. market," says Herb Schmidt, president and CEO of Con-way Truckload, the truckload unit of Con-way Inc., which has interline relationships with 80 Mexican trucking companies. Schmidt estimates that only 5% of Con-way’s Mexican partners have even considered serving the U.S. beyond the twenty-five mile commercial zone. 

An Expensive Investment
Why not? There’s several reasons. 

First is the liability issue. “Mexican truckers are scared to death of our tort system,” says Schmidt. They’re deterred by the cost of obtaining insurance plus the risk of being hit with a massive jury award in the event of an accident.  

Then there's the expense. Mexican carriers who choose to expand into the United States face significant upfront costs for labor, maintenance, facilities and equipment. The typical Mexican trucker has a fleet of six trucks, hardly enough to justify the kind of capital investment needed to play in the world's biggest economy. 

The Stolen Jobs Illusion
One of the chief arguments against cross-border trucking (by which we mean the Mexican border; the Canadians have been in this country for years) is the job threat. Drivers fear they’ll get sacked because their companies can’t compete with the cheaper labor of Mexican truckers. But that’s an illusion, says Derek Leathers, CEO of truckload giant Werner Enterprises (which generates about 10% of its revenue from Mexican operations) and head of the Mexican division for Schneider National. Leathers says any labor advantage enjoyed by Mexican companies will be “more than offset by the higher costs of capital, equipment and insurance.” 

Schmidt of Con-way remarks that in any case, Mexican drivers working in the U.S. will eventually demand higher wages, and their U.S. experience will give them leverage. The same thing happened over the years at Mexican "maquiladoras," plants in Mexico where raw materials imported on a duty-free basis are assembled into goods, which are re-exported back to the United States. At Mexican ‘maquilas,’ Schmidt says, rising labor costs have forced businesses to relocate deeper into Mexico to find cheaper labor. 

Paying for Mufflers
Why then have the Teamsters so actively opposed cross-border trucking? “That’s a good question,” says Lana Batts, a partner in transport advisory firm Transport Capital Partners and one-time vice-president for government affairs for the American Trucking Association. “I have no idea why the Teamsters would waste their political capital on this issue.” 

Maybe because it plays well with the rank and file. A casual Google search (“Mexican trucks”) produces twelve first page items, eight of them more or less objective recitals of current news and four openly critical. Opponents are particularly exorcised about the U.S. picking up the bill for onboard monitoring equipment and new mufflers for Mexican-owned trucks. 

These are valid points. The counter-argument would be that these concessions are worth the resumption of normal trade. The tariffs levied on 89 U.S. products to Mexico amount to $2.4 billion a year. Senator Maria Cantwell of Washington says that producers of potatoes, apples and pears in her state have been particularly hard hit. 

Day One
You can be sure that the government of Mexico will have plenty of long-haulers lined up for photo-ops on the first day that the Obama-Calderon agreement becomes law. What we want to know is, how many trucks will be at the border on the second day? 

We Americans can be pretty chauvinistic about our country, superior in so many ways to other countries. Truckers, who do everything—good and bad—more by half than anyone else, are the biggest chauvinists of all. How embarrassed will they be if they discover that their Mexican counterparts would sooner stay put and haul in Mexico? What’s the matter with those hombres? Don’t they want our business? Frankly, the trouble with Mexican truckers is they can be so un-American! 

This story was drawn from articles in Gateway Pundit, Wall Street Journal, San Antonio Express-News, DC Velocity and Fox News Latino.   

This article is provided as a service for truckers and everyone in the trucking industry by Advance Business Capital. ABC is the first and only factoring service designed by truckers for truckers. We provide innovative financial solutions exclusively to For-Hire truckers and Freight Brokers and are proud to be the first factoring company to receive the P3 (Preferred Platinum Provider) endorsement from the Transportation Intermediaries Association. 

http://www.advancebcap.com