Freight ‘Funnel’ Narrowing at US-Mexican Border

Moving northbound freight across the US-Mexico border is increasingly like threading a needle, owing to rising volumes, insufficient infrastructure, and trade tensions stemming from the migration crisis. Shippers trying to expedite US-bound freight look to intermodal rail, air cargo, and maritime options, but there’s no ready replacement for cross-border trucking.

The cost of cross-border trucking, which moved $424 billion in goods across the Southwest border last year, is predicted to rise as capacity within Mexico and at the border tightens.

From Otay Mesa in San Diego, California, to Brownsville, Texas, there are only 88 truck lanes at border entry ports. That’s a tight squeeze, especially during peak season surges.

To cope with this narrowing freight funnel, shippers need to make better use of technology, align more closely with logistics partners, and advance their supply chain planning and scheduling. The need for longer-term solutions is critical for cross-border shippers and their transportation partners that see supply chains slowed whenever there’s a freight surge or tariff threat.

More freight is coming, and unless they can find ways to divert truck freight or alleviate congestion through better shipment planning, more costly delays at the border are coming too.

With the threat of US tariffs removed, and the lifting of US tariffs on Mexican steel and aluminum in May, shippers are preparing to ramp up cross-border business. The US trade war with China is adding to cross-border volume from Mexico, as importers shift sourcing to avoid tariffs.

The US trade dispute with Mexico, which lately has become entangled with immigration policy, has not slowed the pace of trade across the US-Mexico border. After declining slightly in 2015 and 2016, matching a slowdown in US economic activity, US-Mexico trade has rebounded, increasing 16.8 percent over two years to $611.5 billion in imports and exports.

The US-Mexico-Canada Agreement (USMCA) could boost trade and freight volumes further if it is approved by the United States and Canada. Mexico in June became the first country to sign the treaty into law.

With the cost of May’s cross-border shipping chaos fresh in their minds, shippers are looking for ways to better manage risk and get goods across the border efficiently as the peak US shipping and produce seasons heat up in July. Truck capacity has been loose this year, and industrial demand slack, but demand from multiple sectors could combine to tighten capacity.

Unique needs at a ‘different’ border

Congestion can be a problem at the US-Mexican border even during the best of times, as higher volumes of freight move through a small number of ports of entry. The four largest US-Mexico border truck crossings — Laredo, Texas; Otay Mesa, California; El Paso, Texas; and Hidalgo, Texas — handle 78 percent of the tractor-trailer volume crossing to the United States.

“We have a unique situation. Our southern border is different from the northern border or any other border,” said Michael Ford, vice president of government and industry affairs for BDP International. “Because of the growing amount of immigration, companies need to make sure they’re managing [cross-border shipment planning] almost on a weekly basis,” he said.

Shippers need to watch the clock, so to speak, at different border crossings, said Ford. “Trying to shift from Laredo [Texas] to Brownsville doesn’t work too well, because while you have delays at one crossing, you have delays elsewhere as well,” he said.

The problem is complicated by the fact that no two of the 20 border crossings with truck lanes are the same. In El Paso, Texas, for example, the focus is on goods moving between maquiladora plants in Ciudad Juarez, Mexico, and warehousing and logistics facilities in El Paso. By contrast, Laredo is a hub for long-distance trucking between Mexico and US markets.

Laredo, the largest US border entry point for trucks, saw 2.31 million trucks cross into the US from Mexico last year, a 6 percent increase over 2017, according to BTS statistics. (The United States doesn’t track the number of Mexico-bound trucks that cross the border.) In the first four months of 2019, northbound truck traffic to Laredo increased 5.9 percent year over year.

Laredo has a total of 16 truck lanes, 12 on the World Trade Bridge and four on the Colombia Solidarity Bridge, handling more than 12,000 trucks each day. As a US port of entry, Laredo is second only to the ports of Long Beach and Los Angeles, and it surpassed their volumes by value in May.

Mexico’s geography is another impediment to shippers seeking new routes to US markets. The distances between land ports of entry along the 1,954 mile border make it difficult, if not impossible, to reroute much freight. Much of the long-haul truckload freight from Mexico’s interior is routed through Monterrey and then to Laredo. The closest major alternative ports to Monterrey are McAllen and Brownsville, with El Paso more than 700 miles away.

And switching from one port of entry to another requires more than mapping a new route. “You need to have everything that goes around moving shipments to a different port of entry,” Jose Minarro, senior vice president of customs, Mexico for Transplace, told JOC.com. That includes the correct paperwork and new customs agents at the new border port.

“There’s a lot of formalities that need to be checked from a customs perspective. And from a logistics perspective, there’s even more stuff that needs to be aligned and set up properly beforehand,” Minarro said. Transplace recommends shippers and importers develop relations with customs agents at multiple crossing points, even if they mainly use one border port.

“If customers have a small operation shipping through Eagle Pass [Texas] and suddenly Laredo shuts down, they’re already set up with [Mexican and US] Customs, they know the local motor carriers, or if they do intermodal rail at those locations, they can do that,” said Enriquez. “We even had some customers with ocean access, and they used that.”

Source: Journal of Commerce

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email