The Challenges of Cross-Border Shipping
The North American supply chain is one complicated machine.
With politicians from the United States, Mexico, and Canada constantly working to negotiate the best trade deal for their countries, shippers across North America find it more difficult today to move products to customers in these three countries. Whether it’s the threats of rising tariffs or the complex paperwork controls, there are multiple challenges that are associated with cross-border shipping.
But there is a silver lining…
Most of these issues that carriers and shippers deal with every day can be alleviated by educating themselves and working with a reputable 3PL.
So, in the spirit of education, let’s take a closer look at a few of the most common issues that cross-border shippers face daily. Better yet, let’s talk a bit about how one can avoid some of these pitfalls…
The Facts About Cross-Border Shipping
The U.S. is the central hub of cross-border shipping. Due to its location being situated right between Canada and Mexico, many shipments must pass through the country every day. Some heading North to Canada. Other shipments are heading down South to Mexico.
And the U.S. facilitates the majority of these shipments.
Trade between the United States and Canada alone involves the movement of roughly $700 billion worth of merchandise every year. Trade between the United States and Mexico equates to $650 billion every year.
This means that more than one trillion dollars worth of freight is moved within the United States to these two countries on an annual basis. That’s a lot of money, but it’s also a lot of opportunity for mistakes, delays, and potential health concerns.
There are a lot of regulations with moving freight from one country to another. Although a company that is based in the United States might have businesses in Mexico or Canada, moving supplies to those locations is still considered foreign trade. This requires multiple layers of paperwork, customs declaration forms, and other documents to be filled out correctly for any movement between the same company located in different countries.
To reduce the potential of freight delays and to remove a lot of stress from the equation, many of these larger corporations with satellite locations in foreign countries depend on the expertise of a third-party logistics company. The 3PL will handle all paperwork control and in many cases the complete movement of freight through the international supply chain. That being said, there are a few common challenges that exist with all cross-border shipments.
A tariff is essentially a tax charged by a country for the right to sell merchandise or services to businesses or individuals living in that country. Tariffs are always a challenge for shippers because many countries use tariff negotiations as a political tactic to get the best deal for their people and the businesses that pay taxes to those countries.
From 2016 through late 2019, the threat of a trade war between Canada, the United States, and Mexico was a legitimate concern.
Eventually, political leaders from all three countries decided to create the United States – Canada – Mexico trade agreement. When ratified, this will significantly change the processing or threats of tariffs, and should, in theory, improve the efficient movement of freight between these three countries.
Every country in North America places the safety and security of their people as their top priority. One way that U.S., Canada, and Mexico protect their people is through customs compliance.
The customs department of each of these North American countries places regulations on what can and cannot be sent or shipped into their countries. Some of these products include food that could contain bacteria or other harmful contaminants.
A shipper must understand the customs compliance of each country in order to reduce freight delays.
Another area of concern for U.S.-based shippers are increasing regulatory problems with the importing of medical and food-based products. Each country has its own regulations for the quality of product that can be imported into their countries. If a shipper’s products do not comply with that nation’s regulatory process, the freight cannot enter the country.
When you break it down simply, any company that does not face these challenges head-on or does not know how to navigate their way through cross border shipping will experience significant problems with the international supply chain.
To avoid these issues, many proactive thinking businesses utilized the experience of 3rd party logistics companies to manage their cross border shipping. Whether it’s importing or exporting products into Canada or Mexico, a cross border shipping expert like Redwood logistics can streamline your international shipping needs.
If you would like to learn more about how Redwood Logistics can improve your cross-border shipping, and reduce the common challenges, contact us today.