Texas governor Greg Abbott reversed his recent policy to require Texas state law enforcement to inspect trucks again after they had already been inspected by U.S. and Mexican border and customs agents when crossing the southern border. It’s a relief that he realized his mistake and corrected it because it was causing miles-long delays in sweltering heat and hurting the economies of both Texas and Mexico. Supply chains don’t need any more stress than they already have right now, and it’s very uncommon for illegal immigrants to use commercial trucks to cross the border.
Cross-border trucking between the U.S. and Mexico is always more of a mess than between the U.S. and Canada. That’s partly because Mexico is not as well governed as Canada, so things don’t run as smoothly. But it’s also because of protectionist policies by the U.S.
Some background: Congress banned Mexican truckers from entering the U.S. in 1982. NAFTA, which came into effect in 1994, committed the U.S. to removing that restriction by 2000. The U.S. left the restriction in place anyway, and was found to be in violation of the agreement in 2001, right as George W. Bush was beginning his presidency. The Bush administration said it would remove the restriction.
But organized labor and environmental groups wouldn’t have it. They sued to keep the restriction in place. The environmentalists claimed that Mexican trucks did not meet American safety and environmental regulations. The Teamsters and other unions had an obvious motive: keeping out the competition. Mexican truckers are willing to work for less than the union pay rate, and no company would hire a Teamsters member if a Mexican driver were available on the same route.
In 2004, overturning a ruling from the Ninth Circuit Court of Appeals, the Supreme Court ruled against the environmentalists and unions and said that the Bush administration could remove the restriction and bring the U.S. in line with its obligations under NAFTA. Clarence Thomas wrote for the unanimous court.
The U.S. continued to drag its feet on approving Mexican carriers, however. At this point, Mexico would have been within its rights to impose retaliatory tariffs on the U.S. for failing to meet its NAFTA obligations, but it held off. The Bush administration created a pilot program in 2007 that waived the requirements for a select number of Mexican carriers. The program included safety examinations for every truck and required the Mexican drivers to read and speak English.
Congress defunded the pilot program in 2009. At this point, Mexico did retaliate, imposing tariffs on American products. The Obama administration started a new pilot program in 2011. This program addressed Congress’s purported concerns about safety and regulatory compliance by requiring a more comprehensive inspection of Mexican trucks and requiring GPS and electronic recording devices on every truck to enforce hours-of-service limits and location rules.
The Teamsters and a trade group for U.S. independent truckers sued to block the new pilot program. The D.C. Circuit Court of Appeals in 2013 ruled against them again, with then-Judge Brett Kavanaugh writing the opinion that rejected every argument the petitioners made.
The three-year program ended in 2014. Over the length of the program, the Federal Motor Carrier Safety Administration (FMCSA) performed 5,545 inspections and Mexican trucks crossed the border 28,225 times. They traveled 1,263,630 miles in border states and 255,392 miles in non-border states.
The FMCSA used that huge sample size and reported back to Congress. It found that “Mexico-domiciled motor carriers operating beyond the commercial zones had safety records that were equal to or better than the national average for U.S. and Canadian motor carriers operating in the United States.” Participants in the pilot program actually had lower rates of infractions in numerous categories than American or Canadian drivers.
The FMCSA began allowing a select number of Mexican carriers to run cross-border routes in 2015. The Teamsters and other trucking organizations sued again, claiming, in part, that the FMCSA did not have enough data. The Ninth Circuit Court of Appeals dismissed the case in 2017, writing that “the parties do not raise any arguments the merits of which we may review.”
The USMCA, NAFTA’s replacement, keeps just about everything the same for cross-border trucking. As things currently stand, a capped number of Mexican carriers may operate long-haul routes across the border, but no Mexican carrier may haul freight between two points within the U.S., which is called “cabotage.”
That means when Mexican trucks make a delivery in the U.S., they can only pick up freight headed back to Mexico. Given that inflexibility, it’s advantageous to have U.S. carriers transport freight in the U.S.
That means that in practice, Mexican drivers often don’t drive long-haul routes. It’s more common for freight forwarders to book shipments in multiple stages. (For a quick video that demonstrates the process, click here.) There are many drayage trucking companies near the border that drive freight back and forth between transloading facilities all day. An example might be a Mexican driver picking up a shipment from Monterrey and dropping it off in Nuevo Laredo. A drayage carrier either unloads that trailer and combines it with other shipments or just hooks up the same trailer to its truck to drive it through customs for both countries and drop it off in Laredo. Then, a U.S. carrier picks up the shipment in Laredo and drives on to its final destination in Houston.
Aside from the cabotage restrictions, using drayage carriers can often make sense because the customs process is so time-consuming. There are always lines of trucks waiting to cross the World Trade Bridge between Laredo and Nuevo Laredo. The U.S. and Mexico have made efforts to speed up the process in the past few years, but delays can still drag on for hours at peak times, and the entire border-crossing process can take two days. Having long-haul trucks tied up in that traffic jam when they could be making other deliveries is not a good use of resources.
The multi-stage border-crossing process wastes fuel and time, and it requires more truck drivers than if drivers were simply allowed to drive the same shipment the whole way and pick up whatever freight made sense economically wherever it’s located. Given that shippers near the southern border complain of driver shortages on both sides, and we know Mexican trucks are fully capable of meeting American safety standards, the federal government should rethink its regulatory approach again.
Contrary to what free-trade opponents might expect, this particular case of trade between two countries at different levels of economic development actually resulted in the less developed country raising its standards to meet the demands of the more developed country. Mexico went above and beyond what was required of it in NAFTA and spent large sums of money to bring its trucking up to American standards.
The European Union allows cabotage between its member states with some restrictions. Drivers there are allowed to perform up to three cabotage operations over a seven-day period so long as the journey began with a cross-border transport. Applying that principle to the southern border might mean a Mexican driver picks up freight in Monterrey and drives it all the way to Houston, makes a delivery from Houston to Austin, then picks up Monterrey-bound freight in Austin and San Antonio and drives it back across the border.
Allowing such movements would be much more efficient and require fewer drivers than the status quo. As we saw over the last few days, the highway connections between the U.S. and Mexico are vital to the economies of both countries. By speeding up the customs process and standing up to the Teamsters by allowing cabotage, the federal government can remove impediments to the efficient functioning of supply chains between Mexico and the U.S.