MEXICAN TRUCKERS FEAR COMPETITION

UNCLAS SECTION 01 OF 02 MEXICO 002559

SIPDIS

SIPDIS

STATE FOR WHA/MEX WHA/EPSC
STATE PASS TO USTR JOHN MELLE
DOT PASS TO DAVID DECARME
DHS PASS TO ALFONTZ MARTINEZ
TREASURY FOR IA MEXICO DESK - JASPER HOEK
COMMERCE FOR ITA/MAC/NAFTA ANDREW RUDMAN

E.O. 12958: N/A
TAGS: ECIN ECON EIND EINV ELTN ETRD MX
SUBJECT: MEXICAN TRUCKERS FEAR COMPETITION


1. SUMMARY. Representatives of the trucking industry in
Monterrey expressed frustration with inefficient and unsafe
operations of Mexican customs facilities in Nuevo Laredo.
Although the GOM is improving and updating border crossings,
the road system that feeds into them remains substandard
causing significant delays, expenditures and security
concerns for Mexican trucking firms. Some Mexican firms have
chosen to limit their clients to ensure that they do not lose
DHS FAST (Free and Secure Trade Program) certification. The
frustration seems to hide the Mexican industry's fear that
increased competition caused by a cross border trucking
agreement will shrink their market share. END SUMMARY.

GLOBALIZATION NOT DESIGNED FOR THE SMALL BUSINESS
-------------- --------------


2. Embassy Econoff, Monterrey Econoff, Monterrey Foreign
Commercial Service Officer (FCS) and FCS Senior Trade
Specialist met on April 6 with Jose Trevino Pezino of
Tranportes Aguila de Oro, Manuel Montemayor, General Manager
of Transportes Mon-ro and Jesus Octavio Gonzalez Martinez,
Service Director of COMCE Noreste (Northeast Mexican Chamber
for Foreign Trade). Aguila de Oro is the largest transporter
of merchandise for Wal-Mart in Mexico and the sole
transporter for the HEB supermarket chain, while Mon-ro has
the largest fleet in the region. Both Trevino and Montemayor
are past presidents of CANACAR, the National Trucking Chamber
of Commerce. The three individuals agreed "globalization did
not take into account the needs and issues of the small
business community." According to Gonzalez, transportation
issues change dramatically based on the size of the business.
Large businesses, he stated, have the resources to choose
the best transportation option (such as a FAST certified
shipper),while small businesses have limited options.

BORDER CROSSINGS LACK SUPPORT INFRASTRUCTURE
--------------


3. The trucking companies agreed that improvements have been
made at border crossings themselves, but that road
infrastructure leading to the border has not, causing
significant delays. Trevino noted that having FAST
certification and being able to use the FAST designated lane
can save four to five hours per border crossing. However,
FAST trucks must still spend a significant amount of time
waiting in traffic to get to the start of the FAST lane.
Montemayor mentioned that the Columbia Bridge, a relatively
new, less trafficked bridge located 50 km outside of Laredo,
can save two hours in crossing time but is not heavily used
because it increases transportation costs on both sides of
the border. Although there is room for expansion, few
customs brokers have opened offices at the Columbia Bridge.
This requires trucks to travel an additional 50 kilometers to
the bridge, and another 50 kilometers to Laredo after
crossing in order to reach the customs broker.

SECURITY VULNERABILITIES
--------------


4. The lack of sufficient road lanes to allow trucks to
rapidly approach the international bridges raises security
concerns. According to Trevino, the trucks are an easy
target for any sort of attack while waiting to arrive at the
bridge. Montemayor agreed and added that the patio area
where trailers change from one truck to another for the
transfer across the border, has little to no security
infrastructure in place. Drivers, according to the men, are
fearful that criminals will approach them before they leave
their homes or while waiting in line and obligate them to
take packages in their trucks. They could not provide
specific examples of this occurring.

IMPLICATIONS OF FAST
--------------


5. Although the FAST program provides many benefits, Trevino
explained that there is a shortage of FAST certified drivers
and trucks. This, he explained, makes it extremely difficult
to match shipments with certified drivers and trucks that can
take advantage of the FAST lane. He suggested that the
trucking industry create a national database of FAST
certified drivers and driving schools that could complete the

MEXICO 00002559 002 OF 002


certification. Transporters are fearful of losing their FAST
certification that allows them to bypass border traffic jams.
A FAST license can be lost if a company's supply chain is
breached at any point. Trevino mentioned that his company no
longer accepts cargo shipments from third parties in order to
minimize the risk of losing their FAST license.

BACKLASH OF A TRUCKING AGREEMENT
--------------


6. CANACAR does not support cross border trucking due to
fears of losing the market share they currently control. The
inefficiency and lack of modern trucks of many of its members
would also require significant investment in order to meet
U.S. standards. Trevino's opposition to Mexican
transportation companies' operation in the U.S. was also
based on the shortage of Mexican truck drivers. If Mexican
trucks were allowed to operate in the U.S., he felt that
drivers would only operate there due to higher wages,
furthering the driver shortage in Mexico.

SUGGESTIONS FOR IMPROVEMENT
--------------


6. Trevino and Montemayor offered suggestions for
improvements in the border crossing process on the Mexican
side. The men detailed that Mexico must designate funds to
increase the quality and number of road lanes to the
international bridges. They did mention that the new highway
to the Columbia Bridge may help. They also suggested the
creation of a bonded area for smaller companies that is USG
verified. Finally, they suggested the use of microchips or a
similar electronic device that could be placed on each
package and monitored from the factory to its final
destination.

COMMENT
--------------


7. Trevino and Montemayor were highly critical of operations
on the Mexican side of the border but criticism of the USG at
the border was virtually non-existent. Their suggestions
while on point, do not seem likely to be completed in the
near future. It is unclear, if Trevino's and Montemayor's
companies would lose significant revenues due to a trucking
agreement. The opinions they presented may demonstrate
CANACAR's fear of competition more than their personal views.


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