Across the Border Commentary: Mexican Legislature adopts a 'do nothing' attitude toward logistics

Nov. 7, 2004
For the past seven years, a road cargo bill has been gathering dust in Mexico's Chamber of Deputies (equivalent to the U.S. House of Representatives)

For the past seven years, a road cargo bill has been gathering dust in Mexico's Chamber of Deputies (equivalent to the U.S. House of Representatives) with no clear hope for action on it in sight. Transportation Committee President, Deputy Francisco Avila, says all parties with their divergent view have to come to terms before any legislation can be acted on by the Congress. Given how many lobbying groups are involved, that may never happen.

The resulting free-for-all basically involves three lobbying groups of carriers with differing transportation interests:

  • The National Cargo Carriers Chamber (Canacar) represents "federal transportation public service," i.e., truck ownerswho perform third-party services.
  • The National Association of Private Transport (ANTP), a recently created organization representing mostly large companies who own their own fleets, as well as companies that have gone into public service through fleet leasing.
  • The Mexican Association of Courier and Messenger Companies (Amepac), which represents courier service suppliers — among them DHL, FedEx and UPS, as well as myriad large national companies such as MultiPak and Estafeta.

Each of the lobbying groups has its own agenda, and each has backed legislators against a wall, since there is no apparent negotiable exit in sight. Most likely, Deputy Avila hints, there may not be a new law at the end of the current Legislature's three-year term. ( Reelection is forbidden in Mexico).

Canacar spokesman Oscar Moreno says that private service fleet operators, such as those represented by the ANTP, are breaking the law by providing thirdparty services which are not allowed to them under current regulations.

ANTP spokesman Leonardo Gomez counters that in fact private fleet operators are simply taking advantage of the law. Within the law there is a loophole that says fleet operators can provide service to third parties if cargo is "linked" or related to the operations of the fleet owner.

If a baking company, for example, hauls refined sugar for another company, it is legal because sugar is part of the baking business. This, of course, gives the law broad interpretation and the ultimate goal, according to Gomez, is to make trips cost effective, not to have a truck return empty to its point of origin.

This, says Canacar's Moreno, is an unfair trade practice because private fleets are competing against public carriers. Gomez says it is a perfectly legal interpretation of the word "linkage" (conexos, in Spanish) and of the law. This has prompted widespread employment of private fleets now protected under the ANTP umbrella.

This one issue represents just the tip of the iceberg on transportation matters. Canacar demands — as does the government — that better care be taken of the national road system that this year has been badly battered by months of torrential rains.

Among pending issues is a regulation demanding a decrease in the weight and dimensions of cargo in order to be less damaging to highway infrastructure.

This, says Javier Altamirano, president of ANTP, is tantamount to highway robbery on the part of federal public service truckers, since trucks would need to be smaller and carry fewer payloads.

"This means more cargo trips for the truckers and higher costs for users and consumers," Altamirano says.

There has been a distinct shift back to companies operating their own fleets, as opposed to outsourcing transportation. ANTP members such as bottling company FEMSA and baking company Bimbo now operate large fleets of multiple-use transports to fill their private needs. As a result, they've withdrawn their freight from dozens of smaller trucking companies operating on federal highways, putting them out of business.

Meanwhile, transportation costs are expected to increase should new weight and size regulation be approved.

"In the Chamber of Deputies," notes Canacar's Moreno, "the members show deep sympathy for us in the business, but they refuse to take action. They say it's too cumbersome to solve all of these issues at one time, so they want to solve the easiest ones first. What the deputies forget is the easy matters have already been solved. We need to tackle the difficult issues on weight and sizes, leasing, linkage, parcel services and foreign investment."

The deputies seem inclined to pass the logistics industry's problems along to the next Legislature — which will have to begin the process all over again.

Another issue in Mexico is the move by parcel companies to enter the truckload business. Canacar and other federal highway carriers claim North American Free Trade Agreement (NAFTA) regulations clearly ban the likes of DHL, FedEx and UPS from the truckload business, maintaining it exclusively for nationals in the three signatory nations: Canada, the U.S. and Mexico.

"This is a judicial mandate, neither a recommendation nor advise," says Canacar president Leon Flores.

In this matter, Canacar demands from legislators creation of a special classification for parcel activities under the label "express cargo," which would exclude DHL, FedEx and UPS from the truckload business. At present, these companies have to outsource federal cargo transport to national trucking companies. It's not that these companies lack trucks, but both the highway patrols and Canacar members closely scrutinize their activities.

"This is the law and we want it [to stay] this way," says Flores, restating that Mexico does not need foreign investment in its cargo transportation business. Most likely the Transportation Committee deputies will continue on "eternal siesta" (as one carrier puts it), while business leaders squabble over regulations which exist but are not fully enforced.

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