The prospect of lucrative foreign investment, balanced against concerns about crime, is unusually shaping Mexico’s future.
On the other hand, nearshoring and an influx of manufacturing have improved Mexico’s economic prospects.
According to Forbes, Mexico received $11.9 billion in foreign direct investment in the first quarter of 2021, the most since the country began tracking FDI in 1999.
However, the glass is only half full. Cargo theft is still prevalent in “hot spots” throughout Mexico.
The state of Mexico, in the country’s central region, ranked first in cargo thefts in March, with 465 cases. This represented a 39% increase from March 2021. Mexico also had the most tractor-trailers, with 1,945 stolen between April 2021 and March 2022. Other popular destinations included Puebla, Veracruz, Guanajuato, and Jalisco.
In June, the Port of Manzanillo in Jalisco was the target of what was possibly the largest heist in the port’s history. 20 shipping containers containing gold, silver ore, and televisions were stolen.
Don’t get caught in the crosshairs of the turmoil as the country stands at a crossroads of crime and prosperity.
“Mexico is a fantastic trading partner, but the risk of cargo theft when shipping is astronomical and can be disastrous,” warns Mark Vickers, executive vice president of international logistics at Reliance Partners.
Vickers adds, “There is little recourse for companies that do not practice proper risk management by carrying cargo insurance,” noting that over 17,000 cargo theft incidents are reported annually in Mexico.
“Many small and medium-sized businesses moving freight into Mexico have no insurance and typically have no good risk management strategy in Mexico.” So if a $50,000 shipment of theirs is hijacked, the company may be in trouble.”
Vickers estimates that 95% of the 35,000 trucks crossing the US-Mexico border daily are not insured at all. This is large because it is assumed that Mexican carriers adhere to equitable insurance standards. Unfortunately, this is not the case.
Mexican carriers rarely carry cargo insurance, and if it is, it is of little value.
According to Reliance Partners, while standard cargo insurance in the United States covers up to $1 million in losses and $2 per pound in Canada, coverage in Mexico is only 2.5 cents per pound. Fortunately, shippers are no longer required to take this risk. Shippers can confidently enter Mexico thanks to Reliance Partners’ Borderless Coverage program.
“The first question I ask my clients is, “How does your Mexican risk management program look?” “Most of them don’t even have one,” Vickers explained.
But that’s okay because Borderless Coverage assists shippers in developing an effective risk management strategy that includes proper carrier-vetting techniques and security protocols for a wide range of shipments.
According to Vickers, shippers should only use Customs-Trade Partnership Against Terrorism (CTPAT)-certified carriers. This voluntary certification requires carriers to work closely with CBP to protect the supply chain, identify security gaps, and promote security best practices.
Noncertified and uninsured carriers are not in the same category. Uninsured carriers, in particular, are at risk of theft.
“We believe it is critical that shippers and 3PLs only use CTPAT-certified carriers,” Vickers said. “In Mexico, a CTPAT certification usually checks most boxes for what we’re looking for in a gold standard motor carrier.”
Risk can be further mitigated by stricter security measures for high-risk commodities, particularly if shipments will pass through notoriously criminal ports and regions.
According to Reliance Partners, some of the most commonly targeted items are electronics, steel, auto parts, tires, and liquor.
While cargo theft cannot be eliminated, it can be greatly reduced with the proper insurance.
Borderless offers All-Risk, Shipper’s Interest Cargo Insurance on a per-shipment or per-project basis for standard and high-value Mexico and international shipments from pickup to final delivery, regardless of mode.
Vickers advises using Shipper’s Interest Cargo Insurance on all in-transit shipments and ensuring all inventory is stored at warehouses and ports.
“With the Borderless Coverage program we implemented at Schneider National, we can provide our shipper clients with All-Risk cargo coverage in Mexico that they never thought was possible,” said Bernardo Rodarte, Schneider National’s vice president of Mexico. “Borderless Coverage has created a differentiator for Schneider National, distinguishing us from our competitors.”
“If a company has our insurance in place with real-time visibility, selects only CTPAT carriers, and implements a good carrier vetting and risk management strategy with proper security protocols based on the value of each commodity,” Vickers said.
