Juan Carlos Villa Texas Transportation Institute Texas A & M University System

1. Fifth Annual North American Agrifood Market Integration Consortium Workshop New Generation of NAFTA Standards OPTIONS FOR REDUCING CONGESTION AT THE MEXICAN BORDER Juan Carlos Villa Texas Transportation Institute Texas A & M University System

2. Agenda • Background • Commercial Vehicle Border Crossing Process • Agricultural Truck Movement Process • Opportunities and Recommendations • Concluding Remarks

3. Background • Land Trade between U.S. and Mexico has tripled from $86 billion in 1994 to $262 billion in 2006 • Two very different phases Source: Bureau of Transportation Statistics, Transborder Surface Freight Data

4. Background • Mexican exports of agricultural products -10% AAGR • Seasonality • Tomatoes - largest horticultural export Source: USDA, Foreign Agricultural Trade of the United States Database. Source: Servicio de Información Agroalimentaria y Pesquera-SAGARPA, Mexico.

5. Background • Mexican vegetable exports are primarily done by truck • Concentration • Production • Ports of entry Source: Servicio de Información Agroalimentaria y Pesquera-SAGARPA, Mexico. Source: USDA, Foreign Agricultural Trade of the United States Database.

6. Background • Elements for a potential storm • High growth in US/MX trade • Infrastructure not keeping pace • Concentration • Transportation mode • Ports of entry

7. Unions, non-profit organizations and trucking associations. challenge legally the lift of the moratorium because of environmental reasons. Court of Appeals halts operations E V E N T S The Mexican government contests the U.S. action before an international arbitration panel U.S. Administration vows to comply with the arbitration’s panel conclusion, and includes 22 safety requirements in the Transportation Appropriations Act USDOT and Mexico announce one-year Pilot Program U.S. upholds the moratorium on direct long-haul trucking from Mexico Supreme Court overturns Court of Appeals decision, Mexican carriers to apply for operating authority The panel rules that U.S. could not under the NAFTA impose a blanket ban on the operation of trucks beyond the commercial zones Demonstration Program 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 ORIGINAL PLAN Movement throughout U.S. and Mexican border states was to be allowed Movement throughout the United States was to be allowed Commercial Vehicle Border Crossing Process US/Mexico NAFTA Trucking Provisions

8. Commercial Vehicle Border Crossing Process Drayage Nogales Nogales Culiacan Chicago

9. 2. U.S. Federal 2. U.S. Federal 3. State Safety 3. State Safety 1. Mexican Export Lot 1. Mexican Export Lot Compound Compound Inspection Facility Inspection Facility Mexican export Mexican export CBP primary Visual vehicle Visual vehicle documentation documentation Warehouse inspection Warehouse Warehouse CBP primary verification and verification and safety safety / Yard / Yard (document / Yard / Yard inspection cargo inspection cargo inspection inspection) inspection inspection selection selection Secondary Secondary Mexican inspection Mexican inspection Detailed state Detailed state export export VACIS, X VACIS, X - - truck safety truck safety cargo cargo Ray, Ray, FMCSA Others inspection inspection inspection inspection Others Mexico Mexico U.S.A. U.S.A. Commercial Vehicle Border Crossing Process At least 3 potential inspections

10. Commercial Vehicle Border Crossing Process Border Security Programs Free and Secure Trade FAST Segregation of Vehicles based on previously obtained information C-TPAT

11. Agricultural Truck Movement Process • Agricultural exports have additional steps

12. Agricultural Truck Movement Process Military Roadside Inspections • At least in 3 inspection points before reaching Nogales • Delays could double the transit time • Inspections performed by military personnel • Contamination • Seal breaking

13. Agricultural Truck Movement Process Quality Inspections • Some products require mandatory quality inspection by USDA officials • Tomatoes • Grapes • Onions • oranges

14. Agricultural Truck Movement Process Driver and Cross Docking • Cruzadores – Drivers • Require U.S. issued visas • Truck reload to comply with US truck weight

15. Opportunities and Recommendations • Number of Inspections • “Stops” delay shipments, increase chances for contamination and hamper security programs • Recommendations • Increase coordination • U.S.-Mexico • Fed-State • Public-Private • Coordination Areas • Procedures • Hours of operation • Sharing data

16. Opportunities and Recommendations • FAST/C-TPAT Participation • Low participation • Underutilized infrastructure • Increase delays • Recommendation • Modify FAST to accommodate particular requirements of the agricultural products supply chain • Work with CBP/Aduanas/SAGARPA developing a pilot project

17. Opportunities and Recommendations • Lack of Capacity • Physical Capacity • Human Capacity • Recommendations • Promote development of compliant carriers (truckers) • Sufficient drivers that can cross into the U.S. • Training programs (vehicle safety, security requirements) • Increase throughput modifying hours of operation during peak seasons, smoothing demand curve • Add FAST traffic lanes at crossings all the way to Mexico

18. Opportunities and Recommendations • Inefficient Procedures within Mexico • Military inspections • Security procedures at origin • Recommendations • SENASICA to define non-intrusive inspection protocols and train inspectors • Work with CBP to C-TPAT certify producers • Create a “seal” protocol from origin

19. Concluding Remarks • Identify low hanging fruit • Institutional framework already exists • Key stakeholders need to participate

20. GraciasThank you Juan Carlos Villa Manager Economics, Trade and Logistics Program Texas Transportation Institute 979-862-3382 j-villa@tamu.edu