Road Logistics

Borderlands: Why does innovation stop at the Mexico border?

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Why does innovation stop at the Mexico border?; Arkansas trucking operation expands into Texas; Samsara releases fuel efficiency report; and VW begins exporting Taos from Mexico.

Why does innovation stop at the Mexico border?

While working at Coyote Logistics, Matt Silver said one of the most important things he learned about United States-Mexico trade was that there wasn’t a transportation management system (TMS) that could handle cross-border freight.

“It was like fitting a square peg in a round hole,” said Silver, who is the co-founder and CEO of FreightTech firm Forager. 

Silver began working about 10 years ago at Coyote Logistics, the brokerage his father, Jeff Silver, founded in 2006 and sold to UPS in 2015. Silver said he learned a lot working at Coyote, where he helped build out the Mexico department.

“I learned a lot about the unique headaches and challenges faced by North American shippers,” Silver said. “It’s the reason I started Forager, to address some of those challenges with new and innovative technology.”

Forager is a Chicago-based cross-border logistics technology platform founded in 2018. Forager launched SCOUT, the company’s cross-border booking and pricing platform, in October 2019 to address the gap in technology. 

“We built the TMS, SCOUT, to manage cross-border freight and put a marketplace on top of it,” Silver said.

Mexico was the United States’ second-largest goods trading partner, with $538.1 billion in total (two-way) commodities traded during 2020, according to the U.S. Census Bureau. China was No. 1 at $558.1 billion and Canada was third at $525.8 billion.

More than 6.3 million commercial trucks crossed the U.S.-Mexico border during 2020, including almost 3 million through the border crossing in Laredo, Texas, according to the U.S. Bureau of Transportation Statistics

Outbound tender volume in Laredo, Texas, (OTVI.LRD) climbed slightly week-over-week and increased moderately year-over-year.(Chart: FreightWaves SONAR. To learn more about FreightWaves SONAR, click here.)

Silver said one of the challenges for cross-border shipping he noticed while at Coyote was that technology innovation often stopped at the U.S.-Mexico border.

Since 2015, venture capital firms have invested around $28 billion in logistics startups, according to a report by McKinsey & Co. 

Silver said that venture capitalists investments and corporate investments in logistics startups could be much higher, as high as $160 billion in the last three years alone.

“Most of the technology investment is happening north of the border in the U.S. All the money that’s been invested in Convoy and Loadsmart, Transfix, even Uber Freight, there’s just a lot of people chasing after the domestic market and very little investment has gone into the cross-border market,” Silver said. “There’s not been as much investment for cross-border yet because not a lot of people understand it.”

Silver said the confusion and complexity of cross-border Mexico freight lies in the number of different entities involved. 

In a domestic shipment, there is usually one carrier, a pickup point and a final destination. A standard U.S.-Mexico cross-border shipment involves a pickup facility, Mexican carrier, border transfer carrier, Mexican customs broker, U.S. customs agent, U.S. carrier and final destination facility.

“All the different parties across different countries, different systems, makes it really hard to organize your own thoughts around anything, let alone organize all the information in the shipment,” Silver said. “We’re over here focused on the complexities of cross-border freight as kind of the clear leader in this space at this point from a tech perspective.”

Forager recently launched a cross-border

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Borderlands: Why does innovation stop at the Mexico border?

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