Insurance Practices in Mexico
Cargo moving between the U.S. and Mexico is considered international freight which is governed by international laws of commerce and carriers have limited cargo liability. U.S. insurance is NOT valid in Mexico. It is illegal to contract foreign insurance firms (i.e. any insurance firm outside of Mexico) to cover risks in Mexican territory. U.S. common carrier liability protection applies only within U.S. borders. If cargo protection is desired in Mexico, customers must purchase cargo insurance for shipments within Mexico from a Mexican insurance company or broker.
U.P. offers $250,000 cargo liability while on UP lines. Mexican law substantially limits the cargo insurance in Mexico. The shipper or receiver may obtain coverage or additional coverage on the unit in Mexico through their Mexican Customs Broker or an outside insurance agency in Mexico.
Restrictions apply to certain commodities moving in EMP containers in doublestack service. Restricted commodities require a SAGAR permit or a license from the Mexico agricultural department and may move into Mexico on UPRR via our Passport product. For more information regarding restricted commodities, please refer to Double Stack Services.
Goods are classified as hazardous if they may cause or significantly pose a substantial hazard to human health or the environment when improperly packaged, stored, transported or otherwise managed. Because they can be extremely dangerous in the event of an accident, their movement is highly regulated. Any commodities officially classified as hazardous are assigned a STCC number that begins with 49. Shipments of hazardous materials to and from Mexico are assessed a surcharge per MITA2.
A Fianza permit is required to move U.S. equipment to Mexico for a specified period of time (30 days). The Mexican rail or motor carrier is responsible for obtaining the Fianza permit from the Mexican government. The Mexican government assesses fines after the permit expires to the Mexican rail or motor carrier.
Parties at the Border
When exporting to Mexico, a customer needs the services of a licensed Mexican Custom Broker (MCB). Usually, a MCB operates on the U.S. side as a Freight Forwarder and has office space and warehouse facilities to perform transloading, warehousing and distribution. In most cases, the MCB and the USFF are one and the same. When importing from Mexico a customer needs the services of a licensed MCB and a licensed U.S. Customs Broker (USCB). Below are description of each - U.S. Freight Forwarder (USFF), MCB and USCB.
- U.S. Freight Forwarder
A USFF has office space and warehouse facilities in the
They are the agent for the shipper in the U.S. when goods are exported to U.S. . A USFF has facilities to perform transloading, warehousing, and distribution for their customer's needs. Their function is to ensure compliance on foreign import regulations and ensure that shipments are properly identified in the Customs documentation. In the majority of cases, the USFF is an extension of the MCB. In those instances where they are not, they contract a licensed MCB and work under their license to service the customer. Mexico
- Mexican Customs Broker
An MCB is an agent licensed by the Mexican government to represent customers in
for both import and export shipments to and from Mexico . Their function is to make sure the customer in Mexico imports or exports the commodity under the proper classification as specified by the Mexican Customs tariff and pays the proper corresponding duties to the Mexican government. Mexico
- U.S. Customs Broker
A USCB is an agent licensed by the U.S. Department of the Treasury to transact Customs business. Customs business is activities concerning the entry and admissibility of merchandise into the
, its classification and valuation, and the payment of duties, taxes or other charges assessed or collected by Customs. U.S.
With a duly signed power of attorney, the receiver/importer authorizes the broker to act as their agent. It is the broker's fiduciary duty to inform their client of all pertinent regulations and the manner by which to comply with the same. The broker will obtain the required documentation for implementation and classify the products being imported to obtain the applicable duty rate. They will present the required declarations and the "entry package" to Customs for release.
The required Customs documentation and information needed for prompt import and export clearance are as follows:
- Signed power of attorney form from the U.S. shipper/receiver and a signed Carta de Encomienda form (power of attorney) from the Mexican receiver/shipper
- Federal identification number or Registro Federal de Contribuyentes (RFC) of the client
- Signed complete commercial invoice
- Additional declarations and forms pertaining to a specific commodity
- Verify compliance with any and all federal agency requirements (i.e. FDA, USDA, DOT, FCC, ICC, EPA, ATF, DEA, FTC, etc. and their Mexican equivalents)