US-Mexico border backup pummels supply chains

US-Mexico border backup pummels supply chains

US Customs and Border Protection (CBP) is transferring agents at the US-Mexico border from freight inspection to immigration duties, causing widespread cargo delays. Photo credit: Shutterstock.com.

Freight processing capacity at the US-Mexico border has been slashed 30-40 percent in a week by the transfer of US Customs and Border Protection (CBP) customs officers to immigration duties, according to C.H. Robinson Worldwide. That shift in resources, combined with rising volumes, has snared supply chains in a worsening border freight backup.

“Large ports like El Paso, Laredo, [and] Nogales, are seeing significant slowdowns,” Garrick Taylor, policy director for the Border Trade Alliance, told JOC.com Monday. “However, this is a border-wide phenomenon. Resources are being shifted away from ports all along the border to support Border Patrol. Everything from commercial to pedestrian crossings are feeling the pinch.”

At El Paso, the time truckers take to cross the border jumped from about 50 minutes to seven hours on average, according to data from CBP. In Laredo, Customs last week reported truck delays of four to six hours. And news reports indicate those estimates may be low.

“This is something we saw unfolding right before our eyes” last week, said Jason Craig, director of government affairs for Eden Prairie, Minnesota-based C.H. Robinson. “Shippers are starting to become aware of this congestion, and there’s little relief in sight. Shippers need to first assess how this slowdown is impacting them and then prioritize their shipments.”

Many shippers are responding by moving more goods across the border in an effort to beat the worst of the slowdown and a potential shutdown threatened by US President Donald Trump. “Increasingly, northbound capacity at all locations is difficult to find due to a combination of trailers unable to cross and unload and increased volumes,” C.H. Robinson said in a daily customer alert on US-Mexico border operations issued Monday.

“First, we saw a little bit of fear that the border might be closed increase some volumes,” Craig said in an interview Monday. “Second, this is a very busy week because of the upcoming spring break in Mexico and Holy Week. So we typically see a large volume of US-bound freight this week anyway.”

A ‘slow-rolling crisis’

US importers and Mexican shippers, to a degree, are contributing to a cross-border freight crunch just as Mexico’s produce season heats up. By ramping up the volume of US imports in advance of increased congestion and a potential shutdown, they’re arguably making the slowdown worse. There’s no full estimate of the cost of the delays, but The New York Times puts it at millions of dollars a day.

Short-term shutdowns of specific border crossings due to clashes with migrants (San Ysidro in 2018 and Laredo in 2019) and storm damage (Laredo in 2017) were estimated to cost millions of dollars in lost revenue a day to retailers and other businesses. The current congestion essentially amounts to an unofficial partial shutdown across the entire US-Mexico border, with no end yet in sight.

“We’re dealing right now with a slow-rolling crisis,” said Taylor, whose organization advocates on behalf of improved border management and trade relations within North America. “We risk measuring this in tens of millions of dollars a day very soon. It adds up fast. The stuff on trucks is not riding for free, and the costs are going to be borne by consumers at some point.”

Approximately $1.7 billion of goods cross into the US from Mexico every day, according to the US Chamber of Commerce, and nearly 70 percent of those goods are hauled by truck, US Bureau of Transportation Statistics data show. A growing volume of freight is being shoe-horned through facilities that were already strapped for capacity before the current border crisis hit.

And the cross-border freight crunch is happening just as Mexico’s produce season, traditionally one of the busiest times of the year for northbound cargo, begins to heat up. “There are carriers who would argue that peak season has already started earlier than expected. There’s a tightening of capacity already,” Troy Ryley, president of Redwood Mexico, a division of third-party logistics company Redwood Logistics, said last week. “We have Easter Week this month that will add additional pressure to capacity,” he added.

El Paso, a focal point for cross-border manufacturing and the third-largest truck border crossing along the southern border, has been hit hard, along with Laredo, the largest US land border crossing for truck freight, which handles mostly long-distance truckload goods.

In Nogales, the sixth-largest truck crossing on the southern border and a major conduit for Mexican produce, the truck crossing is now closed on Sundays. “When you make it harder for fresh produce to reach the US, you’re likely to see diminished supplies on store shelves and prices will go up,” Taylor said. “That’s something US consumers will notice quickly.”

On Saturday, the Bridge of the Americas in El Paso was closed to truck traffic for the first time ever. For the time being, the bridge, which has six lanes for commercial vehicles, will be closed to trucks on Saturdays. The only nearby alternative is the Ysleta bridge, which has eight truck lanes. At noon on Monday, truckers faced a three-hour delay at that crossing, according to CBP.

In addition to delays at approaches to specific crossings, delays also are caused by diversion of freight to different border crossings. Some freight is being shifted from El Paso to Nogales and Laredo, for example. But redirecting freight to new border crossings is difficult, thanks to Mexico’s geography, Craig said.

“The distances are very large,” he said. “From El Paso to Laredo is a 12-hour drive” on the US side of the border. Shippers changing routes and border crossings also need to ensure customs information matches the new crossing point. “You have to make sure your customs clearance is adjusted accordingly and coordinated with the transportation diversion,” Craig said.

Shifting resources

The cross-border freight crunch likely won’t ease until the number of migrants trying to cross the US-Mexico border diminishes, and that hasn’t happened yet despite increasingly stringent US policies toward illegal immigrants. In February, 66,450 people were apprehended by US Border Patrol agents on the US-Mexico border, and CBP expects that number to approach 100,000 in March. Last year, a total of 396,579 people were apprehended on the US-Mexico border.

The shift in CBP personnel, which accelerated last week, contributed to a chaotic week of cross-border congestion that was peppered with tweets from the president threatening to shut the border until Mexico, or Congress, took action. Trump stepped back from the brink last Thursday, saying he would give Mexico a year to stop the flow of drugs and migrants northward.

On Saturday, the president acknowledged the increased traffic and commercial delays. “Until Mexico cleans up this ridiculous & massive migration, we will be focusing on Border Security, not Ports of Entry,” Trump tweeted. He also targeted Democrats in Congress, urging them to close what the administration sees as “loopholes” in existing immigration law. Trump reiterated his threat Sunday. “Mexico must apprehend all illegals and not let them make the long march up to the United States, or we will have no other choice than to Close the Border and/or institute Tariffs,” he wrote on Twitter. “Our Country is FULL!”

Amid heated rhetoric and uncertain policy, shippers should prepare for persistent cargo delays at the US-Mexico border. Shippers should identify and prioritize high-risk shipments, Craig said.

“What type of shipments are being slowed down? Are they critical inputs that will result in out-of-stocks, or inventory that is also produced in other areas you could draw from?” After that, he said, shippers should look “one to three weeks ahead. If this situation isn’t going to change, can you change production or delay production? Everyone will answer the question differently.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.

Comments

what happens when you can't think further than you can spit

Very good information to pass on to clients who are constrained by time!!

If you plan ahead, you can setup ocean lanes from the east coast of Mexico that transship in the Gulf/Caribbean and can get you port-to-port transit times of about 9-10 days to the Mid-Atlantic/Northeast. Not ideal by any means, but in the event of a border shutdown, it could be a lot better than "not anytime soon."