News & Press

May
8
2024

Key Insights into Importing from Mexico:

Are You Contemplating Importing from Mexico?

Due to the challenges in the supply chain over the past few years (COVID-19, tariff increases on Chinese goods, geopolitical issues around the globe, etc.), Mexico has become attractive to companies that want to diversify their supply chains.  Sourcing goods from Mexico has become popular as it allows US companies to take advantage of the United States-Mexico-Canada Agreement (USMCA) and reduce/eliminate duties on their imported goods.  The agreement changed the Regional Value Content (RVC) rules used to determine if a product is made in North America, encouraging companies to expand their supply chains to Mexico.  The agreement has also led to much increased foreign investment in production operations in Mexico.  The two major groups investing in Mexico are US companies expanding existing operations there and Chinese companies looking to take advantage of producing in North America with low labor costs and reduced supply chain issues.

 

This shift to Mexico from overseas countries in Asia, Europe, South America, and other areas exemplifies nearshoring.  With so many companies embracing this strategy, Mexico has become the number one supplier of goods to the US.  They have surpassed Canada (now number two) and China (number three).  In 2023, Mexico’s imports accounted for $475.6 billion.  Also, Laredo, Texas, has become the number one port of entry in the US, surpassing Los Angeles, Long Beach, New York, Chicago, and other sea & ocean ports of entry.   There are projections that trade from Mexico could rise another $300 billion over the next decade.  Will you be part of this trend?

 

Choosing the Right Partners

Companies that choose to source products in and import from Mexico need to familiarize themselves with the process’s nuances and select experienced vendors.  The selection of a forwarder that can handle the delivery from the supplier, across the border, and to the destination is essential.  Depending on the urgency, the forwarder can determine whether shipping by truck or rail is the best and most cost-efficient option.  When trucking from Mexico, there are complexities that you do not deal with that are not unique.  For example, moving a shipment from supplier to destination usually takes three trucks.  The first truck picks up the goods from the supplier and brings them to the border.  The second truck handles the transfer across the border to a secure holding yard or warehouse.  The third truck picks up the goods and delivers them to the destination.  This could be a pickup of the container or a different container into which the goods are transloaded.

 

Navigating Customs and Documentation

Also, the documentation process in Mexico is unique and requires an experienced Mexican Customs Broker/Forwarder to navigate this complex process.  There are export clearances that must be completed, as well as payment of fees before the freight is allowed to cross into the US.  Also, the Mexican Broker/Forwarder communicates with the US Broker to ensure shipments are manifested properly with US Customs.

 

Last, the US importer needs to partner with a US Customs Brokers that is experienced with the entire process of clearing shipments from Mexico.  The broker needs to be compliance-focused and able to assist you with determining the applicability of the United States-Mexico-Canada Agreement.  The broker needs to have knowledge of the process for export clearance from Mexico and have good, open communication with their counterparts in Mexico (forwarder and Mexican broker).  Last, the US Broker needs to have the technology available to allow you to see the status of your shipment.

 

Looking Ahead

Mexico expects to remain the number one provider of goods to US companies for the next few years. Most US importers will participate in the process. US importers must educate themselves on the unique methods of importing from Mexico. They also need to select qualified, experienced vendors to work with this process. These vendors are the forwarder, Mexico broker, and US Customs Broker. These partners are crucial to making the sourcing from Mexico smooth and stress-free.

 

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