It’s no surprise that US West Coast ports have experienced such terrible congestion – everything seems to go through Southern California.
The Port of Long Beach reported last month that it moved more cargo in 2021 than any year on record, handling 9,384,368 twenty-foot equivalent units. This represents a 15.7% year-on-year (year-on-year) increase in overall container counts, including a 14.6% year-on-year increase in imports (4,581,846 TEUs), spraying the previous container record set a year earlier.
As the port continued to set unprecedented numbers of records, the sheer volume of containers was exacerbating shipping traffic and overwhelming the port already at capacity.
Importers keen to avoid such massive delays this year are considering alternatives. After all, cargo doesn’t have to stop in Southern California.
Mark Vickers, Executive Vice President of International Logistics at Reliance Partners, recently reached out to Raul Saucedo, President and CEO of SBGroup, for his thoughts on choosing Mexico for international shipping.
“As port saturation and ship unloading is strong right now in Long Beach, the Port of Manzanillo is an option,” Saucedo said. “Even though Manzanillo is not a very fluid port, the big difference between Manzanillo and Long Beach is the time difference it takes to unload large ships.” Queues for unloading at Long Beach can stretch to as many as 40 to 60 ships, he added.
The port of Manzanillo is in the state of Colima on the west coast of Mexico. One of the busiest in Mexico, the seaport is responsible for handling Pacific Ocean cargo for the Mexico City area.
SBGroup helps importers and manufacturers, especially in the United States, facilitate customs clearance of goods in Mexico as an alternative to international shipping through its West Coast ports.
The freight forwarding and contract logistics company based in Guadalajara, Mexico, provides air, sea and ground transportation services in the United States, and has a network of distribution centers with more than 700,000 square feet of bonded warehouses, inland ports, free zones (FTZs), as well as the Manufacturing, Maquila and Export Services Industries (IMMEX) Program and other value-added services.
“[Manzanillo] I think it’s kind of a hidden gem when it comes to current congestion at the Ports of Los Angeles…” Vickers said. “They spend a lot of money on networking strategies and looking for where they can win in the United States, but not everyone is considering Mexico because they just don’t understand it.”
SBGroup offers free zones when handling international freight. Also known as Free Zones, Free Zones are secure areas under the supervision of U.S. Customs and Border Protection (CBP), but considered outside of CBP territory. This, in turn, can provide significant duty savings to US manufacturers and distributors.
Both foreign and domestic goods can be moved into an area for operations that include storage, assembly, manufacturing, and other processing. Area procedures state that payment of duty on products is not required until the merchandise has entered CBP territory for domestic consumption. The importer then has the option of paying duty at the lower rate either on the original foreign materials or on the finished product.
“It’s a huge value for any shipper in the world to have access to these free zones so that they can defer their taxes and duties; it frees up a ton of capital that they can use for other things for up to 36 months,” Vickers said. “Right now is perhaps the most difficult time to find a warehouse for groups that have this kind of capacity.”
SB Free Trade Zone, a segment of SBGroup, also has an IMMEX license, allowing SBGroup to temporarily import raw materials, machinery and goods needed for production or repair on behalf of its international customers.
Saucedo added that an IMMEX license allows its overseas suppliers to import duty-free under SBGroup’s bond, allowing products to be stored in their warehouses for up to 36 months before delivering them to their production line. end customers, such as an OEM.
Combined, Saucedo said the FTZ and IMMEX license allows SBGroup’s bonded products to be held in Mexico for up to 60 months before needing to be delivered to stores or a production line, or re-exported to another country.
“It’s ideal for an international shipper to use a 3PL like SBGroup, which is perhaps one of the few groups that has the ability to defer taxes during all this supply chain congestion,” Vickers said. , adding that he had received quite a few questions from international shippers, many of whom have manufacturing ties to China, who are considering moving their logistics operations to Mexico.
Shipping to Manzanillo has proven to be an effective alternative for many SBGroup logistics customers. Upon arrival, Saucedo said the containers do not stay more than two days at the port, often being moved the same day to SBGroup’s free zone in Jalisco.
“The average time it takes to unload a container from the ship and deliver it to the US Midwest takes us between nine and 14 days,” Saucedo said. “In most cases, when volume permits, we convert three 40-foot containers to two 53-foot trucks bound for the Midwest.”
However, transporting goods through Mexico is not without risk, as the country is notorious for cargo theft in certain areas, especially near the border. In addition to its advanced security and monitoring systems, SBLogistics’ risk management department has further mitigated risk by developing a global insurance solution for its customers’ shipments, T90.
T90 provides coverage on overseas shipments entering Mexico using any of SBGroup’s bonded models, including IMMEX, FTZ, or inland ports. Coverage is provided from the international portion of the shipment up to 90 days of stay in one of its warehouses until it is delivered to its final destination within the country or shipped out of the country.
“We invite our LTL colleagues to use SBGroup to provide a borderless solution to their customers and start using our free zones as a new port of destination,” Saucedo said.
“It’s great to see SBGroup customers finding value in shipper interest freight insurance through the program that Reliance Partners has helped put in place,” Vickers said. “As our partnership continues to grow, I see groups that bring cargo to port begin to come to SBGroup for cargo insurance for all their cargo, which in turn enables SBGroup to provide better risk management of the cargo in their custody.”
Similarly, Reliance Partners’ Borderless Coverage program provides all-risk insurance to the shipper of the load from the time of pickup through final delivery, regardless of mode. Protecting against theft of goods and damage, this coverage can be used per shipment or per project for high value Mexican and international shipments.
Click for an annual Borderless Coverage policy quote by Reliance Partners.
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