Simplifying Cross-Border Freight with Borderless Coverage

Live from the Future of Supply Chain event in Atlanta, Mark Vickers, Executive Vice President and Head of International Logistics at Reliance Partners, discussed the complexities of cross-border insurance and cargo liability in Mexico on FWNOW.

Understanding Cargo Insurance in Mexico

In the United States and Canada, cargo insurance is heavily regulated. The Federal Motor Carrier Safety Administration (FMCSA) in the U.S. mandates that most trucking companies carry $750,000 in cargo insurance. However, Mexico operates quite differently, earning its reputation as the “Wild West” of cargo insurance due to the lack of standardization.

Vickers explains, “Few insurance markets cover Mexico because Mexican carriers lack the equivalent of carrier insurance seen in the U.S. and Canada. In the U.S., carriers typically have $100,000 of cargo insurance, and Canada has similar requirements. In contrast, Mexican law holds carriers liable for just 14 cents per pound, with their responsibility capped at under $4,000 regardless of the load’s value. This means a load worth $1-2 million or even $25,000 is only insured based on its weight.”

Challenges in Cross-Border Freight

Cross-border freight has always posed challenges. Securing insurance is costly and often involves multiple parties—shippers, Mexican carriers, and insurance agents—leading to higher margins due to communication hurdles. Educating shippers about these varying regulations can result in significant savings for companies involved in international trade with Mexico.

Traditionally, freight brokers have handled cargo liability in Mexico by requiring shippers to sign waivers of liability. This meant the freight would move across the border, but brokers bore no responsibility once it crossed. This setup was far from ideal for shippers.

Reliance Partners’ Borderless Coverage Solution

Reliance Partners has introduced a borderless coverage solution to address these issues. Vickers describes it as a shipper’s interest cargo insurance product that pays the shipper directly for the full value of the cargo, then seeks reimbursement.

The borderless coverage involves several steps: a U.S. carrier transports the shipment to a U.S. inspection warehouse, a drayage carrier moves it across the border to another inspection warehouse, and finally, a Mexican carrier delivers it to its destination. Previously, any claims arising after multiple companies handled the shipment could be entangled in disputes for months or years. Now, with borderless coverage, Reliance Partners covers the shipper for the full value of the claim, regardless of where it occurs.

Implementing the Borderless Coverage

Vickers advises companies interested in this new offering to first secure business before building a program. He suggests finding a client already doing well with U.S. freight and exploring their cross-border needs with Mexico. “Listen to all their specific requirements, give us a call, and we’ll help you win that business,” Vickers recommends.

Given that Mexico has been the top trading partner with the U.S. for most of last year and every month this year, having a cross-border solution is essential. Vickers concludes, “If you’re not already responding to client requests of, ‘Can you handle our Mexican freight?’ you’re way behind the curve.”

Learn More

To discover more about Reliance Partners’ innovative insurance solutions, visit Borderless Coverage.