Cargo Insurance Vital for U.S.-Mexico Cross-Border Trade Amid Rising Thefts

Cargo insurance emerges as key for cross-border operators in U.S.-Mexico trade, as cargo thefts rise and logistics complexities increase.

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el seguro de carga es vital para el comercio transfronterizo entre ee.uu. y méxico

The U.S.-Mexico cross-border trucking and trade sector is facing significant challenges with cargo theft, making cargo insurance increasingly important for businesses operating in this area. According to Reliance Partners’ Mexico Cargo Hijacking Data Portal, there were 6,030 incidents of cargo theft in Mexico from January to September 2023, an 8% increase from the previous year.

This rising concern is particularly relevant as Mexico has overtaken China as the U.S.’s top trading partner, with $656 billion in two-way trade reported from January through November 2023. Given that 70% of this trade is conducted through trucking, understanding and managing the risks associated with cargo transportation is crucial for brokers, carriers, and shippers.

Mark Vickers, executive vice president at Reliance Partners, emphasizes that large carriers often win cross-border contracts due to their comprehensive risk management strategies, including cargo insurance. Smaller brokers and carriers, however, face challenges in competing against larger firms due to higher insurance rates and less standardized risk management practices. Despite these hurdles, proactive offerings of Mexican cargo insurance and highlighting risk management protocols can help smaller entities secure business, especially if their rates are competitive.

Liability insurance, not being a requirement in Mexico, poses another layer of complexity. The liability for undeclared merchandise value is capped at a meager $90.52, making liability actions rare. This scenario underscores the importance of comprehensive cargo insurance for cross-border operations.

Reliance Partners, a prominent trucking insurance provider, founded by Vickers as Borderless Coverage in 2018, addresses this gap by offering a product that supplements global policies and self-insurance programs. This approach encourages better collaboration within the cross-border supply chain.

The rise in cargo theft and the strategic shift in global supply chains to Mexico due to the U.S.-China trade war and the United States-Mexico-Canada Agreement have led to a greater demand for cargo insurance. This insurance is now more accessible and cost-effective, with a 500% increase in usage since the pandemic’s onset.

Despite these measures, the persistence of cargo theft in Mexico necessitates more robust government action. The Mexican Alliance of Carrier Organizations has even threatened strikes due to violent hijackings and inadequate governmental response. Vickers stresses the need for a more aggressive stance from federal and state authorities in Mexico to address this ongoing issue.