Borderlands: U.S. supply chains’ future could be tied to Mexico and USMCA; Forager celebrates Laredo’s history as international port

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: U.S. supply chains’ future could be tied to Mexico and USMCA; Forager celebrates Laredo’s history as an international port; CBP aims to keep Mother’s Day flowers pest-free; Dachser Mexico offers new customs house brokerage services.

U.S. supply chains’ future could be tied to Mexico and USMCA

Mexican President Andres Manuel Lopez Obrador recently said border factories that are considered key to United States supply chains could open in the next few weeks.

“We are aware of the interrelation that exists with production and trade with the United States; Mexico is the main commercial partner of the United States,” López Obrador said during his daily press briefing on Tuesday. “In the auto industry we have been asked to consider opening auto parts companies early.”

Obrador has not committed to any specific date yet, but said factories across Mexico could open sometime in early June.

That’s welcome news to U.S. officials who have been pressuring Mexico to reopen hundreds of automotive and aerospace factories that have been closed since Obrador declared a national health emergency on March 30.

U.S. automakers – including General Motors, Ford Motor Co. and Fiat Chrysler – have discussed plans to reopen their factories around May 18, potentially putting as many as 150,000 people back to work. 

Toyota Motor Corp. and Honda are targeting May 11 to open their U.S. factories.

Audi, BMW, Fiat Chrysler, Ford, General Motors, Honda, Mazda, Nissan, Toyota and Volkswagen have factories in Mexico. Heavy duty truck makers Freightliner and Navistar also have Mexican factories.

David Henry, regional manager for Mexico at GlobalTranz, said many U.S. auto factories need parts from Mexico.

“U.S. industries and North American supply chains are highly dependent on Mexican parts. Some of these plant openings are not going to be able to take place in a very big way if they’re not able to get 40% or more of the supplies that they typically get from Mexico,” Henry said. “I think now more than ever, people have realized how important Mexico is to the U.S. economy.”

Henry said the upcoming launch of the United States-Mexico-Canada Agreement (USMCA) on July 1 has also added another layer of uncertainty for manufacturers on both sides of the border.

“Our [Globaltraz] team is based in Monterrey, Mexico, and we support all of our clients with cross-border solutions, and one of the main topics besides COVID-19 is the USMCA,” Henry said.

Some Globaltranz clients have expressed concerns about the USMCA, partly “driven due to a lack of clarity or guidance by the U.S. government and what that ramp up should look like headed towards the deadline,” Henry said. 

Henry added there are concerns about the USMCA’s rules of origin requirements and labor provisions, which affect manufacturers.

“This is going to bring some pretty big challenges,” Henry said. “I believe the USMCA requirements will be implemented in phases [starting in July] and they will be staggered out as well. We’re monitoring it closely, because we know that that’s going to impact several industries, particularly the automotive industry.”

Henry has more than nine years of logistics experience working with original equipment manufacturers (OEMs) such as  GM, Ford, Volkswagen, Nissan, and the PSA Group.

Henry said he has been in contact with a lot of OEMs to understand how they have been impacted.

“Our business unit in Mexico has been hard at work on a daily basis to ensure that supply chains remain intact,” Henry said.

Another factor adding uncertainty is when the coronavirus pandemic will slow down in Mexico.

“Mexico is essentially in phase three of its coronavirus pandemic right now, It is in its most critical point during this pandemic, and it is being taken very seriously,” Henry said.

As of May 8, Mexico has almost 27,000 confirmed cases of coronavirus and has recorded almost 3,000 deaths. 

Forager celebrates Laredo’s history as an international port

More than 14,000 trucks cross the World Trade Bridge port of entry in Laredo everyday, making the Texas-Mexico border city one of the largest epicenters of foreign trade in the United States.

Matt Silver, chief executive officer and co-founder of Chicago-based Forager, said he “absolutely loves Laredo.”

Forager is a freight tech company focusing on freight from Mexico and Canada.

Silver recently wrote a lengthy blog post on the Forager website that details Laredo’s long history as an international trade port.

“Laredo is THE city for cross-border freight and I’ve been there probably 15-20 times,” Silver said. 

For the blog, Silver also interviewed his “friends in Laredo,” most of whom work in freight, logistics or trucking industries.

“Freight runs in our blood,” said Gerardo Alanis, chief executive officer of Laredo-based Cold Chain Solutions.

Port Laredo’s trade totaled $18.88 billion for the month of March, and $55.5 billion from January through March 2020, according to Census Bureau data analyzed by WorldCity

CBP aims to keep Mother’s Day flowers pest-free

U.S. Customs and Border Protection (CBP) officers have been working to ensure that personal and commercial imports of plants and flowers for Mother’s Day are free from insects, pests and diseases.

“CBP officers and agriculture specialists typically encounter thousands of floral arrangements from Mexico during the Mother’s Day holiday period and maintain their commitment to uphold federal agricultural regulations,” said Randy J. Howe, CBP’s director field operations in Laredo.

CBP specialists check plants and flowers for insects, pests and diseases that could harm the agricultural and floral industries of the United States. A single harmful pest could cause millions of dollars of damage to the nation’s crops, officials said.

Mother’s Day, Valentine’s Day and the Easter holiday weekend are traditionally times when CBP agriculture specialists see a large influx of floral arrangements from Mexico and South America.

The U.S. imported $1.31 billion of fresh-cut flowers during 2019, according to data analyzed by WorldCity.

Dachser Mexico offers new customs house brokerage services

Dachser Mexico, a global supply chain and logistics provider, recently added customs house brokerage (CHB) services to its capabilities portfolio.

Dachser Mexico aims for seamless, ‘interruption-free’ shipping with its new CHB offering, the company said in a release. Dascher offers its CHB support at 21 trade ports across Mexico.

Some of the new services include single point-of-contact, simplified shipment management processing, complete documentation management, specialization in customs clearance by specific sectors, international trade consulting and guidance on international customs regulations.

“Businesses are always looking for cost-effective solutions without losing reliability. With the addition of our new CHB services at Dachser Mexico, we are showing our commitment to helping customers take advantage of their global commerce opportunities,” Edgardo Hamon, general director of Dachser Mexico, said in a release.