The following article was published in Homeland Security Today and written by Jim Giermanski. His credentials appear at the end of the article. I don’t agree with most of Dr. Giermanski’s remarks and my comments appear in ITALICS/BOLD below.
Cross-Border Drayage And US Security
January 17, 2012
As taken from an article that appears in the publication HOMELAND SECURITY TODAY.
By: Jim Giermanski
It’s well documented that commercial truck traffic entering the United States from Mexico as is currently practiced poses a serious threat to America’s security.
There is always a threat regardless of the origin of goods entering the U.S.
There are many weaknesses in the system designed and controlled by Mexican citizens with the blessing of the US government, but the most serious flaw may be the resultant drayage, or transfer system, of crossing commercial cargo. The drayage system is just one of the many related security risks.
But a necessary one for the most part.
The risks also include drop lots, or pensiones as they are called in Mexico, that are monopolized by Mexican customs brokers on the border, and the less-than-truck load (LTL) motor carrier crossings that are reliant upon the drayage system.
I know few Mexican Customs Brokers who own drop lots or pensiones.
[Editor’s note: The problem of Mexican drop-lots was addressed in the Oct. 25, 2011 “Guest Commentary” by Jim Giermanski and Jim Neilson, The Cross-border Trans-carriage Threat to the US]
The general Mexican motor carrier system and its cross-border component, drayage and LTL, are all cross-border cargo activities that pose inherent security weaknesses that US Customs and Border Protection (CBP) accepts as normal.
See my response in paragraph #1
Mexican motor carriage into the US
The Mexican shipper contacts the Mexican long-haul carrier to pick-up cargo destined for the United States. Since the carrier is not responsible for customs documentation, all shipping and any customs documentation is sent to a Mexican customs broker before the carrier even arrives.
Documents are sent to both Mexican and U.S. Customhouse Brokers most of the time simultaneous
In Mexico, the long-haul or line-haul motor carrier who picks up the goods from the shipper destined for the US does not actually take the goods directly to the United States. Instead, it takes the goods to the border where it drops them and returns to its originating terminal. The carrier is merely the means of moving cargo from Mexican origin to its destination: the Mexican side of the border.
The Mexican long-haul or line-haul motor carrier brings the load from the originating shipper in Mexico and this trailer is dropped of in most cases at their company owned terminal at the border. These loads are not release from their lot until Mexican Customs clearance documents (Pedimento de Exportacion), U.S. Customs Inward Cargo Manifest and U.S. Customs E-Manifest are prepared. In most cases the E-Manifest is prepared by the Mexican Carrier or Drayage company from information prepared by the U.S. Customhouse Broker on the Inward Cargo Manifest. There are now many Mexican long haul carriers who have their own drayage trucks to do their own drayage. This eliminates the need to contract this part out to a third party drayage company. Many U.S. carriers now have exclusive interchange agreements with reputable Mexican long haul carriers, making the supply chain more secure.
Mainly because of Mexico’s tax code, the Mexican long-haul motor carrier normally carries a completed bill of lading to the shipper because the Mexican tax code requires the motor carriers’ bill of lading be printed by an entity authorized to do so by the Mexican Department of Treasury. The Mexican carrier is legally responsible to the tax authorities to show the following taxable charges:
- Freight charges;
- Declared value surcharge;
- Tollway charges, if any;
- IVA (value added tax); and
- Carriers’ Tax Identification Number
But because the Mexican long-hauler is not carrying an international shipment of goods to any place other than a domestic location in Mexico, it seems more concerned with its Mexican tax reporting responsibility than any other shipping instructions, logistics information or content verification.
Shipping instructions are in addition to the bill of lading, which is the actual contract for carriage. Thus, Mexican line-haul carriers are not concerned about customs data or verifying the actual content because they merely haul to the border, drop the trailer/container or LTL cargo at drop lots or Mexican truck terminals on the border where the drayage carrier picks it up and physically brings the goods into the United States. Both the long-haul and drayage carriers – which often are unrelated – simply claim to be carrying what the shipper said was in the container.
With the advent of the Customs and Trade Partnership against Terrorism (C-TPAT) program in 2002, many Mexican long haul carriers and drayage carriers have revamped their operations and have made great strides in complying with C-TPAT requirements. With pressure from exporters and importers alike, the Mexican carriers now must go through a very complete check list before any shipment is moved from the exporter premises. This includes review of all export documentation; seal verification, product verification, 18 point trailer inspection list, and most importantly know who the exporter is and require that they too are partners in C-TPAT.
After the goods arrive at border drop lots or truck terminals, the Mexican customs broker handles all the documentation that’s necessary to bring the goods into the US. In effect, the Mexican customs broker releases, or “frees,” the goods for entry into the US by filing a document called the Pedimento de Exportacion.
The Mexican customs broker does not handle the documentation necessary to bring the goods into the US. He handles the paperwork to export the goods from Mexico. All documentation necessary to import the goods into the United States commerce are prepared by a licensed United States Customhouse Broker.
The Mexican customs broker also works with a US customs broker to coordinate the US customs entry. Compared to the shipper and original line-haul carrier, the drayage carrier really knows the least about the contents of the trailer or container. Nonetheless, the drayage carrier files documentation into CBP’s Automated Commercial Environment (ACE) portal through a third party that has authority to file, but who knows less about the cargo.
The Mexican long haul carriers or drayage company, in their efforts to efficiently cross the shipments into the United States, in most cases prepares the Electronic Manifest (e-manifest) from information they receive from the U.S. Customhouse Broker and information listed on the Inward Cargo Manifest. The e-manifest calls for information on the driver, tractor, plates, and cargo description. The main reason most drayage companies or Mexican long haul carriers prepare the e-manifest is that they can assign the loads to a driver who is ready to cross the loads immediately. If the U.S. Customhouse Broker prepares the e-manifest (and many do) he must be given the drivers name and information on the crossing tractor and plates. If for some reason that particular driver is busy crossing another loads the carriers can go into the ACE portal and change the driver and tractor information if they were the ones that prepared the original e-manifest.
Importers of Record can file their own entries in ACE and US brokers can file entries in ACE for their Importers of Record as long as they have a properly executed Power of Attorney.
In Mexico, the Mexican customs broker is held responsible for what is presented to Mexican customs based upon current Mexican law. Regardless of the total number of shipments on the trailer’s manifest, only one Mexican customs broker can be represented on the manifest. No comingling of brokers is allowed. This means that regardless of whether something illegal was placed into the load, the Mexican customs broker will most likely be the party initially held accountable if found by CBP at the border crossing port of entries. The drayage driver will be detained as part of a CBP investigation.
The initial part of this comment is correct in that Mexican law does not allow for comingling of loads from several brokers, but the end statement that the Mexican broker will most likely be the party initially held accountable is totally false and the accountable party on the onset is the driver as “the captain of the ship”, and the accountable party will be addressed by CBP after a thorough investigation is completely done on all parties involved.
And that means that the transfer carrier who makes multiple trips per day with multiple cargo dropped by unrelated long-haulers (not true, very general) at unsecure drop lots (not true, very general) files official entries through a 3rd party that has an ACE account and authorized to do so by CBP.
Not true very general
It should be noted that the party filing the manifest into ACE is taking the word of the entity that originally created the documentation. In addition, after the drayage carrier picks up the goods, there is no certainty that the driver will bring the goods directly into the United States or proceed to a location where the trailer/container is illegally accessed for the purposes of inserting contraband into the conveyance or shipment. If the drayage carrier utilizes a pickup truck or flat bed/stake truck, the ability to secure the conveyance with a CBP Customs Trade Partnership Against Terrorism (C-TPAT) compliant seal is not possible, thus leaving open the possibility of contraband being introduced into the load.
The party filing the e-manifest via ACE is getting the information from the Inward Cargo Manifest sent to him by the U.S. Customhouse Broker. The drayage carrier is released the load from the Mexican line haul carrier who notes the time the load leaves the carriers yard (all C-TPAT procedures). There is a “window” of time in which the driver has to get to the crossing point once he leaves the carriers yard. Under C-TPAT guidelines if this window of time goes over the allotted limits it is the Mexican Carriers responsibility to advise CBP. Many C-TPAT drayage carriers now have GPS or satellite tracking systems which shows if the driver veers off his authorized route or goes over the allotted time limit to cross the load into Mexico, thus making it very difficult for them to insert contraband into his conveyance.
Drayage companies are normally not participants in C-TPAT, and their truck drivers are not always vetted as part of CBP’s Free and Secure Trade (FAST) Driver Card program. FAST cards are Western Hemisphere Travel Initiative (WHTI) compliant documents for entry into the US by land or sea and afford expedited release to approved commercial truck drivers making fully-qualified FAST trips between the US and Canada, or to the US from Mexico. The use of these cards allows the driver entry into the US without the need of a passport or other legal entry document
. I can only address this by saying that at the main ports of entry on the southern border, over 30% of all shipment imported into the United States utilize the FAST lanes where only the complete secure supply chain (exporter, Mexican long haul carrier, drayage carrier, and importer) are all C-TPAT certified or validated. At the port of Laredo, TX over 1100 truck per day are processed using the FAST lane. In order for a driver to obtain a FAST card, he must go through a rigorous process, finger printed, background check and have a complete data base on file for CBP to grant him this privilege,
LTL shipments are carried to the border by a Mexican long-hauler after combining smaller quantities of cargo from multiple shippers. These multiple shipments are then combined into a single trailer at the origin terminal. The cargo is then off-loaded and left for pick-up by the drayage carrier after all of the export requirements are met for Mexico and the entry is completed by a US customs broker. In the case of smaller quantities or unusually configured cargo, the cargo may be carried in the drayage company’s unsecured pickup trucks or flatbeds for the cross-border move into the United States; enhancing the ability to introduce contraband into these shipments.
All loads are subject to CBP examination whether they are by intrusive or non-intrusive means.
Mexican truck load (TL) long-haul carriers pick up trailers sealed at the shipper’s facility somewhere in Mexico – taking the word of the shipper for its contents – and then take it to the border for entry into the US. Mexican LTL carriers take cargo already packaged, comingle it with other cargo in a trailer or on a flatbed truck, and take it to the border. Both types of carriers drop their cargo at a border drop lot or truck terminal/warehouse on the Mexican side of the border. Security is virtually non-existent at these drop lots, and drop lot personnel don’t know what is in the trailer or container or otherwise packaged shipment.
Eventually, a drayage firm about which we know little to nothing, employing unvetted drivers about whom the US also knows little about, picks up the trailer or container and the LTL cargo for crossing into the US. From the time of pick-up until it crosses the border, the whereabouts of the crossing conveyance is unknown.
These drayage firms now use a 3rd party that also knows nothing about the content, but reports the nature and quantity of the content and other required items to CBP through the ACE system. In effect, only the shipper, or LTL company if it did the original packaging, knows what was put into the container/trailer at Mexican origin. Even the shipper doesn’t know what arrived at the drop lot, and certainly doesn’t know what ultimately left the drop lot.
By the time the conveyance or cargo arrives in the US, multiple parties have been involved in reporting the contents of the conveyances that have been available for surreptitious entry while moving to the border drop lots, while at the drop lots and while under the control of the drayage companies that transferred the cargo to the US from the drop lots. Yet, CBP seems not to care about this system; instead, placing its trust in those who enter customs shipment data electronically through ACE. But without looking inside, or under the tarp, CBP also knows nothing about the content.
What a great system!
It is very clear that Dr. Giermanski does not have his facts in order. Or more precisely his information is very archaic and he is out of touch. His broad statements and exaggerations concerning Mexican long-haul carriers and drayage companies are an injustice to an industry that has been evolving thanks to great CBP outreach programs like C-TPAT, FAST and others that help the import process and at the same time allows for free and most importantly safe and secure trade.
Take a similar supply chain and compare a container of plastic footwear stuffed in a plant in Seoul Korea and exported through the Port of Pusan on its route to enter the Port of Long Beach, California with final destination Phoenix, Arizona. If you think like the good Doctor, you would expect for the driver locating the empty container at the exporter’s facility in Seoul to be the same driver delivering the goods in Phoenix. It’s impossible. This involves supply chain and every link doing their part as effectively, economically, safely, securely and timely as possible.
I do agree that the fewer components in the supply chain the better. We are now seeing U.S. based carriers like Swift, Celadon, Stevens Transport, and others taking a bigger stake in Mexico and teaming up with Mexican based carriers to form a more secure supply chain and doing their own company controlled drayage. This eliminates the independent third party drayage mentioned by Dr. G
The outreach programs that CBP has in place with the importing and exporting public assist us all and at the same time makes their job of securing our borders while at the same time allowing for a free flow of trade much easier. It’s a difficult balancing act, but we can all do our part in trying to make it better.
What a great system!
Chairman of Powers Global Holdings, Inc., Dr. Jim Giermanski is a former Air Force Col. who, as a Special Agent in the Air Force Office of Special Investigations, concentrated on counterintelligence and clandestine base penetrations. He also is a former FBI agent and worked with Customs and Border Protection on drug intelligence development.
J.O. Alvarez is a licensed United States Customhouse Broker and president of J.O. Alvarez, Inc. and B2B Transport Market LLC, with offices at the main ports of entry on the U.S. southern border with Mexico.