Uncontained Growth.

Increased U.S.-Mexican trade lends new meaning to "out of the box" thinking.

MANUEL RESENDIZ KNOWS SHIPping depends on getting cargo aboard the right truck, ship or airplane at the right time. New technology like the Internet and improved infrastructure in Mexico are making his job easier Yet the distribution manager for Polaroid de Mexico still grapples with problems--including a lack of containers.

"When it comes to infrastructure, most of the attention is being focused on ports, which are using better equipment to load and unload vessels faster," says Resendiz. "Storage areas at ports are also being improved, but inland infrastructure is not improving to the same degree."

Trucks transport about three-quarters of U.S.-Mexican trade, so poor border facilities cause serious headaches. Worse yet, a short supply of containers means Resendiz and other logistics managers often must transport cargo to a port and pack it into boxes there, instead of at their warehouses or factories.

How bad is the problem? According to Resendiz, only one in 10 of Polaroid's 20-foot, refrigerated containers are loaded directly at a plant or warehouse; the rest of the so-called reefers are packed at the port. While six in 10 of the larger, 40-foot refrigerated containers are loaded at the plant, it's still not common to move them empty to plants. The situation is only a bit better for standard 20-foot containers--a third of these "dry" containers are loaded inland.

California-based Mission Produce, which uses refrigerated containers to export avocados and other produce, reports similar problems. "We encounter a lack of equipment up to 15% of the time," says Jim Donovan, vice president of international operations for Mission Produce. "In those situations, our choices are either to truck it to the port or wait until the next available container, which is even less desirable."

Global sourcing of raw materials accounts for some of the container crisis. Steve Muschenheim, an agent at Parker and Company, a logistics provider in Brownsville, Texas, says there are strategies to save money when moving containers into Mexico. For example, many maquiladoras that source supplies worldwide have full containers unloaded at warehouses on the border so that they can return containers immediately and, perhaps, also save on cargo insurance. This practice, however, creates "out of the box" cargo and strains the local supply of containers.

A lack of proper handling equipment also contributes to inland container shortages. "Few companies have the equipment to remove containers from their chassis," says Resendiz. For many loads, that means one container or trailer is simply traded for another, preventing trucks from taking other loads. Some warehouses do not have level loading or covered docks to protect sensitive goods during rain, wasting still more precious time.

And time is, literally, money since shippers pay for containers until they are returned. Tight scheduling to keep boxes moving is difficult, says Resendiz, because systems are just not in place in Mexico as a whole. "Cost is also a factor," he says.

One thing is abundantly clear: until Mexico can solve its container shortages in key transportation centers, uncontained cargo will continue to slow deliveries and increase costs for shippers.