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UPS expands shipping, broker services in U.S.-Mexico cross-border trades

Company broadens truckload offerings, guarantees LTL, TL services if it acts as broker; consolidates power-of-attorney into one document for all Mexican entry points.

UPS Inc. said today it has expanded its transportation and customs brokerage services in the U.S.-Mexican trade, steps that include guaranteeing deliveries of truckload and less-than-truckload (LTL) shipments when the company is the importer of record, and broadening its truckload offerings in the cross-border market.

Atlanta-based UPS will also consolidate its power-of-attorney (POA) functions in Mexico, creating one document to cover transactions at all its 27 border entry points. Peggy Gardner, a UPS spokeswoman, said the move would make life easier for customers that ship to multiple locations within Mexico, because in the past they would be required to file a separate document for each delivery point—a time-consuming process.


UPS, which began service to and from Mexico in 1989 with small-package service, has typically acted as the importer of record for those transactions, according to Gardner. In addition, it has always guaranteed small-package deliveries. However, it has generally not held itself out as the importer of record for LTL and truckload transactions. Nor has it guaranteed its nonparcel deliveries, which make up a small part of its transborder shipment mix. UPS added LTL services in the U.S.-Mexico market when it acquired LTL carrier Overnite Transportation Co. for $1.2 billion in 2005. Overnite was offering cross-border services prior to the acquisition.

UPS said it is the only carrier in the market that offers delivery guarantees for LTL and small-package shipments when it also functions as the customs broker.

The expanded truckload offering announced today is partly a result of UPS' $1.8 billion acquisition last year of Chicago-based broker Coyote Logistics LLC, which primarily handles truckload transactions. Previously, UPS offered cross-border truckload services on a customer-specific basis, according to Gardner. UPS now plans to broaden its truckload capabilities, even offering services on a "spot," or noncontract, basis, Gardner said. UPS said in a statement today that customer requests for U.S.-Mexico shipping services have increased 20 percent year-on-year, a span that includes a six-month period prior to the Coyote purchase.

Troy Ryley, managing director, Mexico for Transplace, a large Dallas-based third-party logistics (3PL) provider with extensive Mexican operations, said the key component in the UPS enhancements could be the increased role of Coyote. "Coyote is not yet a big player in Mexico," said Ryley, "UPS gives them a platform to grow off of as they will have access to a larger client base."

Ryley added in an e-mail that UPS has historically struggled at providing transborder non-parcel services because it has "not nailed the integration of customs, distribution, and cross-border synergies."

Miguel Gomez Tapia, an Austin, Texas-based vice president of Mexican LTL carrier Fletes México Carga Express, said UPS is introducing little that the broader market doesn't already have. Instead, today's announcement represents a more intense attempt by UPS to promote its myriad solutions and services, Tapia said. That effort that could generate significant revenue for UPS in what has become a vibrant but persistently challenging market, he said.

The U.S. is Mexico's largest trading partner, while Mexico is the United States' second-largest export market, behind Canada, and its third-largest trading partner. It is estimated that $1.4 billion is exchanged in commercial trade between the U.S. and Mexico each day. As the global economy has struggled, the U.S.-Mexican market has remained strong, stimulated by the frequency of near-shoring by U.S. manufacturers to closer-in end markets, and the potential for growth within Mexico. However, cross-border trade remains complex and cumbersome, though there are efforts by both sides to streamline the process.

In addition, arguably the main cross-border port of entry, Laredo, Texas, is already at 95- to 98-percent capacity, and the available facilities there are not suitable for cross-docking operations, according to Tapia. Capacity constraints in Mexico are becoming a problem, and in a mirror image of what is transpiring in the U.S., bigger companies are struggling to find qualified drivers there, he added.

UPS did some cross-border rebranding as part of its program. UPS Freight LTL was renamed "UPS Standard LTL." UPS Air Freight Consolidated and UPS CrossBorder Connect LTL shipping services were renamed "UPS Worldwide Expedited Ground Freight." UPS Air Freight Direct was renamed "UPS Worldwide Expedited Air Freight" and is a general service offering a delivery guarantee when UPS is the customs broker. And UPS CrossBorder Connect truckload FTL (full truckload) was renamed "UPS Worldwide Expedited Truckload."

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