International Cross International Cross

Border Border Demonstration Project Demonstration Project

ARIZONA DEPARTMENT OF TRANSPORTATION

MOTOR VEHICLE DIVISION

Motor Carrier and Tax Services

SEPTEMBER 17, 2008

Mesa, ARIZONA

FMCSA initiated the project on September 6, 2007.FMCSA initiated the project on September 6, 2007.

100 Mexican domiciled motor carriers to operate throughout the 100 Mexican domiciled motor carriers to operate throughout the U.S. for one year.U.S. for one year.

One base jurisdiction (Texas, New Mexico, Arizona or California). One base jurisdiction (Texas, New Mexico, Arizona or California).

100 U.S. domiciled motor carriers will be granted reciprocal rights to 100 U.S. domiciled motor carriers will be granted reciprocal rights to operate in Mexico.operate in Mexico.

Brief Information about the Program…

Pre-Authorization Safety Audit (PASA) required under FMCSA Pre-Authorization Safety Audit (PASA) required under FMCSA regulations.regulations.

A Mexican Conviction Database is established.A Mexican Conviction Database is established.

No HAZMAT and passenger carriers will be allowed to travel No HAZMAT and passenger carriers will be allowed to travel interstate within the U.S.interstate within the U.S.

Carriers must provide proof of insurance from a U.S. licensed Carriers must provide proof of insurance from a U.S. licensed firm with a $750,000 minimum bodily injury and property firm with a $750,000 minimum bodily injury and property damage liability.damage liability.

Important points to remember…

Every vehicle entering the U.S. must Every vehicle entering the U.S. must have a valid CVSA decal and must pass have a valid CVSA decal and must pass an in-depth North American Standard an in-depth North American Standard Truck Inspection (every 90 days).Truck Inspection (every 90 days).

Verify a system of compliance Verify a system of compliance containing hours of service rules, containing hours of service rules, recordkeeping and retention.recordkeeping and retention.

Verify the existence of Mexican Verify the existence of Mexican controlled substances and alcohol controlled substances and alcohol testing programs consistent with U.S. testing programs consistent with U.S. Federal regulations.Federal regulations.

A Global Positioning System (GPS) A Global Positioning System (GPS) device will be placed on all U.S. and device will be placed on all U.S. and Mexican trucks that are participating in Mexican trucks that are participating in the project, to track the position of the the project, to track the position of the

truck at all times.truck at all times.

Verify that each driver under the demonstration program:Verify that each driver under the demonstration program:

– a. Has a valid Licencia Federal de Conductor through the a. Has a valid Licencia Federal de Conductor through the Mexican Drivers License Information System.Mexican Drivers License Information System.

– b. Check the Commercial Driver’s License Information b. Check the Commercial Driver’s License Information System (CDLIS) for violations, suspensions, etc.System (CDLIS) for violations, suspensions, etc.

Mexican carriers and drivers will have to comply with Mexican carriers and drivers will have to comply with all all applicable U.S. laws and regulations, included but not limited applicable U.S. laws and regulations, included but not limited to:to:

– Cabotage Limitations - U.S. federal rules limits the MX Cabotage Limitations - U.S. federal rules limits the MX carriers travel. It prohibits a load to be picked up in the carriers travel. It prohibits a load to be picked up in the U.S. for delivery to another point in the U.S. U.S. for delivery to another point in the U.S.

FMCSA will then issue the appropriate operating authority FMCSA will then issue the appropriate operating authority

FMCSA will…

Update as of July 16, 2008…

Mexico - U.S. OperationMexico - U.S. Operation

27 Mexican motor carriers 27 Mexican motor carriers approvedapproved

– 107 vehicles have been 107 vehicles have been granted operating authority granted operating authority to travel into the U.S. beyond to travel into the U.S. beyond the commercial zone. the commercial zone.

– Most of these trips had Most of these trips had destinations within the destinations within the commercial border zones. commercial border zones.

– These carriers have made 9,983 trips These carriers have made 9,983 trips into the United States.into the United States.

– 1,272 long haul trips had 1,272 long haul trips had destinations beyond the commercial destinations beyond the commercial border zone.border zone.

0

2000

4000

6000

8000

10000

Long Haul Commer.Zone

Long Haul

Commer.Zone

Source: FMCSA data

9,9839,983

1,2721,272

FMCSA has notified an additional 30 Mexico-domiciled motor FMCSA has notified an additional 30 Mexico-domiciled motor carriers to have successfully passed a Pre-Authorization carriers to have successfully passed a Pre-Authorization Safety Audit. Safety Audit.

Proof of financial responsibility will have to be filed, prior to Proof of financial responsibility will have to be filed, prior to issuing Operating Authority.  issuing Operating Authority.  

This will bring the total number of approved carriers to 57This will bring the total number of approved carriers to 57

Update as of July 16, 2008…

10 U.S. motor carriers traveling to Mexico10 U.S. motor carriers traveling to Mexico– 55 vehicles have been granted reciprocity to travel into 55 vehicles have been granted reciprocity to travel into

Mexico.Mexico.

These carriers have made 2,245 trips across the Mexican These carriers have made 2,245 trips across the Mexican borderborder

The project has shown that U.S. and Mexican carriers can The project has shown that U.S. and Mexican carriers can engage in cross-border trucking operations in compliance with engage in cross-border trucking operations in compliance with applicable laws and with no compromise to public safety or applicable laws and with no compromise to public safety or security. security.

In fact, Mexican trucks and drivers have established In fact, Mexican trucks and drivers have established compliance rates equal or better to those of U.S. trucks and compliance rates equal or better to those of U.S. trucks and drivers. drivers.

U.S. – Mexico U.S. – Mexico OperationOperationUpdate as of July 16,

2008…

Participation turnout is smaller than expected.Participation turnout is smaller than expected.

– Uncertainties concerning the length and viability Uncertainties concerning the length and viability of the demonstration project may have deterred a of the demonstration project may have deterred a significant number of both MX and US carriers.significant number of both MX and US carriers.

0

100

200

300

400

500

600

Carriers Vehicles

ProjectedActual

Facts of the Demonstration Program…

Source: FMCSA data

100

27

540

107

Facts of the Demonstration Program…

FMCSA officials believe that Mexican carriers are not participating in the program because they are reluctant to incur substantial costs relating their expanded operations, especially when:

Obtaining Financial Responsibility Obtaining Financial Responsibility

Developing a customer base for Developing a customer base for long-haul operations, with the long-haul operations, with the uncertainties concerning the uncertainties concerning the project’s longevityproject’s longevity

U.S.U.S. carriers have expressed concern of: carriers have expressed concern of:

– The high cost of maintaining an official The high cost of maintaining an official legal representative in Mexico along with; legal representative in Mexico along with;

– The belief that a minimum of two years is The belief that a minimum of two years is needed to develop sustainable business needed to develop sustainable business relationships with Mexican shippers. relationships with Mexican shippers.

Facts of the Demonstration Program…

Demonstration Program in Arizona

On June 10, 2008, FMCSA granted provisional operating authority to Manuel Encinas Teran based out of Nogales, Sonora-Mexico

– One truck, traveling from Mexico to Tucson, Arizona

AZ requirements for IRP and IFTA for AZ requirements for IRP and IFTA for Mexican Motor CarriersMexican Motor Carriers

USDOT Number-FMCSA.USDOT Number-FMCSA.

Operating Authority-FMCSA.Operating Authority-FMCSA.

Applications for IRP Registration and IFTA licensing – Applications for IRP Registration and IFTA licensing – ADOT.ADOT.

2290 Federal Heavy Vehicle Use Tax –IRS.2290 Federal Heavy Vehicle Use Tax –IRS. Articles of Incorporation – Arizona Corporation Articles of Incorporation – Arizona Corporation

CommissionCommission

AZ requirements for IRP and IFTA for AZ requirements for IRP and IFTA for Mexican Motor CarriersMexican Motor Carriers

Vehicle Ownership documentation.Vehicle Ownership documentation.

Cash Bond.Cash Bond.

Base Jurisdiction for IFTA and IRP– must Base Jurisdiction for IFTA and IRP– must be the jurisdiction that the carrier will be the jurisdiction that the carrier will expect to travel the most miles in the 1st expect to travel the most miles in the 1st year of operation. year of operation.

Must maintain a record keeping system Must maintain a record keeping system for audit purposes.for audit purposes.

Modification of computer system (VISTA, TARGATS, T&R).Modification of computer system (VISTA, TARGATS, T&R).

Translated to Spanish all our: Translated to Spanish all our:

– Motor Carrier forms and applicationsMotor Carrier forms and applications– IRP ManualIRP Manual– IFTA ManualIFTA Manual

Contacted the participating carrier.Contacted the participating carrier.

Developed informational literature for motor carriers such as:Developed informational literature for motor carriers such as:

– BrochuresBrochures– Quick Reference IFTA and IRP bookletQuick Reference IFTA and IRP booklet– Presentation for training/instructions on IFTA and IRP Presentation for training/instructions on IFTA and IRP

In anticipation of the Demonstration Program, we have…

Latest update…Latest update…

As of August 4, 2008, the Demonstration Project was extended for two As of August 4, 2008, the Demonstration Project was extended for two additional years as permitted under U.S. Law. additional years as permitted under U.S. Law.

The extension will ensure that the demonstration project can be The extension will ensure that the demonstration project can be reviewed and evaluated on the basis of more comprehensive data. reviewed and evaluated on the basis of more comprehensive data.

The extension will enable FMCSA to collect and analyze a larger The extension will enable FMCSA to collect and analyze a larger volume of safety and operational data, which is the fundamental goal volume of safety and operational data, which is the fundamental goal of the demonstration project. of the demonstration project.

FMCSA believes an extension will provide non-participating motor FMCSA believes an extension will provide non-participating motor carriers in both Mexico and the United States, added incentives to join carriers in both Mexico and the United States, added incentives to join the project, knowing that their investment in long-haul foreign the project, knowing that their investment in long-haul foreign operations will have more time to mature and become profitableoperations will have more time to mature and become profitable

THANK YOUTHANK YOU