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Cheers To Cross-Border Trucking

|Includes:ArcBest Corporation (ARCB), YRCW

The arrival of NAFTA heralded a new era of prosperity for North America.  The years since this landmark free trade agreement have allowed economic links on this continent to deepen and mature, especially in the transportation sector

The U.S. is making Mexico an offer it can hardly refuse.  A new trucking agreement will make it easier for Mexican trucking firms to operate in the U.S.  This move is long overdue.  Canadian truckers already enjoy such an arrangement, so extending the terms to Mexico furthers the harmonization of transportation rules across the continent.  Removing impediments to cross-border shipping will make it easier for shippers to forecast their logistics costs and track deliveries.

The details of the official proposed framework should allay any fears that Mexican truckers will pose traffic hazards or undercut U.S. truckers' margins.  The agreement will require Mexican firms to meet U.S. standards in safety and environmental impacts.  Inviting Mexican firms to compete on those terms will raise the quality of long-haul delivery service. 

Opposition to the proposed framework is already stirring.  Protected groups always fear innovation and competition when their sinecures are threatened.  They should examine the hard facts that harmonization of cross-border trade through NAFTA has contributed substantially to economic growth for all three participating nations.

Extending U.S. trucking standards to Mexican truckers can potentially provide opportunities for U.S. truckers.  YRC Worldwide's logistics division could see growth in the freight-forwarding traffic it handles if Mexican truckers are allowed to backhaul goods from the U.S.  Arkansas Best may benefit if its partnership with a Mexican carrier gives it more transshipment options across the border. 

The free flow of trucking across the U.S.-Mexico border will be a boon for trade once the final details of this program are confirmed by both sides.  A permanent agreement should require Mexico to lift any tariffs it imposed in retaliation for the U.S.'s elimination of the earlier pilot program.  That in itself will be a welcome development for American exporters. 

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Stocks: ARCB, YRCW