Shippers should be aware of the consequences that Mexico’s new proposed safety rules are expected to bring, including increased carrier rates. These new rules come at a time when shippers and carriers are already facing challenges in a country where truck deliveries are the primary way to move shipments. If you ship freight or haul freight through Mexico, here is what you need to know about why carrier rates are very likely to increase.
Proposal to Cut Mexican Truck Capacity
Legislators within the Mexican Congress have made two proposals to ban double trailers from Mexico’s roadway. The reason for this is that they believe these trailers present a serious safety risk. The latest proposal was initiated on March 3rd because of multiple accidents involving these vehicles. The first proposal that was made in October 2017 and sought to require operators to have their double-tractor trailers certified with the government. This new law, which did come into effect in June 2018, requires operators to prove that their trucks have been outfitted with required safety features.
Shippers that move marine containers with double tractor trailers would be directly affected if the proposed ban were to go into effect. But this could still be a long way off. However, if this ban does come into effect, trucking capacity would be immediately reduced, and more trucks would be needed on the road. And of course, this means more traffic and air pollution. It would likely drive the cost of moving cargo up and divert some shipments to rail instead.
Rule-Driven Capacity Tightening Expected
Additional new rules are expected to test the already tight capacity that carriers are already feeling. The government is seeking to limit the number of hours that drivers can be at the wheel and would require drivers to:
- Take 30-minute breaks every five hours
- Limit their drives to no more than 14 hours behind the wheel
- Take an 8-hour break after those 14 hours
- Document their driving time in a paper logbook
These new rules would negatively continue to increase an already tight industry, because of cargo volume increases, driver shortages, and the impact of the new law requiring double tractor registration. But a major problem with requiring carriers to comply with these laws would be the dangers it could present to drivers. Currently, the number of safe rest areas is limited, but more importantly, requiring drivers to stop for more frequent rest breaks puts them at greater risk of being robbed, which is a growing threat in the country.
Challenges Dogging the Mexican Shipping Industry
While the growth of Mexico’s trade future continues to look more promising, the expected volume growth will cause a challenge to the shipping industry. Cargo coming into Mexico’s ports increased by almost 12 percent between 2016 and 2017. Investments in infrastructure to expand ports and improve highways are currently at work to address the added volume. This only adds to the shipping industry’s problems. With the current lack of capacity available, the industry will be hit hard. Currently, Mexican trucks move 80 to 85 percent of the cargo that comes into the country’s ports. The industry is already struggling to find drivers to move the existing volume.
As volume grows because of port expansion and new restrictive laws come into effect, the industry will be hit hard. Carrier prices will rise as driver shortages increase and shippers scramble to get their freight moved. Stay tuned to our blog for the latest on what could be a perfect storm hitting the shipping industry.
