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Josefina Blanco leads the legal and compliance department at Nuvocargo. She graduated with a law degree from the University of San Andres in Buenos Aires and has a Masters of Law (LL.M.) from Columbia University in New York. She has ten years of experience in first-tier law firms in Mexico and abroad, including Galicia Abogados, Mayer Brown LLP in New York, and Marval, O’Farrell & Mairal in Buenos Aires, where her practice focused on cross-border financings, banking regulation, and M&A transactions.
David Maloney, Editorial Director, DC Velocity 00:01
Vaccine mandates affect cross-border trade. Retailers advance their sustainability goals. And ransomware and cyber attacks are on the rise.
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Hyster Company, a global manufacturer of forklifts, high-capacity lift trucks, and container-handling equipment. Operations rely on Hyster for everything from advanced power sources for materials handling equipment to their industry-leading package of operator-assist technologies, Hyster Reaction. For more information, visit Hyster.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin today: We saw over the past couple of weeks the protests and blockades of Canadian border crossings. Can the same thing happen on the southern border with Mexico? To find out here's Victoria with today's guest.
Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:15
Thanks, Dave. Yes, our guest today is Josie Blanco, who leads the legal and compliance department at cross-border trade platform Nuvocargo, which specializes in U.S.-Mexico trade. Welcome, Josie.
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 01:29
Thank you. Very happy to be here.
Victoria Kickham, Senior Editor, DC Velocity 01:32
Great. Well, I'll just jump right into it and just start by saying, you know, the pandemic has affected cross-border trade in many ways. I wanted to ask you, you know, what have been some of the greatest challenges shippers and carriers have been dealing with on the U.S.-Mexico border over the past two years?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 01:48
I'd say the greatest challenge has been reduced operator capacity, due in part to cases among drivers and other disincentives and an industry that was already having difficulty sourcing drivers—for example, Covid stimulus checks that reduce driver capacity on the U.S. side. In particular, since Mexico is such an important trade partner with the U.S., when there were frequent and sustained lockdowns in China, there was an increase in trade flows among the U.S. southern border. So, more recently, with the Omicron wave, we've observed a lot of cases among operators, and this, along with the supply hangover from the holiday season, we've seen week-over-week rate increases during the period where normally we see cost-per-mile drop.
Victoria Kickham, Senior Editor, DC Velocity 02:37
It's been about a month since the vaccine requirement for truck drivers and other essential workers entering the U.S. went into effect. Can you describe the requirements of this new rule and how it's affecting cross-border trade?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 02:51
Sure. So, the DHS [Department of Homeland Security] mandate is for foreign drivers—basically anyone who's not a U.S. citizen, permanent resident, or national. It came into effect on January 22, and this mandate requires all foreign drivers entering into the U.S. to be fully vaccinated and to provide related proof of vaccination. They have to attest to their Covid vaccination status verbally, they have to provide CDC {Centers for Disease Control and Prevention]-approved Covid-19 vaccination, and they have to present a valid passport and prepare for any other relevant documents that could be requested by the CBP [U.S. Customs and Border Protection]. In particular, this is a challenge for Mexican drivers, because not all of the vaccines that have been supplied in Mexico are approved for purposes of the mandate. For example, the CanSino and Sputnik vaccines that are being applied in Mexico are not acceptable for purposes of the vaccination requirement. So far, Mexico has done pretty good job in administering vaccines, and other good news is that B-1 [visa-holding] drivers who are typically crossing the border have had access to vaccines approved in the U.S., since they were crossing frequently before the mandate came into place.
Victoria Kickham, Senior Editor, DC Velocity 04:08
So it's an extra, you know, obviously, piece of documentation that drivers need. Are there technology tools that help with any of these issues. Is that, you know, an issue at all?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 04:20
Yeah, so, I think, as a broker, it's difficult to use technology tools to assist, because we are not the employer of the carriers, but there are some digital vaccine records that have been extremely helpful for carriers to be able to show this proof of vaccination—VaxYes, for example, which is previously validated by many states in the U.S., which allows you to upload photos of your vaccine card and store it in your digital wallet. I think where we've seen the biggest impact of technology in supply chain processes most recently is related to the bill-of-lading supplement that is now required by the Mexican tax authorities, because that requires substantial flow of information from shippers and carriers, and having digital processes in place has been totally essential. The pandemic in general has accelerated the need to modernize the sector through technology, and I think as—this has been only one month—but I think that there will be more and more apps and technology available for drivers to be able to show all the documents that are required in the most seamless way possible.
Victoria Kickham, Senior Editor, DC Velocity 05:31
Yeah, we've certainly seen the acceleration of technology in these past few years, absolutely. We saw delays and disruptions related to the vaccine mandates on the northern border, primarily from the protests across Canada in late January and earlier this month, you know, and there—we may see similar actions here in the U.S. in the coming weeks. Do you expect this kind of situation to happen on the southern border at all, or is the situation completely different?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 05:58
The situation is quite different. I mean, part of it is just the anti-vaccine sentiment that is, has made a lot of headlines in the U.S. and Canada is not as predominant in Mexico. We don't expect there to be protests on the southern border with respect to the specific mandate. It has had some legislative traction, which is interesting. For example, Senator Rick Scott from Florida introduced legislation that would exempt foreign truck drivers from the cross-border Covid-19 vaccine mandate. So, it'll be interesting to see where things like that go. I mean, I think the biggest issue is how this is affecting an already very strained supply chain.
Victoria Kickham, Senior Editor, DC Velocity 06:43
Yeah. How would you say the pandemic continues to affect cross-border trade in general. You know, now that cases and hospitalizations seem to be waning everywhere, and restrictions are being lifted in many places, are carriers still experiencing labor problems due to illness and quarantine requirements, for example? Like, what are sort of the lingering effects here as we sit in late February?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 07:06
I think, I mean, it's more of a lingering effect issue. So, the peak of the Omicron wave, which was when we saw most cases from drivers, was, in at least Mexico, sometime in mid-January, we've seen cases stalling, but there is kind of a backlog that we've been experiencing from January forward, so it continues to be an issue.
Victoria Kickham, Senior Editor, DC Velocity 07:32
What other issues on the horizon are you watching in terms of U.S.-Mexico trade? Anything in particular that shippers and carriers should be paying attention to, you know, as we head further into 2022?
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 07:44
So, I think the biggest issue is the Mexican tax authority mandate for Complemento Carta Porte, which is "Bill of Lading Supplement," which came into effect January 1. But the penalties for filling out that form incorrectly will only come into effect on March 31, 2022. So, it's kind of been like a test ride for everyone in the industry that's moving goods between Mexico and the U.S. I think that's something that has been made way more efficient by digital platforms such as Nuvocargo, and it's important to note that there's going to be a similar requirement for customs clearance, also starting March 31, 2022, so that's something that everyone should be paying attention to. And then, just, things are happening because, as a consequence of this new BOL supplement. For example, we see a lot of our carrier partners moving more from, like, transactional customers to more streamlined, dedicated customers because of the time it [takes] to get information from shippers to carriers. I think, generally, we're requiring that all of the information is provided for the new required documentation at least 24 to 48 hours prior to pickup, and so it's something that people still need to continue to work on. We've seen a huge learning curve from carriers filling out this form, and a lot of confusion with respect to kind of this double requirement now with the customs clearance BOL supplements. So, that's something that, I think, should be the focus going forward right now between Mexico and the U.S.
Victoria Kickham, Senior Editor, DC Velocity 09:24
Terrific. Josie, thank you so much for joining us today. We really appreciate your insight.
Josefina Blanco, Legal & Compliance Lead, Nuvocargo 09:30
Thank you so much for having me. Such a pleasure.
Victoria Kickham, Senior Editor, DC Velocity 09:32
Great. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 09:35
Thank you, Josie and Victoria. Now let's take a look at some of the other supply chain news from the week. And Ben, you and I were both at the RILA retail supply chain conference this week in Dallas, and you reported from the show on some of the leading trends affecting retailers. What can you tell us?
Ben Ames, Senior News Editor, DC Velocity 09:50
That's right. We were at the Retail Industry Leaders Association, which is known as RILA. Their retail supply chain show is called LINK, and we were there in Dallas this week. It was an in-person show, which was the first in a long time for many attendees. And we heard speakers talk about a variety of topics. Some examples are how shippers can navigate the really tight parcel market by diversifying their carrier pools and building out their curbside pickup. Another one was how retail employers are tweaking their work environments to cope with the labor crunch. For example, they're offering gamified technologies and more flexible shifts. A third example is how retailers really need to make sure they're getting a return on investment in their rush to offer that same-day delivery. One way is to measure the change in customer revenues in certain regions where they offer that, as opposed to others where they don't yet. And another subject was learned about was how retailers can make progress on sustainability and climate goals, which can really seem like an overwhelming job in any industry. But even though it's hard, companies are getting a lot of pressure to deliver on that, on their corporate and social responsibility, or CSR, and there are ways to both satisfy those stakeholder demands and also to generate new value, we learned at the show.
David Maloney, Editorial Director, DC Velocity 11:18
Well, Ben, those goals can be overwhelming. What advice did you hear on how retailers can handle them?
Ben Ames, Senior News Editor, DC Velocity 11:24
Well, we heard from an expert named Henry Fovargue, who's a partner with the Boston Consulting Group, and he broke the topic up into six climate priorities and shared examples on how certain companies are getting traction on each one. So, first was agriculture and raw materials. Those can produce carbon from many sources. For example, cattle digestion makes a lot of methane, but retailers like Walmart can cut back on those methane emissions by actually working with farmers on specialized feed. I guess it makes the cattle burp less or something. Number two was fuel and fleet. So, those sources, obviously, you know, tailpipe emissions, most famously, might seem unavoidable, cost of doing business, but you see some of the really big players like Amazon have made some huge strides in their electric vehicles, particularly last-mile. Number three was plastics—packaging, particularly. That creates really widespread pollution. You can find miniature parts of plastic, you know, throughout all the oceans in the world, and getting into human food sources, as well, at this point. but the British retailer Tesco now offers its own recycling service, both for the shopping bags that customers carry and other items, like the clamshell boxes. Number four out of six was electricity and heat, because you have to keep all your DCs and stores running, of course. And that might seem beyond your corporate control, but, for example, IKEA, they've built their own wind turbine fields, and at certain times a year, they can sell the extra power that they generate back into the grid. Number five out of the six was refrigerant gases. So, those are really nasty. Those create far more global warming potential than carbon dioxide do, but one example pushing back on that is Target. So, they have begun to replace those leaky systems with new ones with each new store remodel or distribution center refit as it comes up. And that's instead of waiting for new regulations that force their hand so they might have to replace machines that still have years of service remaining on them. So, instead, they sort of take advantage of the upgrades that they're already doing. And finally, number six was food waste. So, that seems like something you really can't control and that can sort of pull the rug out from beneath all your other hard work, but again, looking at Tesco, that British retailer, they've trimmed down the food waste problem, for example, with a popular line of ugly vegetables, so-called, because otherwise, those tend to get thrown away by the farmers if they're misshapen or too small, but Tesco's now looking to expand their ugly vegetable or "ugly veg" line. People have really taken to them. Another thing they do with those funny-looking, you know, potatoes and squash, they can actually put them into smoothies or face creams instead of throwing them away, so they actually can get them into the revenue cycle. So, according to Fovargue, those different kinds of success stories that show that retailers can make climate progress if they break the larger problem into smaller pieces, and then, you know, apply different tools and get a little traction on it.
David Maloney, Editorial Director, DC Velocity 14:47
Well, that sort of goes back to that old adage of eating the elephant one bite at a time to assure steady progress.
Ben Ames, Senior News Editor, DC Velocity 14:53
Yep, that's exactly right. Yep. Another speaker that, actually, that we heard had referred to that similar, parallel kind of challenge in what she called "chunking up the problem," so instead of trying to tackle the whole thing, breaking it into bite-sized bits.
David Maloney, Editorial Director, DC Velocity 15:10
Thanks, Ben.
Ben Ames, Senior News Editor, DC Velocity 15:12
Always glad to be here.
David Maloney, Editorial Director, DC Velocity 15:13
And Victoria, you wrote this week about the rise of ransomware and other cyber attacks on supply chains. What have you found out?
Victoria Kickham, Senior Editor, DC Velocity 15:21
Yes, that's right. So, we found out business leaders are quite worried about the growing volume of attacks on IT networks, and they're especially concerned about supply chain vulnerability this year. And that's according to a report from cybersecurity firm, a cybersecurity firm called a SonicWall. Their 2022 Cyber Threat Report tracked a 232% increase in ransomware—in particular, globally—since 2019, and a 105% increase from 2020 to 2021. As most listeners probably know, ransomware is malware that uses encryption to hold an organization, or it could be a person's data, you know, captive, so they can't access files, databases, applications, unless they meet the ransom requirement. Those kinds of attacks were up 98% in the United States last year and up 220% In the United Kingdom, just to give two regional examples. Just about all of the cyber threats that the company monitors rose last year. That includes ransomware and other encrypted threats; Internet of Things malware; and something called cryptojacking, and that's where criminals will gain access to a computer system and mine for cryptocurrency. All of this, according to the report, is due, really in large part because of our growing reliance on IT systems and the difficult task of securing them. They're essentially becoming just a more and more attractive target for criminals, and we see that on the global stage, especially with some of the, you know, warnings and threats against businesses and supply chains related to, you know, the situation in Russian and Ukraine and elsewhere. So, it's a serious issue that business owners are becoming more and more concerned about.
David Maloney, Editorial Director, DC Velocity 17:07
Yeah. Victoria, did the report say anything about supply chain threats in particular?
Victoria Kickham, Senior Editor, DC Velocity 17:12
Yes. So, they tracked huge increases in supply chain cyber attacks last year—specifically in supply chains related to government, healthcare, education, and retail. Those were the ones most affected by ransomware attacks. In government, those kinds of attacks were up nearly 2,000%; in healthcare and education, the percentage increase was in the triple digits; and in retail, the incidences of ransomware were up more than 20%. Now, we talked about this a little bit last week with our guest, Kyle Rice SAP NS2, the IT security firm, and he mentioned some high-profile cyber attacks that affected energy supply lines. The ransomware attack on the Colonial Pipeline last spring was one example. So, it's pretty clear that these kinds of incidents are not going away. Rice and others have talked about the need for heightened awareness, and also greater collaboration in across the private and public sectors to fight against this. So, the study that we covered this week certainly shows awareness is high, and hopefully, you know, the needed collaboration and communication efforts to protect against this—as much as you can—will follow.
David Maloney, Editorial Director, DC Velocity 18:22
Yeah, so, I guess bottom line is be aware and be prepared.
Victoria Kickham, Senior Editor, DC Velocity 18:25
Exactly.
David Maloney, Editorial Director, DC Velocity 18:26
Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 18:28
You're welcome.
David Maloney, Editorial Director, DC Velocity 18:29
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories, and check out the podcast Notes section for some direct links on the topics that we discussed today.
Again, our thanks to Josie Blanco of Nuvocargo for being our guest today. We welcome your comments on this topic and our other stories. You can email us a podcast@dcvelocity com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, we also encourage you to check out our 11-part limited podcast series from CSCMP’s Supply Chain Quarterly on the Top 10 Supply Chain Threats. Search on your favorite podcast platform to listen to the episodes.
And a reminder that Logistics Matters is sponsored by Hyster. With strength, durability, and their industry-leading suite of lift truck operator-assist technologies, Hyster powers your possibilities. For more information, visit Hyster.com.
We'll be back again next week with another edition of Logistics Matters, when we'll look at how supply chains are affected by the Russian invasion of Ukraine, so be sure to join us. Until then, please stay safe and have a great week.
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