Supply Chain Planning in Cross-Border Logistics: Solving the Route vs Cost Tradeoff

Here are some of the key trade-off factors that logistics teams frequently face:

Border Crossing Times

Border queues can be one of the most unpredictable elements of cross-border logistics. Wait times will vary greatly depending on customs inspection capacity, traffic spikes, seasonal demands (such as export spikes during holidays), and even political events or strikes.

For example, at the Laredo crossing between the US and Mexico, delays can take hours to pass, due to the limited capacity of the bridges; while some crossings in Eastern Europe, such as Poland–Ukraine, can become congested due to security checks and manual inspections. These longer wait times not only result in delays but also increase fuel usage, driver fatigue and risk of violating service level agreements (SLAs).

Trade-off: A shorter, less expensive crossing may mean longer wait times at the border and operational disruptions, while taking a longer or more expensive crossing that includes digitized customs systems or dedicated commercial lanes may reduce variability and improve predictability of delivery.

Tolls and Tariffs

When it comes to infrastructure investment, different trade corridors are not the same. Take the EU’s TEN-T network for example, or the special toll highways in Mexico, they provide a smoother ride, high-quality infrastructure, and even preferential treatment for commercial vehicles. But there is a catch: these routes are heavily taxed with high toll fees, surcharges for freight, and customs tariffs.

On the other side, lower-priced secondary routes might allow you to avoid those tolls, but they usually come with other obstacles, such as damaged roads, rush-hour congestion and longer travel times. Plus, tariffs can change based on the trade agreement, such as NAFTA/USMCA which has its own specific rules of origin and tax structures to factor into your cost calculations.

Trade-off: You can pay those higher tolls and tariffs to have a more comfortable ride and predictable delivery times. Or, you can save some money by using the lower-priced routes but be willing to pay more down the road for inefficiencies, breakdowns, and missed delivery dates.

Fuel Costs and Distance

Fuel is one of the main contributors to the total logistics cost, particularly in long haul trucking operations. The routes you take can have a big impact on fuel consumption, carbon emissions and your operating costs. For example, if there is a congested area, adding a detour of 50 km might seem like a terrible decision but it might save you 3 hours of waiting time.

That translates into less driver overtime, less refrigeration expenses for perishables and less engine wear and tear from idling. And let’s not forget the variation of fuel prices from country to country, it can be a lot more economical to refuel in one place than another, adding yet another area of complexity to your planning.

Trade-off: You could be spending more on fuel by taking those longer detours for faster clearance, or saving fuel but incurring delays, overtime costs and the risk of penalties or breaches of service level agreements.

RTA HOS Compliance

When it comes to global logistics, driver HOS rules are vital to ensuring smooth operations. These rules cap the amount of time drivers are allowed to be on the road before they are required to take a break. For example, in the EU, drivers may drive 9 hours a day, or 10 hours a day on 2 days a week.

Meanwhile, the US requires that a truck driver work 11 hours a day, but that is within a 14-hour duty window. However, these limits can be exceeded very quickly when border delays force drivers to make unexpected stops, incur fines, and generally cause constant headaches in your operations.

Trade-off: Choosing a longer, but simpler route can help ensure compliance and minimize scheduling outages. On the other end, a shorter, congested route may save time but can result in non-compliance, increased labor costs, and regulatory penalties.

Customs & Paperwork Delays

Customs clearance is one of the biggest bottlenecks in cross-border trade. Customs systems such as the US Customs’ ACE (Automated Commercial Environment) and the EU’s Automated Import System (AIS) make the process of clearing products through customs faster, but in countries where paperwork is still done the old fashioned way, delays can be unpredictable.

If the paperwork is incorrect or incomplete, it can result in cargo being held up, fines, or inspections that delay things further. While more efficient customs processes can involve increased fees or longer diversions, they can result in much lower variability in clearance times.

Trade-off: You can pay a little more now for routes that implement digitized customs and streamlined clearance or stick with paper-heavy systems that are cheaper initially but come with a higher risk of unexpected delays and compliance issues.

Cargo Sensitivity

Cargo type and urgency are important in defining optimal routes. For example, perishables such as food and pharmaceuticals need fast and reliable transport to prevent spoilage. And, high-value goods such as electronics and luxury items need a predictable journey in order to minimize the risk of theft and insurance problems.

On the other hand, raw materials in bulk shipments can afford to use cheaper slower transportation routes. In addition, temperature-sensitive cargo can incur greater refrigeration charges if trucks have to wait at borders, and dangerous goods have to comply with ADR (European Agreement concerning International Carriage of Dangerous Goods by Road) regulations that can severely restrict route options.

Trade-off: Pick more expensive and faster shipping routes for time-sensitive or high-value cargo compared to cheaper and slower shipping options for bulk or less time-critical cargo.

Geopolitical and Security Risks 

Cross-border logistics are affected by different geopolitical factors such as political unrest, strikes and regional conflicts. Take the Russia-Ukraine conflict as an example, which forced the redirection of key freight corridors across the Eastern European theater. In addition, strikes at French borders can delay shipments within the EU. While high-risk routes may save some money, they also put carriers at the mercy of cargo theft, increased insurance rates and the need to divert mid-journey.

Trade-off: Choose either less expensive but riskier crossings which come with security issues or invest in safer and more politically stable routes which may involve higher tolls, insurance and longer distances.

Sustainability and Carbon Footprint 

As corporate commitments to ESG (Environmental, Social and Governance) targets increase, carbon emissions are increasingly important. For example, longer detours are associated with higher levels of emissions, whereas quicker border crossings may contribute to lowering idling and the overall carbon footprint. Some shippers are now making a deliberate effort to prioritize low-carbon routes even if they are not cost or speed competitive.

Trade-off: Optimize routes around carbon reduction at the expense of paying more in tolls and tariffs, or optimize cost or speed at the expense of corporate sustainability agendas.