Freight processing capacity at the border has diminished
The freight processing capacity at the border between the United States and Mexico has been cut by an average of 35% in one week thanks to the transfer of Customs and Border Protection officers from their traditional duties to immigration duties. This shift in resources comes at a time when an increase in the volume of freight processing necessitated at the border caused a serious detriment to supply chains. The backups are now worsening an already existing backup among border freight.
Larger ports are seeing heavy slowdowns but this doesn’t exist in isolated areas across the border. Rather, this occurs across the entire border. The phenomenon is taking place everywhere. Resources are currently being shifted from their ports across the border, in order to better support other aspects of border control. this pinch is felt everywhere from commercial crossings all the way to pedestrian crossings and it has serious implications for the shipping industry.
At El Paso, for example, truckers used to take approximately 50 minutes to cross the border in one direction, but now that same border crossing is taking up to seven hours on average. And these delays are being reported everywhere. Laredo is seeing delays for truckers at Customs between four and six hours. What’s worse, many news reports are indicating that these estimates are in fact quite low.
Effects on Supply Chains
This is something that is literally happening right under the eyes of all the shipping industry companies. The shippers are becoming aware of the congestion but there’s very little they can do. And it doesn’t seem as though an end is in sight. This means that shippers are going to have to find some other avenue to help relieve this congestion. They’ll have to first assess how the slow down is impacting their company and then better prioritize their shipments as a result.
What are shippers doing? Many are simply moving their goods across the border right now with as much gumption as possible in order to beat the worst of what is bound to be a worsening slow down and a potential shutdown. The U.S. president, Donald Trump has threatened a potential shutdown which would only exacerbate the existing crisis. To that end, Northbound capacity found in every Customs location is actually quite difficult because there are trucks simply unable to cross and unload the increased amount of goods being shipped in an event to thwart or circumvent this potential shut down.
There was a slight amount of fear among the shipping industry that the border could be closed and increase some volumes, but this is already shown itself to be a very busy week because it coincides with Mexican spring break and holy week. This means there was already a natural increase in the volume headed toward the United States, which has only exacerbated this problem.
How shippers are responding to delays
Shippers in America and Mexico are having problems with this cross-border freight crunch. As the produce season increases in Mexico, the volume is going to naturally ramp-up for imports and all of this is going to worsen the current congestion. Especially if there is no end in sight and a looming potential shutdown. Together, this the worst possible slow down. The New York Times has estimated that the cost of these delays are upwards of 1 million dollars per day.
There are certain shutdowns taking place at specific border crossings, and this is clashing with migrants and storm damage. Already these issues were estimated to cost a million dollars per day in lost revenue to businesses and retailers alike.
With no end in sight, the crisis itself is a slow-rolling crisis. This means that there is a risk of tens of millions of dollars being lost on a daily basis. The costs will be borne by the companies and shippers at first, but eventually, it’s going to make its way into the pockets of consumers as they end up paying out over these losses.
On a daily basis, 1.7 billion dollars worth of goods crosses into the United States from Mexico and 70% are called in by a truck. This volume is growing annually and right now it’s being shoehorned into facilities that were already ill-equipped to handle large capacity, once again exacerbating the problem of this current border crisis. Mexico’s produce season as mentioned is one of the busiest times of the year, particularly for Northbound cargo. Peak season this year has started much earlier than expected. The border has already seen a tightening of capacity and with the produce season approaching that capacity is only going to worsen.
At certain crosses, closures have had to be made on the weekends which is only worsened this problem. Produce that is now unable to make it through the border on Sundays is no longer fresh once it reaches the United States. This means that the supplies in stores are going to diminish, and this will be noticed by consumers immediately.
How resources have shifted
This shift of resources was done in an attempt to target the high number of migrants crossing the border and reportedly it would diminish the number of migrants trying to cross, but this hasn’t happened yet. Shifting so many resources have contributed to a rather chaotic level of congestion, especially as the president continues to tweet threats of closures.
What shippers should expect in the months to come
In the coming months, shippers should be prepared for persistent delays at the US border. They should identify what is at high risk and focus more heavily on those areas. Shippers need to be prepared and look at least three weeks in the future. If the situation does not change, is there a way that shippers could change their production or delay it? Perhaps only critical inputs could be targeted so that inventory is produced in other areas and used in the interim. These are all things that shippers have to consider in the coming months.
