The Express Lane is Open for Business

If time is really money, U.S. Customs and Border Protection’s cargo pre-inspection program is saving both. CBP and Mexico’s Tax Administration Service forged a plan to rapidly move cargo across the border. The pilot project places CBP officers in Mexico and Mexican customs officers in the U.S.

CBP runs two cargo pre-inspection facilities—at Mesa de Otay in Tijuana, Mexico, and at Laredo International Airport, Texas. CBP officers at the Mesa de Otay facility handle trucks hauling certain produce into the U.S. The Laredo facility is staffed by Mexican officers who check air cargo—auto parts, electronics and aerospace components— destined for Mexico. At both locations, Mexican and CBP officers work together.

Mesa de Otay is in Mexico and Otay Mesa is CBP’s port in the U.S. The communities straddle the border and both facilities connect.

Officials are planning a third location at San Jeronimo, Mexico, just across the border from Santa Teresa, New Mexico. That facility will handle electronic products produced by a huge manufacturer in Mexico.

For either nation, screening cargo before leaving the exporting country is the core of the program. It eliminates a duplicate inspection when crossing the border. That’s how the time and money is saved.

How much?

U.S.-destined carriers spend about 2.5 hours for inspections in Mexico. After crossing the border and arriving at the Otay Mesa port of entry, they spend about a half hour in another line of trucks inching toward the area where CBP officers conduct another inspection lasting about an hour.

"That’s an estimated four hours to bring a shipment into the U.S.," explained Manuel Garza, program director for CBP cargo pre-clearance. Under that time burden, it would be tough for drivers to manage more than one delivery a day, he said.

In reality, waiting to enter the U.S. can be greater, as trucks are usually backed up for miles into Mexico.

Cargo pre-inspection slashes that time in half. Shipments can cross the border within an hour, making the program attractive for Mexican drivers, exporters and U.S. importers. "Now, single drivers can make three to four trips per day, potentially doubling their income," said Garza.

Take Driscoll’s Strawberry Associates. Well-known in supermarkets, Driscoll’s strawberries, blackberries and blueberries have limited shelf life. "We need to move as fast as possible," noted Arazeli Penilla, who oversees customs compliance and security for the company. Before joining the program, border crossings took up to four hours. "Gate-to-gate is now 30- to 45-minutes," she said. "It’s saving us 10 percent of the value of each shipment." With deliveries worth from $50,000 to $100,000 according to Penilla, that’s a lot of money.

Cargo pre-inspection is mutually managed. Applicants are vetted jointly. Rejected shipments are decided jointly. Secondary inspections are considered jointly. If one agency objects, it’s considered a refusal by both countries.

To join, drivers and shippers are vetted by both CBP and Mexican customs officials. The agencies look for driving and narcotics violations and experience delivering produce approved by a U.S. Department of Agriculture program called NARP, or the National Agriculture Release Program. NARP produce is less likely to harbor pests and diseases and, for now, the only products allowed in the program. Qualifying applicants and companies are entered into a data bank.
 

Driving on Through

Once enrolled in the program, it’s a quick and easy transit. Drivers carrying produce from Mexico take a special lane through the Mesa de Otay cargo pre-inspection area. They first stop at the security gate, then on to the Mexican processing booth and finally to the U.S booth. The booths resemble and operate like bank drive-thru, where shipping documents and driver credentials are matched against records in the data bank and information the shipper forwards describing the cargo. If everything checks out, drivers continue along the secured lane that whisks them into the U.S. to continue on their way.

While both sides collaborate, Mexican and U.S. officers "are looking for different things," noted CBP officer Jennifer Krismer, who processes the Mexican drivers. Mexican officers verify compliance with customs and tax regulations and check for contraband. CBP officers look for narcotics, unauthorized produce and program approval. Either nation can turn back shipments. The program evolved from a 2010 White House directive based on talks between the U.S. and Mexico on how to better manage the border. Part of the directive calls for reducing congestion and delays in cross-border traffic and advancing "economic competitiveness…through the secure, efficient, rapid, and lawful movement of goods and people," exactly what cargo pre-inspection is designed for.

Mexico’s Tax Administration Service or SAT (Servicio de Administracion Tributaria) received an identical directive known as Los Pinos from the Mexican president’s office.

Cargo pre-inspection was designed by a joint SAT-CBP working group guided by both directives and supported by a committee of American and Mexican officials representing agencies involved with the border. The committee was formed through the 21st Century Border Management Initiative, the plan that carries out both the White House and Los Pinos mandates.
 

Dual Effort All the Way

Perhaps the most difficult obstacle required a political solution. Mexican law needed to be changed so CBP officers in Mexico could carry firearms.

That required the support of the Mexican Congress in a nation where restrictive gun laws make it difficult for Mexicans to possess firearms. Foreigners have a greater challenge, said Jose Garcia, who represents the Ministry of Finance Revenue and Customs Affairs at the Mexican Embassy in Washington, D.C. However, the backing of Mexico’s highest officials made the task less daunting.

"The bill was presented to both chambers of the Congress," he said, eventually passing in May 2015. "The Ministry of Finance approached senators and representatives and explained the benefits—how much money carriers would save, how growers would prosper, how the economy would grow." The legislation was also supported at the time by Mexico’s President Enrique Peña Nieto.

Still, the program needed to move from concept to completion. The necessary guidance and day-to-day procedures to ensure cargo pre-clearance facilities operate smoothly needed crafting.

That task rested with a group representing key CBP offices, led by the Office of International Affairs (INA). Collaborating with Mexican officials, the group reached international agreements on management, vetting, acceptable products and how to obtain visas, carnets and permits. The group also set working hours and rules for each location, said Hugh Austin, a former INA program manager who worked on the project.

"From start to finish, the cargo pre-inspection program was a full bilateral commitment where we worked closely with our Mexican partners," he said. "We addressed details large and small."

Mexico’s pursuit of cargo pre-inspection goes back nearly a decade. Mexico submitted its first proposal in 2007 to an association of Mexican fresh produce exporters in Nogales, Mexico. "We proposed this type of cargo processing because our economies and industries are integrated and strong," Garcia said.

According to Garcia, for every dollar spent on Mexican imports, 40 cents returns to the U.S. That’s also true when the U.S. re-exports goods jointly manufactured with Mexico. By comparison, trade with China returns just two cents, 20 times less. He also pointed out that having CBP and Mexican officers working together increases compliance and further encourages trade by reducing transaction costs.

Nogales, Mexico, was originally considered for the program. Eighty percent of the trucks carrying fresh produce to the U.S. through that port account for nearly 40 percent of the produce the U.S. imports, according to a report by the Nogales International newspaper. But in Nogales "the facilities were not right," Garcia said. "It lacked the infrastructure."

Garcia said only land locations, including airports, were considered for the program. "Forget seaports at this time. They’re minimal compared to our trade on rail and roads."

Instead, Mexico proposed Mesa de Otay, where traffic volume is huge. The port processes 1.4 million trucks through the border each year, according to the Federal Highway Administration.
 

Mexico’s Money and Commitment

During construction at Mesa de Otay, Mexico’s support for the program was evident, recalled Carlos Robles, CBP branch chief for trade operations at Otay Mesa. Mexico converted an entire warehouse into a cargo pre-inspection facility. The gleaming structure, renovated to CBP requirements, contains offices, inspection docks, a refrigerated bay for unloading perishable goods and the inspection booths, all paid for by Mexico.

"There was lots of dedication on their side," Robles said. "They haven’t said no to anything we asked for—bullet proof glass, higher fence."

When it opened in June 2014, activity was slow, but business quickly picked up as Mexico promoted the program. Currently, five shippers with their combined 125 trucks are in the program. Up to 20 trucks are processed daily through the facility from 8 a.m. to 1 p.m.

Participants gave the cargo pre-inspection program a positive rating in a recent CBP survey.

Beyond saving time and money, the program builds a strong international bond between Mexican and U.S. border officers.

CBP Agricultural Specialist Amanda Stransky, who works at the cargo pre-inspection facility, agrees. "They’re fabulous," she said of her Mexican counterparts. Despite the limited English and Spanish between the two, Sutton said the Mexican customs officers assist with taking samples or off-loading a shipment suspected of carrying nonapproved produce. Sutton had only one contraband incident between January and September 2016. "These guys are clean. They don’t want to be dropped from the program," she said.

Ongoing information sharing and communication is key to maintaining that bond and ensuring the program’s success, according to Rosa Hernandez, port director at Otay Mesa, where Mexican and U.S. customs officers meet monthly. "You’ve got to have that dialogue," she said. "We have a very good relationship with Mexico. The confidence is there."

Requests for a joint task are a typical example. They begin on the ground, then channel up to Hernandez, who contacts her Mexican counterpart, Administrator Jorge Boy, to reach a decision. Sometimes it may take a while because Mexico’s government is centrally structured, requiring Boy to get approval from officials in Mexico City, Hernandez said.
 

All Up in the Air

While cargo pre-inspection at Mesa de Otay benefits mainly Mexican commerce, at Laredo International Airport the program benefits mostly American shippers. The airport was selected by Mexico because of its volume and support from the city, serving as a hub for eight destination airports in Mexico located near assembly plants. Covering three shifts, Mexican and CBP officers together inspect arriving shipments in a controlled area before they continue on to Mexico. Mexican officers can’t seize suspicious cargo, but they can ask CBP officers to seize a shipment, the same protocol followed by CBP officers in Mesa de Otay.

And just like at Mesa de Otay, in most cases shippers avoid a second inspection upon arriving in Mexico. After landing, cargo goes straight to its destination. That means shippers know when to schedule trucks to transfer the cargo to the manufacturers, again saving time and money. Drivers outside the program may spend hours waiting, not knowing when their cargo will clear an inspection, Director Garza, noted.

"Time is money, otherwise these parts wouldn’t go by air," he said.

Look at Chrysler. The international automotive manufacturer informed Mexican officials that cargo pre-inspection has cut the company’s importing costs by half and reduced the time to process those shipments by 60 percent, said Mexico’s Garcia.

Currently, 14 American air cargo carriers have joined the program. To qualify, they must pass a background check and hold a Customs-Trade Partnership Against Terrorism, or C-TPAT, certification. Companies with that credential are considered low-risk, having built into their international supply routes protections to prevent infiltration by terrorists. Carriers must also receive a similar security screening in Mexico equivalent to C-TPAT, said Alberto Flores, Laredo’s assistant port director for trade operations.

During pre-inspection, Mexican customs officers check for these certifications, review shipping documents to confirm the cargo complies with the program and proof the carrier has cargo pre-inspection approval.

Contraband, weapons and currency are unlikely, said Flores. "These are trusted shippers who charter small planes, so we can easily access the cargo and see all the commodities." No violations have been encountered by CBP or Mexican officers since the program began at Laredo.

U.S. Department of Homeland Security Secretary Jeh Johnson and Secretary Luis Videgaray, of Mexico’s Ministry of Finance and Public Credit, promoted the Laredo facility at its October 2015 opening. Mexico, along with the City of Laredo, continue to pitch the program to potential exporters to attract more industry and trade to the region. Like Mexico, Laredo is a big cargo pre-inspection supporter and paid for constructing Mexico’s inspection terminal. "The city invested $2 million to build the facility," said Airport Manager Jose Flores.

From September 2013 to October 2015, 8,920 cargo flights arrived at the airport, according to Guillermo Villalobos, Laredo’s airport operations manager. About three of every 10 arrivals are part of the program.
 

Looking Ahead

CBP’s third cargo pre-inspection facility in San Jeronimo, Mexico, expected to open by spring 2017, will be different. It’s slated to be located at Foxconn, a huge, Taiwan-based manufacturer of personal computers and computer components, explained Ray Provencio, Santa Teresa port director. "For flow of traffic, we’re unique," he said, because trucks will work in both directions.

Foxconn, located on the border, manages an extensive industrial park in San Jeronimo, where Dell and Hewlett Packard plan to set up manufacturing operations. Working at Foxconn will allow CBP to better manage the considerable export stream that’s expected, he said.

A dedicated lane with fencing, lighting and Foxconn security cameras still needs to be constructed.

Foxconn’s expansion means more than 30,000 computers will be exported to the U.S. each day through the cargo pre-inspection program, predicts Mexico’s Jose Garcia. He also hopes the program can expand to other industries and to other locations in Mexico and the U.S. beyond the border.

Cargo pre-inspection’s future, however, rests with evaluations by both countries. The U.S and Mexico agreed to assess and share each site’s performance after 180 days. Those reports will determine if the program continues.

"A lot will depend on participation and traffic," said Larry Fanning, Otay Mesa’s assistant port director for trade.