Thread: Path cleared for Mexican truckers

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Published August 22, 2006 12:59 am - Along with driver shortages and rising fuel costs, trucking company owner Mark Fields now worries about losing business to companies based in Mexico.

Path cleared for Mexican truckers



By Melissa Dunson

mdunson@joplinglobe.com

Along with driver shortages and rising fuel costs, trucking company owner Mark Fields now worries about losing business to companies based in Mexico.

But Fields, who has 20 trucks, might be surprised to learn that his soon-to-be, Mexican-based competitors face the same fear regarding him.

More than 10 years after the North American Free Trade Agreement was signed with the idea of opening U.S. borders to Mexico and Canada for international trucking, Ian Grossman, an official with the Federal Motor Carrier Safety Administration, said the Department of Transportation will announce a plan at the end of this year giving 100 Mexican carriers access into the United States for a one-year pilot program.

Mexican trucking companies are now taking loads within a designated area three to 20 miles past the U.S. border, and transferring the loads to U.S. trucks to deliver within the states. The same is true for U.S. loads being shipped into Mexico.

More competition

Small carriers like Fields’ JVF & Sons LLC in Joplin are concerned that they won’t be able to compete with Mexican trucking companies because of the difference in the countries’ wage rates.

Todd Spencer, a spokesman with the national Owner-Operator Independent Drivers Association, said there already is a driver shortage in the industry. He said that if increased competition pushes down wages, recruiting will become even more difficult.

Fields agrees.

“They work for nothing, pretty much,” Fields said of Mexican-based drivers. “It’s going to make our pay go

down even further. It’s going to impact us a lot.”

Spencer presented written testimony last month to the U.S. International Trade Commission citing studies showing that Mexican drivers’ pay is 25 percent to 50 percent of the amount U.S. drivers receive, which can range from $40,000 to $60,000 a year.

Larger trucking companies such as Joplin-based Contract Freighters Inc., which has more than 600 trucks in its fleet and serves all of North America, will face the same competition as small carriers, but they could benefit from the situation by potentially growing their businesses south of the border and increasing competition in the Mexican market.

Herb Schmidt, chief executive officer for CFI, said the policy changes aren’t as much of an issue for larger companies like his.

“It’s more of an issue for them (Mexican companies) than us,” Schmidt said. “It doesn’t scare us. We’re not intimidated by the competition. They still have to pick up and deliver on time just like us.

“In all honesty, most of them don’t have the financial wherewithal to make it here. They’re not accustomed to operating in the U.S., just like we’re not accustomed to operating in Mexico. They don’t relish having to come up here. They don’t want to come over here and compete. It’s more out of concern for their existence.”

Neither side agrees

The owner-operator association reported at the end of 2005 that some Mexican trucking companies were unhappy when U.S. congressional negotiators and the White House reached a deal on Nov. 28 allowing Mexican truckers to operate beyond the border.

The fear is not only American companies establishing themselves in Mexico, but that Mexican carriers won’t be able to compete in the U.S. marketplace, creating a lose-lose situation.

Schmidt said that if he had his way, the policy would retain the practice of Mexican and U.S. trucks handing off trailers at the border.

“I wish they’d just leave it the way it used to be,” he said. “It was a partnership in the truest sense of the word. When their business grew, our business grew, and vice versa. They serve our customers in Mexico, and we serve their customers here.”

Spencer, with the owner-operator group, said most of the Mexican carriers are happy with the current stop-at-the-border rules.

Schmidt said the competition with Mexico isn’t having a large impact on CFI’s business, but it has made a dent. While his company potentially could find benefits in an open-border situation, Schmidt said he is sympathetic toward smaller carriers.

Jason Bates, a spokesman for Tradewinds Transportation, a Joplin company with 34 trucks, said he is concerned about the difference in wages between the two countries, but he doesn’t think the competition will significantly affect areas more than one or two states from the border.

“We can’t pay our drivers what they do,” Bates said. “But they’re paying the same price for fuel. You might see an effect along the border, but most companies aren’t going to look to Mexico to fill their needs.

“I really don’t see it being a big problem.”

Bates said he is sympathetic toward the Mexican drivers. “Just because you’re from another country shouldn’t mean you can’t work in this country,” Bates said.

Grossman, with the Federal Motor Carrier Safety Administration, said the program is simply meant to implement the NAFTA provisions and is not the direct result of a push by the trucking industry. “The administration has always been in favor of implementing NAFTA,” Grossman said. “This is more of an administrative priority.”

Safety issues

The independent truckers association’s concern with the policy changes doesn’t just center around the wage-rate difference, but also on fairness and safety issues that the group says are being ignored by governmental agencies.

Spencer said background checks and inspection standards are not the same for Mexican and U.S. trucking operations. He noted that U.S. drivers transporting hazardous materials are required to have two endorsements — a Free and Secure Trade Program card and a Hazardous Materials Endorsement, for a total of $144 — while Mexican drivers only have to get a $50 FAST card.

FAST is designed to speed up truckers as they pass through customs stations at the border.

Grossman said he was not familiar with that policy, but that all drivers traveling into or through the United States, regardless of their country of origin, would be held to the same safety standards.

Spencer cited legislation passed in 2002 requiring five pages worth of safety inspections, verifications and reviews to be completed on all trucks crossing the Mexico-U.S. border. He believes the federal Department of Transportation doesn’t have the jurisdiction or the manpower to enforce the legislation because most states have not adopted it into state law or trained any of their law-enforcement agencies to deal with it.

“We know it’s only a matter of time before an act of terrorism is committed using a truck,” Spencer said. “Then they will come down even harder on us. Real people are paying the price for this gross inefficiency.”

Grossman said negotiations and planning for the pilot program are still under way, but he is confident that all safety concerns and legislation will be addressed by the time the program is in place.

“Our concern is maintaining safety for all,” Grossman said.

Melissa Dunson is the business writer for The Joplin Globe.

NAFTA effect

Ten years after the North American Free Trade Agreement took effect, a U.S. Supreme Court decision cleared the way for a deal between the United States and Mexico to allow free travel into either country.

The high court tossed out a lower court’s ruling that the federal government must study the environmental impact of thousands of more trucks on U.S. roadways before implementing the trucking portion of NAFTA.

Under current restrictions, Mexican and U.S. trucks must stop within 20 miles of the border.

Source: Federal Motor Carrier Safety Administration

http://www.joplinglobe.com/dailybusines ... art:int=45

“They work for nothing, pretty much,” Fields said of Mexican-based drivers. “It’s going to make our pay go down even further. It’s going to impact us a lot.”

Good. High fuel prices and cheap competition.

The plan is working perfectly.

George Bush and Karl Rove are smiling.