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Thursday, Dec 7, 2023

TRADE — Enforcement of Mexican Trucking Law Takes Effect

Asia/Pacific Business Outlook Seminar Draws Big Crowd to USC

San Diego-based trucking companies and companies operating warehouses near the Otay Mesa border crossing are the short-term beneficiaries of a law barring Mexican trucks from transporting goods beyond a prescribed commercial zone.

The federal law approved last year closes a loophole used by many Mexican carriers that permitted them to move goods from Tijuana maquiladoras to Los Angeles and Long Beach.

Last week, state and federal enforcement officers were stopping Mexican trucks that went beyond the commercial zones, which in San Diego’s western area was Oceanside. Violators were subject to state fines of $2,700 and federal fines of $10,000.

“A number of our members have been seeing an increase in their business over the past two months,” said Armando Freire, chairman of the international policy committee for the California Trucking Association.

Freire said the trade association of some 2,500 members had been lobbying for several years to level the playing field with Mexican trucking firms.

Although the 1994 NAFTA trade agreement originally intended to permit the free transport of goods throughout the United States, Mexico and Canada, the reality is trucks from the United States and Mexico have been operating under restrictions since the pact took effect.

U.S. trucks were banned from transporting in Mexico almost entirely, while Mexican trucks were confined to commercial zones that varied depending on the border area. In Tecate, the zone extends only three miles; in Calexico, it’s seven miles.

As a way to get around the temporary prohibition, Mexican carriers began leasing their trucks to U.S.-based carriers, but that loophole was closed last year with the new law, which took effect March 28.

As a result of the law, instead of driving all the way to Los Angeles, Mexican trucks now usually deliver their loads to Otay Mesa warehouses, where they are transferred to U.S.-based trucks.

“We’re doing record volumes of warehousing here,” said John Jolliffe, executive vice president of Casas International Brokerage Inc., an Otay Mesa customs broker. “From now on, Mexican trucks bringing their loads north have to do a transfer in Otay Mesa.”

Although his company is getting some new warehouse business, Jolliffe wasn’t so thrilled about the development. A joint venture Mexican trucking firm Casas partly owns stands to lose business, so the gain in warehousing balances things out, he said.

“The bottom line is that this is going to add to the cost of doing business, when the whole idea of NAFTA was to reduce those costs,” Jolliffe said.

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Asia Conference: This year’s Asia/Pacific Business Outlook conference drew about 400 attendees to the University of Southern California, the largest number in the conference’s 13 years.

“Last year was one of the lowest but that was because of the recession,” said Grace Korman, assistant director of the International Business Education and Research program at USC, which co-sponsored the event with the U.S. Department of Commerce.

The attendees, primarily middle- to senior-level managers at U.S. companies and Department of Commerce commercial officers, could choose from some 70 forums and seminars on various aspects of international business in the region.

“The seminars are geared to American managers who are interested in starting, expanding or improving their international operations,” Korman said.

Among some of the seminars were E-commerce opportunities in China; current status of Chinese reforms; the Asian financial restructuring; and negotiating in Japan.

Besides forums that focused on particular issues, the conference featured outlooks on the economic and political environment for each of the 12 Asian countries and Hong Kong.

The speakers at the outlooks were Department of Commerce senior commercial officers and a private sector executive who was doing business in the nation.

Seminars dealing with China were especially popular this year because of the prospect for that nation’s entrance into the World Trade Organization, and the tremendous opportunities that market holds for virtually every industry, Korman said.

Another popular area of interest dealt with Japan’s economy because of a long-delayed restructuring of its banking system, she added.

Gerald Mitsch, a controller for Excellon Automation Co. in Torrance, said he was attending his third Asia Pacific Outlook.

Excellon, a manufacturer of heavy equipment used to make printed circuit boards, gets about half of its sales from overseas customers, with most of it coming from two areas: Taiwan and Hong Kong. Last year, Excellon, a subsidiary of Esterline Technologies (traded on the NYSE), had about $90 million in revenues.

Five years ago, Mitsch said he came to the conference seeking more information about how his firm could sell its products into Japan, then a new market. This year, he was more interested in getting data and contacts about the firm’s newest market, Taiwan.

“The biggest thing I got out of it this year is how much the Internet has taken over as a business tool,” Mitsch said.

The conference featured former San Diego executive James Owens of Caterpillar Inc., as one of its keynote speakers.

Owens worked here in the early 1990s as president of Solar Turbines, Inc., the San Diego gas turbine engine manufacturer and subsidiary of Caterpillar.

Now the head of Caterpillar’s Asia Pacific division, Owens described some of the steps his firm took when the Asian financial crisis took hold in 1997.

As a result of the currency devaluations in some countries, and ongoing recessions at other nations, the building and construction industry dropped by more than 80 percent in the region, and by about 50 percent in Japan, Owens said.

Yet Caterpillar didn’t lose a single dealer.

The strategy involved moving some inventory to more stable economic regions, restructuring loans, and generally standing by their customers and dealers during a time when it would have been easy to walk away, he said.

That strategy is starting to show payoffs this year as some economies begin to turnaround, and purchases of big-ticket heavy equipment resume, Owens said.

While Owens is optimistic about the region, he didn’t sugarcoat his perceptions.

“It’s still a pretty deep hole, and it’s going to take some time to fully recover. perhaps not until 2003, but we’re very bullish on the region. The long-term fundamentals are still there, and are improving every year.”

New Import/Export Program: Southwestern College in Chula Vista is one of 17 centers now offering free or low-cost international consulting services ranging from research and development to finance assistance through a new statewide program that began this year.

While trade assistance service is nothing new at Southwestern’s small business development center, the difference with the latest program, called the California-Mexico Trade Assistance Center, is the focus on helping California companies export their goods specifically into Mexico, said Rebecca Torra, spokeswoman for the program.

Heading up the statewide centers, all found in state community colleges, is Bernie Weiss, the former director of Southwestern College’s small business center. But Weiss hasn’t moved to Sacramento, and oversees the $1 million program from the Southwest center.

“Mexico offers a tremendous business opportunity for those people willing to research and market and take the time to learn a few things,” Weiss said.

For more information, call the center at (619) 482-6392.

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Trade Winds: How to do business in Mexico without speaking Spanish is a seminar that will be held from 6 to 9 p.m. starting April 4 at Southwestern’s California-Mexico Trade Assistance Center. Trade opportunities in Cuba is the subject of a breakfast presentation starting at 7:30 a.m. April 13 at the San Diego World Trade Center’s monthly breakfast at the University Club.


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