Cheers To Cross-Border Trucking

The arrival of NAFTA heralded a new era of prosperity for North America.  The years since this landmark free trade agreement have allowed economic links on this continent to deepen and mature, especially in the transportation sector.

The U.S. is making Mexico an offer it can hardly refuse.  A new trucking agreement will make it easier for Mexican trucking firms to operate in the U.S. This move is long overdue.  Canadian truckers already enjoy such an arrangement, so extending the terms to Mexico furthers the harmonization of transportation rules across the continent.  Removing impediments to cross-border shipping will make it easier for shippers to forecast their logistics costs and track deliveries.

The details of the official proposed framework should allay any fears that Mexican truckers will pose traffic hazards or undercut U.S. truckers’ margins.  The agreement will require Mexican firms to meet U.S. standards in safety and environmental impacts.  Inviting Mexican firms to compete on those terms will raise the quality of long-haul delivery service.

Opposition to the proposed framework is already stirring. Protected groups always fear innovation and competition when their sinecures are threatened.  They should examine the hard facts that harmonization of cross-border trade through NAFTA has contributed substantially to economic growth for all three participating nations.

Extending U.S. trucking standards to Mexican truckers can potentially provide opportunities for U.S. truckers.  YRC Worldwide’s (YRCW) logistics division could see growth in the freight-forwarding traffic it handles if Mexican truckers are allowed to backhaul goods from the U.S.  Arkansas Best (ABFS) may benefit if its partnership with a Mexican carrier gives it more transshipment options across the border.

The free flow of trucking across the U.S.-Mexico border will be a boon for trade once the final details of this program are confirmed by both sides.  A permanent agreement should require Mexico to lift any tariffs it imposed in retaliation for the U.S.’s elimination of the earlier pilot program.  That in itself will be a welcome development for American exporters.

Full disclosure:  No positions in YRCW, ABFS, or any Mexican trucking firms.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

Visit: Alfidi Capital

3 Comments on Cheers To Cross-Border Trucking

  1. Are you kidding me? Do you realize what this will do to American Trucking companies? Protected groups? What does that Mean? If I say to you that hey all those Canadian truckers that come down to drop off their freight then fill their trucks back up for a return to Canada is great, Then I have perfect business sense, Right? However, you will call me a protectionist, if I say to you that when those trucks return their freight back to Canada, have done so by taking opportunities away from American Truckers at a much lessor rate that blows away the U.S Trucker. They can’t compete on those terms. We already have seen that in trucking with CN. You simply can’t compete against someone willing to do it so cheaply. They just want to fill their trucks up on their return back home. American rate structures and the CN government won’t allow U.S. trucks to deliever freight all over Canada, will they? Mexican govt won’t allow it either. You are promoting a bad policy but hey, I’m behind times in my protected world. You probably supported the exporting of American Jobs too. Lost freight, lost opportunities and lost jobs is what Nafta has created for America. By the way, I’m a conservative, and you don’t care about American Jobs, do you?

    This policy will affect OB to Canada and OB to Mexico freight. No doubt about it.

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