Freight Bottlenecks Spotlight Need for Faster Payments at US-Mexican Border

The United States-Mexico cross-border trade route is one of the largest in the world, but importers and exporters still face a challenge in moving cargo between the two countries.

Like all international trade, it’s complicated — involving anywhere from eight to 12 different stakeholders.

“A big portion of that is not only making sure that you connect the right parties and you centralize communication, but how money flows between those parties,” Anaid Chacón, head of product at Nuvocargo, told PYMNTS.

Nuvocargo helps simplify this process with an all-in-one digital platform focused on U.S.-Mexico cross-border freight trade. The company announced June 18 the addition of a platform that helps streamline invoicing and payments for motor carriers.

“At the center of Nuvocargo, we have the platform that helps us connect and build this marketplace experience,” Chacón said. “And then also how do we facilitate those payments between those different parties, understanding there’s definitely latency happening between each one of those transactions and we need also documentation to prove that services were provided, etc.”

Getting the Most out of Carriers

The amount of traffic through this trade lane has increased since the start of the pandemic as companies that used to source goods in Asia and bring them through West Coast ports are now looking to Mexico for suppliers.

As they undertake this “nearshoring,” importers and exporters must learn to work within a different regulatory framework — and transition from maritime to over-the-road freight.

While the numbers fluctuate, about seven out of every eight loads on this trade lane are going northbound while only one is going southbound. Carriers, then, are looking to maximize the utilization of their equipment by not having an empty trailer.

“Truckers get paid by the mile, and if they don’t have cargo, that’s a thing that is hitting their bottom line,” Chacón said. “So, as a two-sided marketplace, we’re looking to also make sure that we’re maximizing the utilization of carriers as one of our value propositions.”

Keeping Track of Details

Another challenge for carriers is keeping up with all the invoices they need to issue and the proofs of delivery. Shippers won’t pay a carrier or Nuvocargo unless they see a proof of delivery, Chacón explained.

This paperwork takes carriers one to three hours every day, and record-keeping is difficult. Some try to get by using email and taking pictures of receipts they get from drivers.

With a digital experience, on the other hand, documents can be uploaded, carriers can see what is pending and what is a due date, and those one to three hours a day can be reduced to minutes.

“By consequence of that, carriers get paid faster because the sooner we get that information from them, the sooner we can also invoice the invoice to the shipper and get paid on our end to close the transaction,” Chacón said.

Easier Working Capital

The platform also facilitates Nuvocargo’s offering of QuickPay, a cash advance product that allows carriers to receive payment two days after they upload the proof of delivery, rather than the traditional 30 days or 90 days.

“We know that one of the biggest pain points that [carriers] have is that access to capital,” Chacón said, adding that it’s especially important at this time of spikes in gas prices and unpredictability of demand.

Overall, Chacón said, speeding up the handling of documents and payments gives shippers reassurance and a better service experience and carriers access to capital for a service they’ve already provided.

Providing Visibility

Another challenge for carriers is visibility — knowing where things are at any given point in time. Most loads are not going between facilities owned by the same company; they’re transactions in which there’s a third party involved that must know when the cargo is going to arrive at the warehouse.

Nuvocargo gathers this information with bilingual agents who are constantly tracking and talking to dispatchers. The company is also working on integrations with GPS.

It’s especially difficult to track cargo at the border, so Nuvocargo has hired a person as head of customs who will contribute to adding visibility there.

“Our mission, the reason why Nuvocargo exists, is to empower companies to simplify trade across the Americas,” Chacón said. “So, for us, we started as only brokerage and connecting carriers to shippers, but we do see this border piece, this access to capital, both for shippers and carriers, as a very important piece, and also insurance — I think it’s something that we’re working to incorporate into our offering.”

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