Cross-border rail freight offers a wealth of advantages for shippers, including cost savings and efficiency. Linking Canada, the United States, and Mexico, these international connections are made possible primarily through Class I railroads. However, orchestrating these shipments demands careful attention to detail, from researching customs brokers and managing special documentation to coordinating with freight forwarders and securing the necessary border permits. Let’s explore how to navigate these requirements for a smooth cross-border shipping experience.
Table of Contents
- Benefits of International Rail Shipping
- International Rail Carriers and Connections
- Customs Brokers and Documentation
- International Rail Freight Forwarders
- Understanding Border Permits
Benefits of Shipping Rail for U.S. Shippers to Canada and Mexico
When shipping freight between the United States, Canada, and Mexico, rail as a modal choice possess advantages that can address international border challenges. Compared to truck as a modal choice for freight, rail is more efficient and timelier, and in more rural areas with less infrastructure, safer as well. Rail also offers cost savings in the form of optimized networks from first to last mile, while consistently receiving modernized expansions and improvements.
Efficiency at the Border
One of the most significant challenges with truck transport is the extensive border delays. Every truck entering the United States from Mexico undergoes a thorough inspection, which leads to an average delay of up to three hours per trailer. Rail shipments, in contrast, avoid these extensive wait times. The streamlined processes at rail border crossings greatly reduce downtime, as railcars are typically pre-cleared and grouped for fewer inspections.
Infrastructure and Safety
Mexico’s infrastructure poses another logistical challenge, particularly outside the major trade corridors. In those more rural areas, the road conditions can be suboptimal, and the risk of collisions with livestock is high. Approximately 40% of transportation accidents in rural Mexico involve livestock collisions due to unfenced farming areas. Rail transport makes these risks less substantial with safer and more reliable tracks that bypass the less developed roadways.
Cost Savings
Shipping via rail through Canada offers a particular advantage for reaching U.S. markets. Often, the combination of ocean and rail through the Canadian Gateway costs considerably less than other routes, allowing you to reduce expenses while maintaining efficient transit times. This is mostly due to the nature of duties and a shipment’s country of origin and provides a possibility for managing fees from incoming international shipments.
Modernized Rail Systems
Over the past decade, international rail networks, particularly in Mexico, have seen significant modernization efforts to make them not only safer but faster. Enhanced rail services such as those provided by Class I railroads like the Union Pacific (UP) and Canadian Pacific Kansas City (CPKC), who consistently upgrade and expand their networks into and out of Mexico, means that by switching to rail from truck, you could potentially save on transportation costs and lower your carbon footprint by 75%.
International Rail Carriers: Cross-Border Connections
North America’s major railroads, including the Canadian National (CN), Canadian Pacific Kansas City Limited (CPKC), and Union Pacific Railroad (UP), play pivotal roles in facilitating seamless cross-border trade across the continent.
CN boasts an extensive network that reaches from the eastern shores of Canada across to Vancouver and stretches further into key U.S. midwestern and southern states. This vast spread not only ensures smooth transportation of goods across North America but also connects effortlessly with other U.S. Class 1 rail carriers, enabling connections and distribution possibilities through critical trade corridors.
Emerging from the merger of Canadian Pacific (CP) and Kansas City Southern (KCS), CPKC offers a unique and comprehensive rail link stretching from Canada directly into the heart of Mexico. This network serves as a direct thoroughfare for goods traveling between the manufacturing sectors in Mexico and the consumption and distribution centers in the United States, extending up into Canadian ports and agricultural regions. The former KCS’s exclusive Mexican cross-border route is part of a critical role in this integrated rail system.
The UP enhances the U.S.-Mexico trade landscape with robust cross-border capabilities, particularly through its strategic Eagle Pass, Texas, gateway. This pivotal point enhances the link between UP’s network and Ferromex (Ferrocarril Mexicano), streamlining the cargo movement through one of the most crucial conduits for bilateral trade.
Rail Freight Customs Brokers and Documentation for Cross-Border Rail
When transporting goods across North American borders by rail, the documentation and customs clearance process is crucial. Collaborating with a customs broker that aligns with your shipment destination—whether it’s the U.S., Mexico, or Canada—is essential. These brokers assist in securing all necessary customs paperwork, pivotal for a smooth transition through border checkpoints.
Key Customs Documentation Needed for Mexico:
If you’re shipping freight by rail to Mexico, some documentation may be required:
- Bill of Lading: A legally binding agreement that lists goods details, origin, and quantity. Signatures from both the buyer and carrier are required.
- Commercial Invoice: Must be provided in Spanish, detailing the transaction for the freight forwarder and Mexican broker.
- Packing List: Specifies cargo contents, including weight and material type.
- Commodity Permit and Material Safety Data Sheet: The Commodity Permit may be necessary for specific goods; additionally, the Material Safety Data Sheet (MSDS) is crucial for hazardous materials, outlining storage, handling, and safety instructions.
Additional documents may include: the United States–Mexico–Canada Agreement (USMCA) Certificate of Origin, sales contract, customs declaration, and insurance policy, among others. Your customs broker should be able to advise you if there are additional paperwork needed; or a Third-Party Logistics companies like RSI Logistics can coordinate with customs brokers on your behalf.
Finding a Customs Broker:
It’s important to ensure you do your research when searching for a reliable, licensed, and knowledgeable broker who can handle import and expert details. If you’re beginning your search for a customs broker, the below resources may offer some assistance.
- U.S. Customs & Border Protection (CBP): Offers a list of licensed brokers, accessible on their website under the Permitted Customs Broker List.
- Tax Administration Service (SAT) and Confederation of Associations of Customs Agents of the Mexican Republic (CAAAREM): Both organizations offer options; the SAT through a verified list of Mexican customs brokers, and CAAREM through a directory of Customs Agents.
- Cross-border Freight Providers: These providers may work with multiple brokers and can help you refine your search. For instance, Coyote, part of UPS Supply Chain Solutions, can offer connections to their customs brokerage solutions.
Role and Selection of Freight Forwarders in North American Cross-Border Rail
For seamless international exchange of freight across borders, freight forwarders often become an important point of contact. These entities are engaged in not only the physical transport of commodities but also in ensuring that all export compliance requirements are met. Working in conjunction with customs brokers—who are responsible for navigating governmental import and export regulations—freight forwarders facilitate the end-to-end logistics of international shipping.
Freight forwarders may take charge particularly when goods need to go beyond the rail endpoint, coordinating the onward journey by road to the final destination. This may involve transloading—the transfer of goods from one mode of transportation to another.
When and How to Engage a Freight Forwarder:
Freight forwarders come into play when shipments need integration with other transportation modes, typically at border crossings where rail services end. To identify a reliable freight forwarder experienced in navigating the country’s export landscape, consider these factors:
- Reliability: Ensure the company you choose has a track record of dependable service in cross-border logistics.
- Experience: An established forwarder with experience in international shipping is likely to have existing relationships with trusted customs brokers.
- Customs clearance expertise: Select companies that have specialized knowledge in customs procedures can steer shipments through border controls without delays.
Understanding Border Permits for North American Cross-Border Rail
Cross-border rail shipping requires an understanding of border permits and their various requirements. The need for such permits often depends on the specific nature of the commodities being shipped, as well as any additional embargoes that might affect the movement of specific commodities or movements. It’s important to be aware that, alongside the essential customs documentation, certain shipments might also require additional border permits, as well as the settlement of relevant duties and fees,
Coordinating with a rail logistics provider can significantly make securing these permits simpler. For instance, at RSI Logistics, our rail experts leverage our rail management solution Rail Command®, which is designed to accommodate the intricacies of cross-border shipping intricacies. This includes specific regulatory requirements, such as Carta Porte for shipments destined for Mexico.
