An executive with a U.S. manufacturer active in Mexico, Wade works closely with the 80 members of the Association: trucking, rail and air cargo companies, customs brokers and maquila operators.

"You can't just walk in [to Mexico] and set up a warehouse," cautions Wade. "First, you must do an in-depth study of where you are going. You'll have to rethink your inventory system, and find a reliable Mexican carrier."

Wade is located in Laredo, where all NAFTA business is viewed through the close-up lens of trans-border shipping. Even when commercial border-crossing proceeds smoothly, its perception as a logistical bottleneck is magnified by proximity.

A U.S. company considering establishing a storage base in Mexico thinks first of the warehouse ... build, rent or buy? Where to locate it? What kind of equipment will it need? Staff? Wade views those factors as almost secondary to the transportation requirements. From the perspective of the border, they are critical.

"If you are a full-load shipper, you are OK," says Wade. "You must have a full-load system." (Any company thinking about warehouse space in Mexico is probably already a full-load shipper.) The difficulty lies in less-than-full loads (LTL). The goods still have to get to the warehouse.

"There is not a reliable LTL system," Wade warns. "Most people find it cheaper and faster to consolidate loads here."

He points out that even though NAFTA has reduced or eliminated tariffs between the two countries, there are brokerage fees of some $75 per truck, another $90 for the drayage company to haul the trailer across the border, and maybe $150 to have it driven to Monterrey, for example.

No wonder U.S. rail companies are eager to open up the Mexican market.

Amistad operates 17 industrial parks throughout Mexico and has assisted dozens of U.S. companies in setting up manufacturing operations in Mexico over the past 18 years. Its list of clients includes Allied Signal, Avon, General Motors and Sara Lee/Hanes. But among all the foreign investors in Amistad parks, there are no public warehouses yet.

"More and more companies are going to be looking for distribution centers in Mexico," says Ramon.

His words are timely. The recovery of the Mexican economy after the peso devaluation crisis, the reviving demand for U.S. consumer products, and the return of those goods to the shelves of retail stores in Mexico are now driving the need for an efficient, cost-effective, logistical inventory system.

"We have one client now as of March '97 that is looking for a 50,000 square foot distribution center," Ramon says.

An indicator of just how daunting it must be to set up a warehouse in Mexico is the number of U.S. firms actively doing business there who have not yet taken that step.

The Ace Hardware Company is a good example.

"Since 1991, we have increased our store count in Mexico," says Louis Perez, a member of the team Ace has mandated to establish its warehouse space in Mexico. "We now have 60 stores -- a broad dealer base -- and those stores are not clustered. They are scattered through 32 states and can order merchandise from our three U.S. warehouses, each fully automated, or from one of our approved vendors in Mexico."

Perez recounts that prior to the peso devaluation, Ace Hardware Stores in Mexico stocked 75 percent to 80 percent U.S.-made products.

"After the crash, we readjusted," Perez says. "We encouraged our dealers to buy locally, for their own good. The percentage dropped to about 50/50 U.S. and Mexican-made."

How is Ace going about setting up its warehouse?

"There are many factors to consider," says Perez. "Where our dealers are located. What are the best freight rates. Where is the industrial activity; which products are selling. The size. Should we own our own warehouse or work with a third-party distributor? Use their employees and let them handle the shipping? Originally we were planning on a 150,000 square foot warehouse, but now with fewer products we are downsizing that estimate. It has been a challenge."

Ace Hardware expects to make a decision by this summer, after all the ramifications have been considered. Perez and his team have visited a number of Mexican states and studied all the investment incentives those states have to offer.

"We have narrowed it down to three areas: Mexico City, Monterrey and San Luis Potosi," says Perez. "Many of our U.S. suppliers are impatient for us to make a decision. They say, 'Can we give you our product, and we'll share it [warehouse space]?'"

Those hardware manufacturers represent only the tip of the iceberg. The demand for storage space in Mexico, international-standard warehouse capacity, is steadily increasing.

"In the last three months, we've seen the activity increase," says Frances Sanchez, director general of the PHH Mexico Corporation. (In January, Mexico repaid the final installment of its $20 billion loan from the U.S., three years ahead of schedule.) "We help people set up businesses worldwide: auto parts, plastics, paper, balloons." PHH Mexico was established in 1994, during the first wave of NAFTA energy, and counseled companies like MCI, Volvo and Caterpillar Financial.

"There was a pause after the devaluation, but now that Zedillo has repaid the debt, interest has picked up again," Sanchez says. "For U.S. companies, real growth is going to come internationally. That means Latin America and Asia."

"In 1994, we established a joint venture with InverMexico," says USCO Vice President David Giroux. "They are a strong Mexican financial group which includes Banco Mexicano, the fourth largest bank in the country. The resulting company, Almacenadora InverMexico USCO, was the first third-party logistics provider with nationwide coverage in Mexico."

By this July, the joint venture will have 700,000 square feet of modern warehouse space under roof, positioned to reap the rewards of patience and foresight. Their client list already includes Compaq Computer, Procter & Gamble, Colgate Polmolive, Duracell, Hewlett Packard, Honda de Mexico and IBM.

National service is provided by five warehouses offering the same communication and inventory control capabilities provided by USCO in the U.S. They anchor the points of the "Golden Triangle": two in Guadalajara, two in Mexico City, and one in Monterrey. The largest is a 290,000 square foot building in the FINSA Grupo Arguello industrial park at Iztapalapa, south of Mexico City. Some 85 percent of the business is conducted within the Golden Triangle.

"We have two advantages," Giroux points out. "Our facilities are all bonded, so we can offer in-bond transit. The products don't clear customs until they are released from the warehouse. On valuable goods like computers, that can be significant. And, unlike the U.S., Mexico allows some dealing with products under bond. For example, we can repackage or re-label goods, under bond, before they are released."

Giroux continues.

"And second, we have recently been licensed by the government as verification stations under the new N.O.M.-50 and -51 law," he says. "This is similar to our UL license. Fifteen of our staff took the government examination and are now officially qualified to determine whether an import product is legal, under the new Spanish-language labeling laws. And, if not, we can fix it to make it legal."

Early in its Mexico experience, USCO made a survey of businesses and prospective clients.

"Twenty-five percent of them said they had problems with customs, but 99 percent wanted improved transportation," says Giroux. "Since then things have improved. New roads have been put in and it is possible to ship less than a full load. We don't have our own trucks. We've tried a number of carriers and now have a dependable list: local, 300-to-500-mile, and long distance. There are two small shippers, Mexico's equivalent to UPS, which are very reliable."

Giroux is positive about the future. "Confidence in Mexico has returned," he says. "The peso is stable. The ports have been privatized. Investors are coming in to build buildings. Money is coming back."

And USCO's future in Mexico?

"We are projecting 35 percent growth for 1997," predicts Giroux. "In fact, we are currently talking to one prospect, if they come in, it'll be 35 percent right there."