Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Supply chain issues halt more automakers; GrubMarket acquires Texas produce wholesaler; WDSrx opens pharmaceutical warehouses in Texas, Nevada; and Peak-Ryzex announces partnership with distributor, logistics firm.
Supply chain issues halt more automakers
A shortage of semiconductor chips has turned the global automotive industry upside down over the last several months.
The latest automakers to announce production cuts due to supply chain issues are Honda Motor Co. Ltd and Toyota Motor Corp.
Honda said Tuesday it will shut down five auto plants in the U.S. and Canada on Monday, as well as a plant in Celaya, Mexico. Honda did not give a timetable when production could resume at the plants.
“We continue to manage a number of supply chain issues related to the impact from COVID-19, congestion at various ports, the microchip shortage and severe winter weather over the past several weeks,” Honda said in a statement.
Toyota vehicle and engine factories in Kentucky and Alabama, as well as an assembly factory in Guanajuato, Mexico, have been affected by the supply chain issues. The company said it will cut shifts or production lines on both sides of the U.S.-Mexico border for vehicles such as the Camry and Avalon sedans, Tacoma pickup truck and RAV4 sport-utility vehicle.
They join other companies such as General Motors Co. and Stellantis that have had to shut down plants on both sides of the U.S.-Mexico border in March because of the global shortage of semiconductor chips.
Matt Silver, CEO of Forager, said the chip shortage has not had a huge impact on his company or clients yet.
Forager is a Chicago-based FreightTech firm. Forager launched SCOUT — the company’s cross-border booking and pricing platform — in October 2019. Forager also recently launched a cross-border load board.
“As a business, we made a decision to expand our industry focus to the consumer packaged goods industry, food and beverage and other less manufacturing-oriented and more production-oriented goods, because it was all stuff that people are consuming,” Silver told FreightWaves. “We’ve focused a lot over the last year in growing other volume to where we haven’t seen as much of an impact on automotive the way that you would see from other areas.”
So far, the disruptions to automotive supply chains have not significantly disrupted key freight markets such as Laredo, Texas, where many cars and parts suppliers ship their products.
At 11%, tender rejections in Laredo are far below the national average at 26%. The lower tender rejections in Laredo could be attributed to lower tender volumes, instead of increasing capacity. Laredo’s headhaul Index rose moderately from a week ago, signaling a probable tightening in capacity, according to FreightWaves SONAR data.
Silver said the lack of semiconductor chip inventory for domestic automakers is another reason manufacturers could consider relocating their supply chain operations to North America.
“I think about 88% of semiconductor chips that are used by U.S. communication industries, as well as automotive and defense industries, are made outside of the U.S.,” Silver told FreightWaves. “The U.S. is making less and less of it here. That means that we’re relying on a lot of supply chains outside of North America. That kind of puts us in a weird spot.”
While some U.S. companies have started reshoring (transferring business operations from overseas to their origin country) in the last decade, the COVID-19 pandemic in 2020 provided an even stronger reason to consider relocating supply chains closer to home, said Harry Moser, founder of the Reshoring Initiative.
Reshored jobs were up nearly 45% in 2020, according to data compiled by the Reshoring Initiative.
“A significant cause of the pickup in reshoring is COVID-19,” Moser wrote in a recent blog post. “Reshoring has already been a serious consideration for companies due to the ongoing U.S.-China trade war, rising costs and risks, and environmental initiatives; the pandemic has shined an even brighter spotlight on these issues.”
President Joe Biden signed an executive order on Feb. 24 that’s intended to address the chip shortage through a review. Biden also ordered a review of supply chain vulnerabilities for semiconductors last week.
“Seeing Joe Biden kind of make that executive order around supply chains throughout the U.S. and how that expands the impact in Mexico, I think you’re going to see more encouragement of manufacturing to happen closer to home and not in Asia,” Silver said. “During the election, people were saying that they thought that Biden might be the one that pushes for more of a relationship with China. Now we’re seeing that he is in fact on the same page about nearshoring and bringing manufacturing closer to home to shorten the supply chain.”
GrubMarket acquires Texas produce wholesaler
Officials at San Francisco-based GrubMarket said the acquisition helps boost its nationwide food supply chain presence. Terms of the acquisition were not disclosed
GrubMarket is a food technology and e-commerce company that provides a platform for consumers to order produce and other food and home items for delivery. The company also has a business-to-business service in which it supplies grocery stores, meal-kit companies and other companies.
RJ Produce is the second wholesaler GrubMarket has acquired in Texas’ Rio Grande Valley. In September 2020, GrubMarket acquired Alamo, Texas-based Fresh Tex Produce, a company founded in 1999 by Kenny Alford and Jesus Falcon.
RJ Produce was founded in 2004 by Rick Gorena and provides fruits and vegetables to a variety of businesses throughout the U.S. and Mexico.
WDSrx opens pharmaceutical warehouses in Texas, Nevada
Logistics services provider Woodfield Distribution (WDSrx) recently opened warehouses in San Antonio and Reno, Nevada, to serve manufacturers of pharmaceutical drug products and related categories.
Company officials said both markets were underserved in the specialized pharmaceutical logistics sector, which requires temperature-controlled warehouses to store products.
The facility in San Antonio is a 54,000-square-foot warehouse located in the Cornerstone Industrial Park. The warehouse in Reno is a 78,605-square-foot facility in the NV South Meadows Business Park.
WDSrx is a Boca Raton, Florida-based pharmaceutical logistics firm.
Peak-Ryzex announces partnership with distributor, logistics firm
Peak-Ryzex Inc. recently announced partnerships with independent service provider (ISP) RB Express and grocery distributor River Valley Foods.
RB Express selected Peak-Ryzex’s Zebra Workforce Connect Push-to-Talk (PTT) Pro software, an application that provides drivers the ability to communicate with each other and central operations in real time.
The upgrade will help Miami-based RB Express supervise shifts, monitor mid-route changes and address delivery concerns and accident reports. RB Express is an ISP for a major ground logistics company, according to a release.
Peak-Ryzex also announced a partnership with River Valley Foods to upgrade to a fleet of customized Zebra TC57 and TC77 mobile devices for field data collection.
The goal of the upgrade was to create a reliable inventory tracking solution and create a friendly user interface for field sales reps who did not require extensive training, said Dan Amidon, hardware systems manager at Syracuse, New York-based River Valley Foods.
“These mobile devices are our bread and butter, so any downtime can be detrimental to our business,” Amidon said in a release.
Peak-Ryzex, based in Columbia, Maryland, is a provider of digital supply chain and mobile workforce solutions.
More articles by Noi Mahoney