PCCA - Plains Cotton Cooperative Association Logo PCCA Commentator Magazine Masthead. Vol. 31, No. 1 | Spring 1998

Laredo, Texas: The Gateway to Mexico for Texas and Oklahoma Cotton

Laredo, Texas

Photo Courtesy of J. Michael Short

Laredo, TX, is far from the stereotypical sleepy border city. In fact, it is a bustling beehive of commercial activity, and every bale of cotton sold to Mexican textile mills by Plains Cotton Cooperative Association (PCCA) passes through this rapidly growing city.

Thanks to trade agreements such as NAFTA, Laredo now is the largest land port in the United States, handling 35 percent of all U.S.-Mexico trade that crosses the border. According to U.S. Customs figures, more than one million northbound and southbound trucks crossed Laredo’s two bridges designatedfor commercial traffic in 1996, and this number continues to grow.

According to Laredo’s Chamber of Commerce, the number of truck crossings could increase to two million by the year 2000 based on a conservative 20 percent rate of growth. This current and projected future volume of traffic is due primarily to the city’s location at the southernmost point of Interstate 35, making Laredo one of the most important pieces of real estate on the U.S.- Mexico border.

These reasons are why Laredo and its business community play an important role in PCCA’s export sales to Mexico’s textile industry. The process of moving cotton across the border involves a complicated maze of bureaucracy despite the best intentions of recent trade agreements. Fortunately, an entire industry exists in Laredo to help facilitate trade and the transfer of freight across the border.

Shipping cotton to Mexico involves more than just contracting with a carrier (trucking company). In fact, U.S. trucks seldom, if ever, cross the border due to a number of factors including documentation requirements, insurance and restrictions that prohibit them from traveling more than 26 miles into Mexico.

Laredo-based companies that assist exporters such as PCCA include freight forwarders, customs brokers and trans-shippers, and they number in the hundreds, according to the Laredo Chamber of Commerce. They have turned international trade into an art.

The process goes something like this. PCCA receives payment arrangements from its Mexican buyer. Next, the cooperative’s traffic department issues shipping instructions to the coop warehouses in Texas and Oklahoma where the cotton is located. U.S. carriers then are secured to haul the cotton to Laredo. The documents required for customs clearance between the U.S. and Mexican borders are sent to a freight forwarder located in Laredo prior to the cotton being delivered to them. When the cotton arrives in Laredo, it is off-loaded at the freight forwarder or the carrier’s facility and loaded onto a Mexican trailer. The forwarder then inspects the cotton received and matches the appropriate customs clearance documents sent by PCCA with the load.

The documents required to ship cotton into Mexico include a commercial invoice, phytosanitary certificate, shipper’s export declaration, and NAFTA certificate of origin for each truckload. The forwarder must also receive power of attorney from the Mexican mill to utilize the import permit containing the mill’s RFC number (Mexican IRS number), corporate physical address, and corporate seal.

Forwarders take these documents to all appropriate Mexican government offices to be stamped and to pay the necessary duties and fees. Next, the truckload of cotton is moved across the border for delivery to the Mexican mill. The entire process can take several hours, if not days without careful planning.

Due to the complicated nature of the process, PCCA’s sales staff maintains a close and personal relationship with these forwarders and carriers. It is necessary to ensure that cotton moves efficiently into Mexico and is delivered to the mills on time.

One of the freight forwarders PCCA works with on a daily basis is S.R. Forwarding, Inc., with offices in both Laredo and Nuevo Laredo. This 12- year-old company with 28 employees estimates it handles 116 truckloads of freight per day, almost half of which are carrying U.S. cotton.

S.R. Forwarding may be unique in that it does not have to go elsewhere for inspections, thus providing faster service for its customers. A good example is an on-site laboratory authorized and approved by the Mexican government four years ago. This feature enables officials from the Mexican Department of Agriculture to come to S.R. to issue or approve phytosanitary certificates for cotton every week.

Once the necessary documentation is in hand and a Mexican carrier hauls the cotton across the border, the forwarder then faxes a “pedimento” to PCCA. This document is necessary for the cooperative to collect Step 2 payments for cotton exports, when applicable, under the U.S. farm program’s competitiveness provisions.

On any given afternoon at approximately 3:00 p.m., a line of trucks, in an almost daily ritual, begins forming in the left southbound lane of Interstate 35 starting at the Juarez-Lincoln Bridge. By 7:00 p.m. this line may extend four or five miles northward waiting to cross the Rio Grande into Mexico. They inch forward one truck-length at a time as the cumbersome process of customs clearance is completed. It is further complicated by massive road construction projects underway to improve Laredo’s transportation system.

Despite the complicated procedures, U.S. cotton seems to move smoothly into Mexico. During fiscal year 1996-97, PCCA shipped 54,840 bales to its textile customers there, and during the first six months of fiscal 1997-98, almost 40,000 bales have been shipped.

Much of the credit goes to the diligent and constant oversight by PCCA’s sales staff and excellent relationships with the many companies they must deal with in Laredo. These efforts translate directly into more money paid each year to the cooperative’s members.