This has been a winning strategy in the past for BNSF and other Class I rails. I am reminded of the Centerpoint facility near Chicago, which provides BNSF a transfer point in the Midwest. But Centerpoint was developed with money from investors, CalPERS being the largest. BNSF hopes to be the prime developer in Barstow, CA.
In case you don’t know where that is, Barstow is in the middle of the Mojave desert, 132 miles from the Port of LA (about 2 hr 27min as I look at Google Maps). It is right on I-15, the main route the movie stars take to go to Las Vegas from LA. Parts of it around San Bernardino are already traffic jams at many hours. However, the BNSF vision is that containers from the port will move by train, reducing traffic on I-15 and other LA freeways.
The Alameda Corridor already moves containers inland a good 20 miles. It’s a double-stack double-track route. BNSF will ensure good rail service from the Barstow yards to the ports.
Transloading and distribution warehouses will be built near Barstow on the BNSF complex. I believe BNSF sees this as a good real estate play as well as a plan to improve container rail service.
I am wondering if the plans for Barstow include customs processing. If so, that would be good for both imports and exports, because they would not have to wait for customs on the ports. That would aid in reducing port congestion.
Changes in the Mexican government’s regulations for bills of materials and shipment documentation are poised to take effect January 1, 2023. The changes are substantial, and require much more data collection.
I interviewed Josefina Blanco, Legal and Compliance Lead at Nuvocargo, talking from Mexico City. She’s a lawyer, and an expert on Mexican trade regulations.
Nuvocargo is a full-service digital platform for US-Mexico trade, offering freight forwarding and brokerage services, customs broker services, cargo insurance, and supply chain financing for both shippers and carriers. They specialize in 53-foot truckload transport.
The genesis of the new regulations is the Miscellaneous Tax Resolution, passed in Mexico in June 2021. That act imposes new Bill of Lading requirements on anyone moving cargo within Mexico, as well as into and out of Mexico. The new requirements are captured in documents known as Complemento Carta Porte or CCP. They require more detailed information to accompany each shipment, verifying its origin and ownership. It’s an attempt to reduce contraband, an important problem for Mexican trade.
There are severe penalties for non-compliance, including loss of ability to operate, fines, and felony charges. Originally, the regulations were to have begun with spot checks in 2021, but fines were not to occur till January 1, 2022. The deadline for enforcement has slipped five times. Now authorities insist that January 1, 2023, will begin enforcement with sanctions.
Under the new rules, drivers must carry the CCP documentation with them, and it must be correctly filled in. There could be spot checks of cargo, leading to issues for drivers. In addition, the CCP is an electronic form. Nuvocargo has a lot of information about the CCP supplementary information in a FAQ on its website.
The Mexican authorities, according to Josefina, included design criteria that help make the CCP and bill of lading electronically compatible. However, the present result seems to contain a lot of redundant information in its over 200 fields. That means a computer system to prepare the forms is almost essential for efficiency, though it is legal to fill the CCP in by hand. Josefina Blanco indicated that about 20% of firms in Mexico are building software themselves to comply.
Now you would think that large firms would not oppose this regulation too much, because they would be in a good position to provide correct CCPs. However, the deadline slips were due to objections from larger companies, represented by industry organizations. Josefina says this was due to the considerable difficulty of programming computer systems to gather data and create the CCP documents correctly. System development takes time and cost, and collecting the information could add as much as 15% to the freight bill, according to Josefina. Many smaller carriers and businesses do not have what’s required to meet these new requirements, and have not started yet.
Brokers themselves are not required to file the CCP forms; according to Josefina, shippers and carriers are the ones in the spotlight. But freight brokers like Nuvocargo, who specialize in Mexican and US transport, can provide service which insures compliance for their loads. Nuvocargo, for instance, includes both shippers and carriers in their offering. Carriers they suggest are likely ready to meet the new rules. and Nuvocargo’s digital platform for managing a shipment collects the proper information and provides the proper CCP documentation, paper and electronic.
Josefina indicated that Nuvocargo specializes in international trade crossing the border at Laredo, TX, US/Nuevo Laredo, Tamaulipas, MX. This port of entry is one of the largest in the US. I was surprised to learn how much truck traffic crosses this border every day. Recently, congestion has grown so great that the US government is expanding several smaller border crossings in Texas to handle larger amounts of traffic. They may provide alternatives for avoiding the congestion at Laredo.
Nuvocargo has recently received major injections of new capital, showing that they are meeting a need perceived by investors as growing. One of their investors is Flexport, the San Francisco unicorn of user interface (UI) based freight brokerages. Other top investors include Tiger Global, one of the largest funders of entrepreneurial firms, and YCombinator, the MIT-related incubator of startups. This article from Techcrunch details the recent trajectory of the company from an entrepreneurial perspective.
Nuvocargo has offices in New York City, a major financial center and hotbed of entrepreneurial activity, and in Mexico City, MX.
Apparently some ships are departing for the Ports of Los Angeles and Long Beach without notifying US Customs of their estimated arrival. They’re required to do so, but don’t know about the rule. The reason is that many newly chartered ships are sailing, chartered by firms who do not ordinarily manage shipping, or are being handled by forwarders who are new to the practice. They appear to be unaware of the requirements.
When the ship fails to notify the port at departure, and just ‘drops in’, there is no place in the schedule to unload it. The ship must wait offshore. The Maritime Exchange says that essentially all positions for waiting ships off LA and Long Beach are full; drop-ins must steam around until their place in the queue can be found. The waits can be upward of a month.
This operational gap is just one of the reasons for the supply chain logjam. If it’s happening at LA and Long Beach, you can bet it’s happening at other West Coast ports.
We know that queues to unload are lengthening at all the West Coast Ports. Tacoma announced detention surcharges for containers not moved from their yard on time, following the lead of Los Angeles and Long Beach.
The other ports are seizing up because of diversions to them from the usual LA and Long Beach stops, especially by chartered vessels, which can choose any route; they do not have fixed routes like the linear alliances.
People have to start addressing the issues that seem small regarding maritime supply chains. Only an across-the-board effort will get things unsnarled soon.
Supply Chain and Logistics 