US-Mexico cargo delays spur new transport approaches

US-Mexico cargo delays spur new transport approaches

CBP reportedly plans to transfer at least 100 agents from the US-Canadian border and from airports to relieve the cargo inspectors who were reassigned to the US Border Patrol. Photo credit: Shutterstock.com.

How desperate does a shipper need to be to charter a plane to move freight less than 20 miles across the US-Mexico border? Pretty desperate, but it’s been done in recent weeks, as congestion and truck delays at US border crossings squeeze North American supply chains, adding days and uncertainty to just-in-time delivery schedules and pushing up costs.

Chartering cargo planes to travel any distance isn’t cheap, but it can be much less costly than shutting down a production line because automotive parts didn’t arrive when needed. 

“We’ve seen air charters flying freight from [Ciudad] Jaurez to El Paso,” said David Henry, regional manager for Mexico at third-party logistics company GlobalTranz. “That’s a five-minute flight going across the border, and it’s happening. It’s easier to do that and get the freight on its way to Detroit” than to accept delays in truck lanes linking Mexican and US factories.

As ongoing, rolling delays at the US-Mexico border threaten cross-border manufacturing operations that rely on quick, dependable deliveries, US importers and Mexican shippers are expediting freight, evaluating different transportation modes and sources, and rescheduling deliveries and even production. But there are few routes that entirely avoid disruption.

That’s because the freight crisis spawned by an immigration crisis isn’t going away soon. Logistics experts warn delays and congestion at the US-Mexico border are likely to get worse, as the loss of experienced US Customs agents transferred to immigration duties exacerbates an existing imbalance in capacity that tightens the border during the annual produce season.

Those who don’t at least try to reconfigure cross-border supply chains will find their costs jump whenever disruption occurs at the border — and it is occurring more frequently, as the number of migrants hoping to enter the United States climbs higher. In March, US Customs and Border Protection (CBP) apprehended 103,492 individuals at the Southwest border, a 106 percent year-over-year increase.

30-40 percent capacity loss

The personnel transfer by CBP slashed freight-processing capacity at the US-Mexico border 30 to 40 percent on average, according to C.H. Robinson Worldwide, the largest US logistics company, with $88.5 million in Customs revenue. In Laredo, Texas, the largest truck crossing on either US border, 300 Customs officers were reassigned.

Some of those officers may be coming back. CBP reportedly plans to transfer at least 100 agents from the US-Canadian border and from airports to relieve the cargo inspectors who were reassigned to the US Border Patrol, according to reports in the El Paso Times and other news outlets. But that would still leave the Southwest border short several hundred cargo agents.

The costs of cross-border freight delays are mounting. Francisco Cervantes, president of Mexico’s Confederation of Industrial Chambers, or Concamin, estimated truck delays are costing Mexican exporters alone $800 million a day. Total supply chain costs, once tallies from trucking companies, warehouse operators, and drivers are included, will be much higher.

Wait times posted by CBP have declined, but logistics experts say those wait times are underreported. Even when wait times have decreased, allowing more freight to cross, that influx of freight has presented challenges to navigating industrial parks near the border, as congestion moves up the pipeline.

“There’s little relief in sight,” said Jason Craig, director of government affairs for C.H. Robinson Worldwide, which has Customs brokerage offices at all border ports of entry. “Any backfill of officers won’t provide relief, because they need to be trained.” There are signs that cross-border congestion isn’t ebbing but is changing as shipping patterns adjust to weekend closures.

In Nogales, Arizona, a major import site for Mexican produce headed to US supermarket shelves, C.H. Robinson has noticed longer truck wait times on Fridays as shippers try to get freight across the border before the port of entry’s truck lanes are shut down on Sunday, and again on Monday when shipments held over the weekend surge toward the border. 

On April 12, nearly two weeks after the crisis began, only eight of 12 truck lanes were open on Laredo’s World Trade Bridge, and northbound crossings took between seven and 10 hours, according to C.H. Robinson. Drivers draying freight across the border were limited to one turn a day.

In Pharr and McAllen, Texas, wait times were eight to 10 hours. US-bound shipments arriving at noon were not able to cross in the same day. Otay Mesa, California, saw delays of seven to eight hours.

Delays were expected to worsen as Easter approached, and higher volumes of produce contributed to a seasonal imbalance in available capacity at the border. “There are carriers who would argue today that the peak produce season has already started earlier than expected,” said Troy Ryley, president of Redwood Mexico, a division of Chicago-based Redwood Logistics.

“There’s a tightening of capacity already. It’s shaping up to be a tough month,” Ryley said. Typically, the ratio of northbound to southbound shipments rises from two-to-one to four-to-one or even five-to-one during the produce season. As the number of northbound shipments rises, less truck capacity — whether measured by tractors, trailers, or drivers — is available to pick up freight in Mexico.

“We’re dealing right now with a slow rolling crisis,” said Garrick Taylor, policy director for the Border Trade Alliance, which advocates for improved cross-border trade relations. “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.”

“This is an ongoing situation, and the issues continue to pile up,” said Henry, who manages cross-border trucking for GlobalTranz from its Mexico office in Monterrey. “I very much believe we’re going to see a major increase in what are considered critical shipments. Air charter capacity could potentially be wiped out very quickly. There’s only so much to flow there.”

Time for a ‘reboot’ 

That puts the onus on US importers, from automotive manufacturers to electronics retailers and produce wholesalers, to reboot cross-border shipping strategies and diversify everything from sourcing and procurement to transportation modes and routes and even US distribution strategies, in close cooperation with vendors and customers.

“First and foremost, shippers should assess how this congestion is impacting them,” Craig said. “The situation affects every shipper differently. What type of freight is being slowed down? Is it critical inputs that will result in out-of-stocks? Do they have inventory in other areas they could draw from? Second, look one to three weeks ahead and prioritize high risk shipments.”

“Everybody has to think about what multiple day delays will do to their supply chains,” Henry said. “Make sure you communicate that to your end client and make sure they understand what it will mean to them.” Shippers should work closely with carriers as well to identify where freight can be stored, if necessary, and where transloading can expedite freight, Ryley said.

“The one consistency within Mexico is that it’s always inconsistent,” Ryley said. “Logistics managers have to have more than one bullet in their gun. We saw this when a hurricane flooded the road between Monterrey and Laredo. There were very few clients who could shift freight from Laredo to McAllen. Most people aren’t creating flexibility in their supply chains.”

Trying to add flexibility is especially important when a system is by nature more inflexible than not. That’s the case at the US-Mexico border, where trucks move about 70 percent of US-bound Mexican freight. “Dry vans, flatbeds, and reefer units are still going to be the main method that everything is moved. They’re just going to be moving at a much slower place,” Henry said. 

Shifting transportation from truck to intermodal rail, air, and ocean will be a solution for some shipments, but not for all freight and not in high volumes. There’s simply not enough capacity in other modes to absorb a significant share of the high volume of truck freight. There are logistical problems in shifting to new modes as well, and these shifts can’t be implemented overnight.

“Ocean may be an option for some companies, depending on where they’re shipping,” Henry said. “If I’m moving containers from Veracruz to Houston, that’s easy-breezy. The problem is going to be if I’m shipping from Mexico City to Montana. Even if it takes a month to get your shipment there by truck, it would take just as long to ship it there by ocean.”

GlobalTranz shippers have increased use of intermodal rail as they seek alternative cross-border routes. “Right now, based on the types of delays you see, [cross-border] trucking is pretty much running on intermodal transit times,” he said. “You’ll see an uptick in intermodal requests as this continues, and we’ll eventually see bottlenecks across the board,” he said.

That means a growing amount of freight is being shoe-horned through border facilities already at capacity. “As congestion worsens, you start to feel the pinch of outdated, outmoded infrastructure,” Taylor said. “US facilities have little control over the lines approaching the border on the Mexican side. This is why you need real international cross-border cooperation.” 

If the freight processing regime at the border remains inflexible, importers and shippers need to look for opportunities to flex supply chains closer to origin and destination points, deep within Mexico and the United States. That may mean loosening tight delivery requirements, or even rescheduling production to avoid stock-outs caused by delayed deliveries. 

Moving freight across the US-Mexico border in mid-week may help, too. “If you’re going through Laredo [during the week] now, you can expect one- to two-day delays in transit times [door-to-door],” Henry said. “On the weekend, that can go up to three days.” So arranging to move freight across the border Tuesday through Thursday can mitigate disruption.

Henry also sees more freight being broken into smaller shipments, or consolidated into larger ones, to advance a border move. “They’re breaking down truckloads to use straight trucks and sprinter vans, which may be more accessible [than tractor-trailers] in different parts of Mexico. We see them breaking shipments down to get a skid or two for an air cargo shipment.”

This is a problem unlike others importers and shippers have faced in the past. Natural disasters typically affect specific areas, and their aftermath is typically limited. But there’s nothing natural about the freight congestion and migration crisis at the Southwest US border, which has been exacerbated at times by US President Donald Trump’s threats to close the border.

Ultimately, reducing freight delays at the US-Mexico border depends on reducing the number of migrants and would-be immigrants, mostly from Central America, trying to enter the United States, either illegally or through asylum claims. Until the influx of migrants is reduced to a number that’s manageable by CBP, cross-border shipping will remain what it’s been: crippled. 

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

 

 

Comments

I like how our materials procurement team decided to start sourcing way more from Mexico just ahead of this crisis. Challenges aplenty.