Friday, June 28, 2013

From New Hours-of-Service FAQs

Unless the courts step in and rein in new hours of service rules, they are set to take effect on July 1. J.J.Keller & Associates has put together some frequently asked questions and answers about them:

Who is affected by the new hours-of-service rules?

The new federal hours-of-service rules, with a compliance deadline of July 1, 2013, apply to drivers and motor carriers who are operating commercial motor vehicles and either:
  • Are engaged in interstate commerce and have to comply with the FMCSA’s (federal) safety regulations in 49 CFR Part 395; or
  • Are engaged in intrastate commerce — conducted entirely within a single state — and that state has adopted and enforces the new federal HOS regulations
Although portions of the new rules apply to passenger-carrying vehicles (specifically, some of the changes that took effect February 27, 2012), the changes taking place on July 1, 2013, apply only to drivers of property-carrying vehicles.

What are the compliance dates for the new hours-of-service rule?

The hours-of-service final rule was published December 27, 2011. The effective date was February 27, 2012; however, not all the new provisions had to be complied with at that time. The rule included two separate compliance deadlines:
February 27, 2012 (all CMVs): 
Effective February 27, 2012, drivers resting in a legally parked vehicle and not using the sleeper berth — whether a bus or a truck — are allowed to log the time as “off duty.” Truck drivers will also be able to log off duty for up to 2 hours riding in a passenger seat on a moving vehicle immediately before or after spending at least 8 consecutive hours in a sleeper berth.
July 1, 2013 (property-carrying CMVs only): 
Beginning July 1, 2013, the driving of a property-carrying CMV will not be permitted if more than 8 consecutive hours have passed since the end of the driver’s last rest break of at least 30 consecutive minutes. If the driver has not had at least a 30-minute break by the end of his/her eighth hour, the driver must take a 30-minute break before driving. A lunch break or time resting in the sleeper berth will satisfy this in most cases.
The biggest change will be in the reduction of hours a driver will be allowed to log in a 7-day (168-hour) period, due to changes in the 34-hour “restart” provision. The current rule allows a driver to work right up to his or her 60- or 70-hour limit, take a 34-hour restart, and then go again. This allows a driver to accumulate up to 82 working hours in a 7-day period.
As of July 1, 2013, the new rule will limit the maximum number of hours a driver can work and drive to 70 hours per week, by limiting when and how often a driver can take a “restart.”
One change will require that the restart break include two back-to-back nighttime periods of rest from 1:00 am to 5:00 am, which could force some drivers to be off duty for longer than 34 hours to get a valid restart.
Another change will limit the use of the restart to once in any 168-hour period (exactly 7 days, down to the hour). The rule specifically says that a driver cannot start another restart break until 168 hours have passed since the start of his or her last restart break.
Also, if a driver has multiple potential 34-hour restart periods off within a 7-day period, the driver will need to indicate on the log or time records which one of those breaks is being counted as the restart, if any.

Early compliance with 2013 rules 

As these new rules are stricter than the ones they are replacing, voluntary compliance was allowed with all the new 2013 provisions beginning February 27, 2012.

Where can I find the new provisions?

The changes that most drivers and carriers need to worry about are found in:
  • 49 CFR Sec. 395.2, under the definition of "on duty time"; and
  • 49 CFR Sec. 395.3, the basic HOS limits for drivers of property-carrying vehicles.

Is there a grace period for compliance?

No. Compliance with all provisions in the new hours-of-service rules is required as of 12:01 a.m. on July 1, 2013. Individual enforcement officers or agencies may choose “soft enforcement” for a period of time after July 1, but that is not official or guaranteed.
In part, this means that drivers taking a restart break after July 1 will need to make sure that the break does not begin until 168 hours after the last restart break, even if that last break was taken prior to July 1.

Will the courts delay the July 1 deadline?

A decision in a pending legal challenge to the new hours-of-service rules is expected any day from a federal appeals court. The decision may or may not arrive before July 1 (the court does not have to meet a specific deadline), and the decision may or may not have any effect on the compliance deadline or the hours-of-service rules.
Motor carriers and drivers should be prepared to comply with the HOS rules on July 1, but watch for news concerning the court decision.

How do the new ‘off-duty’ provisions work (as of 2/27/12)?

  1. Time spent resting in a parked vehicle (including any type of vehicle, whether truck, bus, car, etc.) can be recorded as “off duty” (unless you are in a sleeper berth, in which case it would have to be recorded as “sleeper berth”). Unless you spend 10 consecutive hours off duty (which may include sleeper-berth time), the time will count against your 14-hour allowance; it will not “stop the clock." 

To record such time as “off duty,” the driver must be free of responsibility and obligations to the employer, vehicle, and cargo during the break and must be free to walk away from the vehicle if he/she so chooses. If the company requires the driver to stay in the vehicle or perform work during the break, it must be recorded as “on duty” even if the driver is sitting in a parked vehicle.
  2. If you spend up to 2 hours riding in a passenger seat on a moving property-carrying CMV immediately before or after an 8-hour sleeper-berth period, then that time can be recorded as “off duty” AND be excluded from the 14-hour calculation. This should benefit team drivers who no longer have to spend a full 10 hours in the sleeper berth; they can spend 8 hours in the bunk and another 2 hours riding in a passenger seat. Time spent in a moving passenger seat beyond 2 hours must be recorded as “on duty” unless the vehicle is parked and the driver is off duty.

Does a driver need a 30-minute break every 8 hours of driving?

The 8 hours are consecutive hours, so they include driving and all other time (including any breaks that are less than 30 minutes). The new rule says you have to stop driving CMVs once you reach 8 consecutive hours past the end of your last break of at least 30 consecutive minutes.

If a driver won’t be driving after the 8th hour, does he or she need a break?

No, not under the federal HOS rules. The rules only restrict drivers from driving a property-carrying CMV after 8 hours without a break. If a driver will be working but not driving a CMV after 8 hours, then no break is required.

How do you log the 30-minute break?

To be counted as a valid break (for compliance with the 8-hour/30-minute rule), it must be logged "off duty" or "sleeper berth." Any time that must be logged as “on duty” based on the definition of “on duty time” in section 395.2 cannot count as a valid break (except in the case of certain drivers transporting explosives who must “attend” the cargo and can use attendance time as their break). In general, to be “off duty” the driver must be free of all obligations and responsibilities and free to leave the premises.
Note that any kind of “off duty” or “sleeper berth” time will satisfy the rule. For example, a lunch break, a 10-hour break, time spent resting in a sleeper berth (even if used for the “split sleeper” option), or time spent resting in a parked vehicle will satisfy the break requirement in most cases. The key is that drivers must be relieved of all duty and responsibility and be free to walk away from the vehicle and cargo for the duration of the break.

Might some drivers need more than one break each day?

Yes. Drivers who work long days or who take the 30-minute break too early may need two or more breaks in one day. For example, a driver who takes the break after the first hour of the day and who has another 9 hours of driving ahead will need a second break within 8 hours after the end of the first break. The longer the work day, the more likely a second break could be needed (especially if the first break is taken too early).

How does the 30-minute break affect the 14-hour rule?

The 30-minute break must be spent “off duty” and/or in a sleeper berth, but no matter how it is spent it must be counted as part of the driver’s 14-hour allowance. The driver does not get 14 hours of on-duty time in addition to the 30-minute break. It takes 30 minutes out of the driver’s 14 available hours. The breaks will not extend the 14-hour window.

Do drivers who are exempt from logging need the 30-minute break?

Yes, drivers using the “100 air-mile radius” or “non-CDL 150 air-mile radius” provisions in section 395.1(e) and operating property-carrying CMVs after the 8th hour of the day are required to take the minimum 30-minute break. However, because these drivers are not required to maintain logs, the FMCSA says they are not required to record the break periods. The breaks should not be included in the drivers’ total on-duty hours for the day, however (since they must be spent “off duty”).

Do oilfield drivers need the 30-minute break?

Yes. Drivers using either of the oilfield exceptions in Sec. 395.1(d) are required to comply with the 30-minute rest-break requirement. Drivers eligible for the “waiting time” exception (305.1(d)(2)) can use off-duty waiting time as their break.

Do hazmat drivers need to take the mandatory break?

Yes. Drivers hauling hazardous materials are subject to the requirement for a mandatory 30-minute break, and it must be spent “off duty” unless transporting Division 1.1, 1.2, or 1.3 explosives. Drivers transporting these explosives must remain “on duty” at all times while “attending” the load (see Sec. 397.5), so they are allowed to show their mandatory breaks as “on duty” as long as they enter a remark on the log to designate a 30-minute period as their break. No other work (other than attending to the load) can be performed during the break.
Other hazmat drivers who are required to attend their loads while operating on public highways under Sec. 397.5 must be allowed to go “off duty” for their breaks.
Note that certain drives hauling radioactive materials and who are operating under contract with the Department of Energy have been given an exemption that allows them to use the exception granted to drivers transporting explosives (see Sec. 395.1(q)).

Does the 30-minute break apply to drivers of passenger-carrying vehicles?

No. The 30-minute break requirement only applies to property-carrying CMV drivers.

Under the new rules, is the 34-hour restart provision still optional?

Yes. Even after compliance with the new rule is required in July 2013, the restart provision will still be optional, like it is today. For example, a driver who works 8 hours per day, 7 days per week, would never need to use the restart provision because he/she would never reach the 60- or 70-hour limit. Drivers may continue to keep a running total or “recap” of their hours over the past 7 or 8 days and “do the math” each day to determine when they may need time off before driving again. In some cases, getting a restart will be the quickest way to get back on the road.

How does the 1 a.m. – 5 a.m. provision work?

This new restriction will force drivers to get two, back-to-back, nighttime periods of rest as part of their 34-hour restart break, even if they normally work at night. Under this new rule, for a rest break to count as a “restart,” it must include the 28 consecutive hours from 1 a.m. on the first day until 5 a.m. on the following day, plus enough additional time on either end (at least 6 hours) to total at least 34 hours.
For example, a driver can get a restart by going off duty from 7:00 p.m. on Friday until 5:00 a.m. on Sunday. The break includes the hours from 1-5 a.m. on Saturday morning and again on Sunday morning and is at least 34 hours long.
Drivers will only be able to take exactly 34 hours off to get their restart if they begin their break between 7 p.m. and 1 a.m. If they start earlier than 7 p.m. or after 1 a.m., they'll need more than 34 hours off.

Does the 34-hour restart break have to be taken at the driver’s home?

No. The break can be taken in any location but it must be logged based on the time standard in effect at the driver’s home terminal.

Will the 1 a.m. – 5 a.m. constraints apply to any of the 24-hour restart provisions?

No, the changes to the 34-hour restart have no effect on any of the 24-hour restart provisions (which only apply to a limited set of eligible drivers). The 24-hour restart provisions were set in law by Congress, so the FMCSA is not authorized to change them.

How does the 168-hour-rule work?

The purpose of the 168-hour rule (according to the DOT) is to make sure that drivers cannot put in 70 hours of work, immediately take a restart, and then immediately go back to driving, week after week. This results in drivers being able to average about 82 hours per week instead of a maximum of 70.
Under this new restriction, drivers will not be able to start another “restart” break until 168 consecutive hours — exactly 7 days — have passed since the start of their last “restart” break. For example, a driver who begins a restart break at 8:00 p.m. on a Tuesday will not be able to start another restart break until 8:00 p.m. or later on the following Tuesday, even if the driver runs out of hours long before then.

What if a driver takes several “restart” breaks in a week?

If a driver takes more than one period of 34 hours off duty within a 168-hour period, only one of those breaks (if any) will count as a restart, and the driver must indicate which rest period is being used as the restart by entering a remark on the log.

Are drivers from Canada or Mexico affected by the new HOS rules?

Yes, if they operate in the United States. Drivers from Canada and Mexico who come into the U.S. will need to be in full compliance with the U.S. hours-of-service rules upon crossing the border, just like any U.S. driver. This includes the need to comply with the mandatory break requirement and the restrictions on getting a "restart."

From Hours of Service: Resetting the Clock

With just days to go before the scheduled implementation of the new and more restrictive hours of service rules, fleets and drivers need to be asking if their electronic onboard recording devices are ready for the change.

For the most part, updating to the new rules is a slam dunk," says Joel Beal, president of LoadTrek Technologies. "The big guys are already there. Some of the smaller providers, especially those using older in-cab devices could face a few challenges."
Beal says some older devices may not have enough onboard memory to accept the coding changes required by the new rules.
The way most of the code is written today, the parameters like driving time are not hard coded, instead they are variables.
"X hours of driving. You fill in the X. Could be 10, could be 11," Beal says. "You just have to type in a value and you're done. It's the same with the 14 hours off or 70-hour weekly limit. It's just a number to a programmer."
The 30-minute break could pose problems for some applications, Beal warns. "It's something we don't have now, so it's not a variable we can change in a hard-coded system. We have to create it," he says. "If you're using any recently designed (within the past five years) automatic on-board recording device that won't be a problem. Problems could arise with older units that have been around for 10 years or more. There may not enough memory to support the changes."
Fleets and independents using EOBRS or ELDs or AOBRDs, or whatever the current moniker is, should check with their providers to make sure their device can accept the update.
Rolling out the update is the easy part.
While the exact process may vary across the different brands and system networks, Alexis Capelle, the EOBR program manager for Continental Commercial Vehicles, says it will be a very easy and transparent process transparent process with VDO RoadLog.
"When we push the update out across our network, the customer will see a message advising that an automatic update is ready to install," he says. "All the customer has to do is accept it. The update will not become active until it has been accepted."
Continental says Updates are available to our VDO RoadLog customers to meet the new HOS requirements.
Beal says in many telematics systems, the updates to the in-cab devices will be equally transparent. They will be sent downstream from the main office system in the usual manner and will sit on the in-cab device until they are accepted and activated.
The activation date still remains somewhat in question. FMCSA has said in no uncertain terms it wants the change to take place as planned on July 1. A slim chance that a court could derail that plan with a decision on the rule before or even after its implementation date.
According to Capelle, even if the update is activated before July 1, and the recorder begins running on the new rules, the driver will not be in violation of the rule if they continue operating under the old rule.
"The device will be running the new hours of service rules, but compliance with the rule is not required until July 1, or when it officially comes into effect," he says.
In the case of EOBRs without telematic capability, updates will have to be physically installed on the in-cab devices before the July 1 deadline.
"Some of the programming changes will have to be handled with physical media, a card or a key," Beal says. "Some newer systems do that too, but it's not a shortage of resources, it's just the way the system is designed. Drivers "turn in their logs" on a USB stick or something like it, and the updates are delivered to the truck via the same key when the driver plugs it in again."
Due to the varying capabilities of the different systems current available, some may include alerts that drivers are approaching compliance thresholds. These aren't required by law, but they are sure nice to have. Even older systems without the advanced features can still be compliant.

From Politico: Senate confirms Anthony Foxx to lead Transportation

The Senate has just confirmed Anthony Foxx as the secretary of Transportation by a 100-0 vote.
Foxx, the 42-year-old mayor of Charlotte, N.C., has long been seen as a rising political star, especially after he helped lure the 2012 Democratic National Convention to his city.

His transportation portfolio includes a much-debated streetcar project that broke ground under his tenure. As mayor, he was involved in a controversy over whether Charlotte Douglas International Airport should be controlled by an airport authority as opposed to the city. He has also worked as deputy general counsel of a bus manufacturer that twice failed to meet commitments on stimulus-related contracts, although Foxx was never accused of being personally to blame.

Foxx’s confirmation has been uncontroversial, despite a delay prompted by questions from Sen. John Thune about DOT’s handling of the sequester this spring.

When President Barack Obama announced his nomination in April, Foxx vowed to continue the tradition of handling infrastructure investment as a bipartisan area of agreement.

“There is no such thing as a Democratic or Republican road, bridge, port, air field or rail system. We must work together across party lines to enhance this nation’s infrastructure,” Foxx said at the time.

Foxx will replace Ray LaHood, who announced in January that he would leave after a successor is confirmed.

Thursday, June 27, 2013

From Reuters: GM to invest $691 million in Mexican operations

Reuters) - General Motors Co (GM.N) outlined plans on Wednesday for investing $691 million to expand its Mexican operations, including the previously unannounced expansion of its Toluca engine plant.
The plans include a new factory in Silao in central Mexico to build 8-speed transmissions and an upgrade to an existing factory in San Luis Potosi that will make next-generation transmissions, GM Mexico President Ernesto Hernandez said.
With numerous free trade agreements, a cheap, well-educated labor force, and proximity to the lucrative U.S. auto market, combined with growing demand in South America, automakers have been lining up for two years to set up shop or expand in a country that some analysts believe could eventually overtake Brazil as Latin America's biggest economy.
"The automotive sector is today one of the pillars of the national economy, representing more than 20 percent of manufacturing GDP and continues to be, for many reasons, a fundamental industry in attracting investments to productive sectors of the economy," Hernandez said at a press conference in Mexico City with Mexico President Enrique Pena Nieto.
GM's investment will boost employment and development in Silao, San Luis Potosi and Toluca, Hernandez said. GM did not say how many jobs it will add in Mexico, where it employs 15,000 people at four complexes and its headquarters in Mexico City.
The U.S. automaker builds the Chevrolet Silverado and GMC Sierra pickup trucks in Silao; Chevy Sonic and Captiva, and Cadillac SRX vehicles in Ramos Arizpe; and the Chevy Aveo, Trax and Tracker vehicles in San Luis Potosi.
GM, which has operated in Mexico for 78 years, has the second largest vehicle output in Mexico, behind Nissan (7201.T), according to the Mexican Auto Industry Association. Mexico is the eighth largest producer of vehicles in the world.
In January, the company said it would invest $1.5 billion in its North American plants this year, as part of the $8 billion the Detroit automaker has said it will annually put into its worldwide operations.
Of the $691 million announced on Wednesday, $211 million will be spent on the expansion of Toluca, where GM builds V8 and four-cylinder engines. It did not elaborate.
Of the rest of that investment, GM will spend $349 million for a new transmission plant in Silao that will build 8-speed transmissions, and $131 million to expand the next-generation transmission plant in San Luis Potosi. GM didn't provide details on the new transmissions.
The $480 million newly announced to be spent at Silao and San Luis Potosi is part of $900 million GM in July 2011 committed to spend in Mexico. In July 2012 it said it would spend $420 million at its San Luis Potosi and Silao plants.
GM also said its in-vehicle OnStar service that connects drivers to live operators for directions or emergency help is now available on select cars in Mexico. OnStar has more than 6.5 million subscribers in the United States, Canada and China. GM previously said it planned to expand OnStar into Mexico.
The company also said it will invest $133 million to add a third stamping press at its assembly plant in Wentzville, Missouri. Construction will begin in July and GM expects the press to be operational by early 2015.
The Missouri plant builds full-size vans and will eventually add GM's next-generation midsized pickups to its lines. The press expansion will create or retain 55 jobs.

Wednesday, June 26, 2013

Some perspective: U.S. authority to four Mexican carriers

The number of Mexican trucking companies the Federal Motor Carrier Safety Administration recently  granted permanent U.S. operating authority:    4

The total number of trucks that these companies have that are participating in cross border trade:  6

From Commercial Carrier Journal: Agency grants permanent U.S. authority to four Mexican carriers

Four Mexican carriers participating in the Federal Motor Carrier Safety Administration’s cross-border trucking pilot program have been granted permanent U.S. operating authority by the agency.
It’s also preparing to publish a notice requesting comment on a new applicant for the program.
Five Mexican carriers now have permanent operating authority in the U.S. — half of the program’s participants. Another five half provisional operating authority.

Carriers are eligible to receive permanent status after 18 months in the program, barring they haven’t received unsatisfactory compliance reviews.To be admitted into the program, carriers must clear a Pre-Authorization Safety Audit. During the first 90 days of participation, all drivers and trucks are inspected each time a carrier travels beyond the border zone.
FMCSA issued permanent status May 23 to Moises Alveraz Perez, Servicios Refrigerados Internationals and Higienicos Y Desechables Del Bajio. Transportes Monteblanco also received permanent authority recently, but FMCSA did not publish what date it was granted.
Transportes Olympic has had permanent authority since the program began because of its 18–month participation in the previous pilot program.
The agency will publish June 26 a notice asking for comment on the latest applicant, Sergio Tristan Maldonado of DBA Tristan Transfer. The carrier’s applying for provisional authority for one truck and two drivers.
PASA results are pending for five additional program applicants, while FMCSA has dismissed another 13 applicants and four others have withdrawn their applications.
The Owner-Operator and Independent Drivers Association and the Teamsters Union each filed for a rehearing of its case against the program after an appeals court in D.C. ruled in favor of FMCSA and the continuation of the program.
The program’s three-year anniversary is in October.

Monday, June 24, 2013

From Forbes: Ferrari Head of North America: Mexico Is The Next China

Forget the hype about China – Mexico is the next big thing for automakers.
“Mexico is the next China,” Ferrari North America CEO Marco Mattiacci said during a panel discussion today about the future of luxury. He was joined by Burgess Yachts CEO Jonathan Beckett and Gotham Jets CEO Gianpaolo De Felice for the hour-long talk, which was held aboard the $40 million yacht KATYA berthed in the Hudson River off New York’s West Side Highway.Mattiacci said the massive growth anticipated in revenue and manufacturing didn’t necessarily pertain to Ferrari but to a broader 13-year expansion in the auto industry due mainly to dramatic wealth creation, an increased appetite for industry and from considerable investments from abroad.

“We see indicators that lot of manufacturing is moving back to Mexico,” Mattiacci said. “The quality of education is absolutely outstanding, and you have a proximity with the U.S. as well. Plus there has been a change of government.”
Indeed, Mattiacci said record sales and profits have created other challenges for the 66-year-old brand. For instance last month Ferrari boss Luca di Montezemolo announced he would reduce annual production to preserve exclusivity after it sold too many cars in 2012. Production for 2013 will be less than 7,000 cars, reduced from the 7,318 sold last year.
Exclusivity in Mexico, on the other hand, is at an all-time high.
“When we launched the new La Ferrari we are positively surprised that sadly we now have on-hand a list of 15 millionaires and billionaires who want to request that car,” Mattiacci said. “I can tell you that in 2003 when we launched Enzo in Mexico was not having that kind of request. That’s a big indicator.”

Thursday, June 20, 2013

From The Wichita Star: Mexico Tequila Market in China Drunk With Promise

 — Mexico wants China to loosen up and have a little tequila. Actually, lots of it.
Since China President Xi Jinping and Mexico's Enrique Pena Nieto broke a diplomatic and economic chill and agreed to boost trade, tequila producers have been gearing up to make the world's most populous country their second-biggest market, after the margarita-loving United States.
The drink synonymous with Mexico already is available in more than 100 countries. But export of the alcoholic beverage to China has been limited by legal and sanitary restrictions.
Chinese authorities changed their rules last week, deciding that the purest and best tequila, known as blue agave, has no detrimental health effects. That has opened the door for businesses in both countries to begin promoting and exploring ways to sell more tequila.
With the purchasing power of 1.3 billion Chinese, tequila producers see a niche market, especially among the emerging upper class.
"The potential of this industry is that in five years, we can reach 10 million liters in exports," said Ramon Gonzalez, director of Mexico's tequila promotion council. "Today's new rich are in China."
Until the change by health authorities last week, the Chinese couldn't drink the good stuff made famous by swilling cowboys in many a western on the big screen.
Because of restrictions on methanol per liter of alcohol, China had only allowed the import of lower quality tequila made with 51 percent agave sugar, the rest of the sugar a mix from other plants. The methanol content in blue agave tequila was considered too high.
Mexico exports a total of 43.7 millions of gallons (165.7 million liters) of tequila, with 80 percent of the bottles going to the United States. Little more than 108,000 gallons (410,250 liters) go to China. Mexico in the past wasn't that interested in exporting its lower-quality tequila, said Mexican Agriculture Secretary Enrique Martinez, who announced the change by Chinese health authorities on Tuesday.
"I'm convinced that we're going to be very successful," said Martinez, who led a trade delegation to China last week to help speed export of $1 billion dollars in Mexican goods over the next year. "It's a Mexican product that will conquer the preferences of Chinese consumers."
Former President of Mexico Felipe Calderon indicated in 2010 that the Chinese were willing to lift their restrictions and allow import of 100 percent blue agave tequila. But when Calderon left office last year, that still had not happened and relations had cooled after his meeting with exiled Tibetan spiritual leader the Dalai Lama.
During Xi's visit to Mexico earlier this month, the countries agreed to try to level their trade imbalance, which favors China 10 to 1.
The two presidents - and especially the first ladies - hit it off, spending the better part of three days together and visiting the Maya ruins of Chichen Itza. They made tequila and pork priorities for increasing Mexican exports to China.
The Asian country's economy is forecast to slow some this year, but at 7.75 percent growth, it remains robust by all standards.
China's ruling Communist Party is trying to reduce the country's reliance on exports and investment and nurture more self-sustaining growth based on domestic consumption. That includes trying to encourage more consumer spending on restaurants, a key driver of liquor sales.
"It is expected that the introduction of Mexican-produced tequila in the food service sector will see an initial spark in demand because of its relative novelty," said Christopher Shanahan, food and agricultural program manager for Frost & Sullivan, a U.S. marketing analysis firm, in written comments to The Associated Press.
Still, tequila producers may run into the Chinese policy of doing whatever it takes to protect national products from foreign competition, Shanahan said.
In other words, they should take the promise of an open market for tequila with a lime and pinch of salt.
So far, that's not fazing Mexican tequila producers.
"We are well-armed to enter the market, withstand the competition and stay there," said Francisco Alcaraz, international director of Tequila Patron. The company, dedicated almost entirely to exports, already has markets in Singapore and Japan. It produced close to 5 million gallons (18 million of liters) of tequila in 2012 and exported 99.5 percent of it.
Tequila Patron's marketing executives are already studying China's culture to determine the best approach for selling tequila there.
"We hire people there to look at their customs, culture, gastronomy, to see how they pair their meals to bring out the best tasting experience," said David Rodriguez, production director based in Jalisco state, the agave heartland.
Beer is by far the most popular alcoholic beverage in China, which accounts for more than half of global consumption
For distilled spirits, the most popular are versions of baijiu, an eye-wateringly strong traditional Chinese spirit. Cognac and whisky together represent around 90 percent of imported liquors, followed by vodka.
In Mexico, people sip tequila from shot glasses, sometimes with a chaser of tomato-based juice called sangrita. Some drink it with lime or mix it with grapefruit soda. In Japan, people drink tequila on the rocks or mix it with berries to make fruity cocktails, Rodriguez said.
Rodriguez said will take about two years to know if tequila will catch on in China.
"The Asian markets are seeking to westernize when it comes to prestigious brands, the brands consumers aspire to," he said.

Read more here:

Wednesday, June 19, 2013

From Bloomberg News: Pena Nieto Confident 75-Year Pemex Oil Monopoly to End This Year

Mexican President Enrique Pena Nieto said he’s confident Congress will end the state oil monopoly this year, opening the way for companies such as Exxon Mobil Corp. and Royal Dutch Shell Plc (RDSA) to tap the nation’s reserves.
In the model envisioned by Pena Nieto, state-owned Petroleos Mexicanos would develop some fields, while others are tapped by foreign and private companies. He declined to discuss more details of the proposal, or whether it would require a change in the constitution.
Seven decades after his party seized fields from the predecessors to Exxon and Shell, Pena Nieto is preparing for the return of international oil companies to arrest eight years of decline in crude output. An opening would probably be broad, from offshore drilling to shale fields similar to those that have revived the U.S. petroleum industry, Pena Nieto said.
“It’s obvious that Pemex doesn’t have the financial capacity to be in every single front of energy generation,” the 46-year-old president said in an interview in London yesterday, before traveling to Northern Ireland for meetings with Group of Eight leaders. “Shale is one of the areas where there’s room for private companies, but not the only one.”
Pena Nieto said his administration will send the energy bill to congress by September, when regular sessions resume, along with a tax proposal. The support of the top three political parties in the Pact for Mexico should ensure the bill is approved by Congress before year end, he said.

Skeptical Investors

Mexico is seeking to attract capital for deep-water and shale deposits found in the past decade as reserves dwindle in Cantarell, the 1976 oil discovery that ranked among the world’s largest.
Investors became more skeptical about the depth of the energy reform after it wasn’t included in the schedule for special congressional sessions in July and August, leaving it for the final four months of the year along with a crowded agenda that includes the tax overhaul and next year’s budget.
Mexico’s peso pared its drop yesterday after Pena Nieto’s comments, falling 1 percent to 12.8361 per U.S. dollar after losing as much as 1.3 percent. Yields on peso-denominated fixed-rate government bonds due in 2024 increased 11 basis points, or 0.11 percentage point, to 5.31 percent. Yields on $2 billion Pemex bonds due in 2022 added one basis point to 3.98 percent.
Pena Nieto’s comments boosted confidence he’ll make good on his pledge to open the state-controlled energy industry, said Ramon Cordova, a currency trader at Banco Base SA.

‘Good Path’

“What the market wants is the reforms to pass,” Cordova said by phone from San Pedro Garza Garcia, Mexico. The comments indicate “the energy reform is on a good path and it gives some more information, because up until now it’s been very opaque.”
Opening oil and gas exploration for private investment would help Mexico revive oil production that is heading for its ninth year of decline. Crude output averaged 2.52 million barrels a day this month through June 9, compared with 3.38 million barrels a day in 2004.
When Pena Nieto took office in December, he inherited an economy that had started to grow faster than Brazil in the final two years of predecessor Felipe Calderon’s administration amid record Mexican auto exports and waning Chinese demand for Brazilian commodities. Mexico’s gross domestic product will expand 3.2 percent this year, faster than 3 percent for Brazil, according to the median estimate of analysts surveyed by Bloomberg.

Government Spending

While Mexican growth eased to 0.8 percent in the first quarter, the least since the 2009 recession, Finance Minister Luis Videgaray said in an interview yesterday that the expansion will quicken as the government increases spending in the second half of the year.
“We expect much more accelerated spending in the second semester,” Videgaray said. “The budget is there and the revenue is there.”
Pena Nieto said there’s political momentum to pass more reforms after the approval of sweeping education and telecommunications laws and the creation of the Pact for Mexico. HisInstitutional Revolutionary Party, or PRI, dropped its opposition to an oil-law overhaul in March.
“We’re approaching key deadlines,” Pena Nieto said. “I’m optimistic that this political climate of understanding and agreement will be maintained.”
The start of July will mark one year since Pena Nieto’s election returned the PRI to power after a 12-years hiatus. Opening the energy industry to more private investment would be the “signature issue” for judging his presidency, Pena Nieto said during the campaign.

Pact for Mexico

Pemex bondholders are losing confidence in his ability to achieve the needed changes after signs of fraying in the Pact for Mexico alliance that Pena Nieto engineered between his own PRI, the National Action Party, or PAN, of predecessor Felipe Calderon and the Democratic Revolution Party, or PRD.
“The PRD cannot sign on for an ambitious energy reform, and they’ve been quite explicit about that,” Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington, said in an interview. “It’s going to be very difficult for the elite of the PRD to continue working with the government if the government and the PAN push through an energy reform that they’re opposed to.”
Yields on $2 billion Pemex bonds due in 2022 jumped 72 basis points in the past month through last week to 3.97 percent. Yields on Brazilian oil producer Petroleo Brasileiro SA’s 2021 notes rose 63 basis points over the same period.

Changing Reputations

Pena Nieto has been working to overturn the country’s reputation for violence, while strengthening the economy. His administration passed a balanced budget and an education overhaul that created an independent institute to evaluate schools and foster competition for teaching jobs and promotions based on performance, a move that sparked violent protests. The government also arrested the powerful head of the teachers’ union, Elba Esther Gordillo, on corruption charges, taking on a leader long considered to be untouchable.
Some of his other goals, such as progress in the war against organized crime, have proved more elusive. While the Milenio newspaper reported a 2.5 percent drop in drug violence in the first four months of the administration, communities in southern Mexico have armed themselves and kidnapped law-enforcement officials, saying police can’t protect them from cartels.

‘Excellent Job’

Pena Nieto’s energy and tax pledges, and his early legislative success, helped attract overseas asset managers including Pacific Investment Management Co., the world’s biggest bond fund, and lift foreign holdings of peso bonds to record levels. Yields on government peso debt due in 2024 dropped to a record low and the currency climbed to the strongest level in almost two years against the dollar last month. Yields have since climbed and the currency weakened on the prospect that the Federal Reserve will scale back its stimulus program.
Pena Nieto’s energy initiative may be the industry’s biggest overhaul since then-PresidentLazaro Cardenas seized oil fields from British and U.S. companies in 1938, said James R. Jones, the U.S. ambassador to Mexico when the North American Free Trade Agreement, negotiated under U.S. President George H. W. Bush and Mexico’s Carlos Salinas de Gortari, took effect in 1994. The expropriation is celebrated March 18.
Pena Nieto has “done an excellent job in his first six months in office,” Jones said in a telephone interview from Washington on June 14. “He has the best political sensitivity and touch I’ve seen since President Salinas was able to marshal various factions of Mexico to pass Nafta.”

Monday, June 17, 2013

Expo Carga 2013

Without a doubt, Expo Carga / Cargo Week Americas is the best conference and trade show on Mexican Logistics.

Held during the first part of June, thousands of attendants from over 20 countries descend on the World Trade Center in Mexico City.  Attending again this year was BHI's President Tom VanMouwerik.

If you would like to learn more about Expo Carga  / Cargo Week Americas, please feel free to contact Tom.

From Forbes: Wealthy Mexicans Investment In The United States Sharply Up in 2012

As the United States economy improves, wealthy Mexican businessmen are pouring millions of dollars into the largest economy in the world. They seek to take advantages of their proximity to the U.S. and its foreign investment-friendly laws.

In 2012, Mexican investment in the U.S. went up by 11% and currently stands at $27.9 billion, the U.S. Embassy in Mexico City recently reported. Many of these investments come from companies controlled by Mexican billionaires such as Grupo Elektra, Mexico’s largest electronics retailer owned by Ricardo Salinas Pliego; Grupo Bimbo, Mexico’s largest baking company and distributor of U.S. brands like Sara Lee, Arnold and Entenmanns’s, owned by the billionaire Servitje family led by Roberto Servitje; and Gruma, the world largest tortilla maker founded by Roberto Gonzalez Barrera, whose wealth at the time of his death in 2012 was $1.9 billion.

Other Mexican conglomerates mentioned by the U.S. Embassy as having made large investments in the United States are Sigma Alimentos (food), Arca (beverages and snack food), Grupo Herdez (processed food), Industrias Bochoco (poultry products), Grupo Alfa (aluminum, processed food and cheese), Mexichem (chemical products) and Cinepolis (the world’s fourth largest chain of movie theaters).  In 2012, all of them generated billions of dollars in revenues.

Although the U.S. Embassy did not name America Movil–44% of which is owned by the world’s second richest man, Mexican mogul Carlos Slim and his family–the telecom giant has been the largest Mexican investor in the United States for some time. According to a study by the Economic Commission for Latin America,  a UN regional commission to encourage economic cooperation, America Movil was the prime reason that Mexico displaced Chile and Brazil as the leading Latin America country in foreign investments abroad in 2012.

The U.S. Embassy also announced that the U.S. government had issued 4,000 investor visas to Mexican citizens in 2012–the third most in the world, behind only Japan and Germany. An investment visa, or E-2 Visa, is given to foreign nationals who make “substantial” investments in the U.S. economy. The visa allows them to work and live here. It’s a way of “buying” entrance to the U.S. without immigrating.  This type of visas has no quota or annual cap, and spouses and children under 21 years old may receive derivative E-2 Visas.  Since visa records are protected by privacy statutes, it was not possible to find out the identity of the 4,000 new Mexican holders of E-2 Visas.

The increase in investments is the result in part of the work of the U.S. Embassy in Mexico, which under the leadership of Ambassador Anthony Wayne has lured rich Mexicans into taking advantage of a neighboring country that offers a “predictable and transparent legal system, outstanding infrastructure, and access to the world’s most lucrative consumer market.” In May, the Embassy sponsored three seminars in Mexico City, Guadalajara and Monterrey for Mexicans looking to expend their opportunities in the United States. “The American work force ranks as one of the best educated, most productive, and most innovative in the world,” the invitation to the seminar said. With an entrance fee of $50.00, the seminar featured speakers in various areas including investment visas, legal and tax system and business and investment climate in the U.S.

From CNN MONEY: Truckers face big labor shortage

Trucking companies have already been facing a labor shortage for years. New federal regulations may make it worse.

New rules, set to go into effect July 1, will mean truckers cannot drive more than 70 hours in 7 days. Truckers had been allowed to drive 82 hours under the former rules.

Trucking companies hired about 40,000 workers over the past 12 months, according to the Bureau of Labor Statistics. But the largest companies are still recruiting aggressively.
Werner Enterprise (WERN)offers a $5,000 sign-on bonus for some jobs, and Swift Transportation(SWFT) is trying to lure military veterans by offering them free tuition for its driving school.
Roz Wilson, a senior analyst with the Delcan Corporation, estimates trucking companies have a shortage of about 30,000 workers. Reducing hours could create a need for an additional 100,000 drivers.
Turnover for long-haul truckers is dramatic, averaging about 98% in 2012. Some are opting for higher paying jobs in construction and the shale oil industry, while others are retiring, Wilson said. Companies simply can't hire enough new workers fast enough to make up for the exodus, she said.
But safety advocates argue it's not the restrictions, but poor working conditions, that are the reasons for the labor shortage.
"Drivers are over-worked, underpaid and have high health and safety risks," said John Lannen, executive director of the Truck Safety Coalition. "With so many people unemployed, you have to ask yourself, why can't they hire and retain people?"
The Truck Safety Coalition wants drivers to be restricted from driving more than 10 hours in any given day, whereas the new rule allows for up to 11 hours a day, as long as the total doesn't exceed 70 hours in a week. The group also advocates for drivers to be paid by the hour, instead of by the mile, or per delivery.
Median pay for a tractor-trailer truck driver is about $38,000 a year, according to the Bureau of Labor Statistics.
"Obviously, we want truck drivers to be safer and get compensated in a better way, and I think it would be good for everyone," Lannen said.
Crashes related to large trucks have been declining since the 1970s. About 3,800 people were killed and 88,000 people were injured in crashes involving large trucks in 2011, according to Department of Transportation figures.
Still, neither the industry nor safety advocates are pleased with the new rules.
The Truck Safety Coalition thinks the new rules aren't strict enough, whereas industry group the Truckload Carriers Association says the regulations will be a blow to their business. Both sides have even filed lawsuits in an appeals court in Washington DC, aimed at altering the new regulation.
"It's safe to say, nobody's really happy with the rules," said David Heller, director of safety and policy for the Truckload Carriers Association. "We're still hoping for the courts to rule against the government.