US-Mexico border bottleneck to continue

Spring 2019 saw drastic measures taken to ship goods over the US-Mexico border. Some shippers resorted to chartering cargo planes to fly less than 20 miles from Ciudad Juárez, Mexico to El Paso, US, due to the bottleneck of trucks at customs facilities on the border.

The main reason for the extensive delays was President Trump’s administration’s decision to remove around 750 border agents from customs and reassign them to immigration posts, causing the border to partially close. The loss of human resources at the ports of entry slowed down inspections of commercial and passenger traffic and the knock-on effect was huge tailbacks. Shippers and logistics companies with time-sensitive consignments were forced to use costly air transport whist some road freight was diverted to far away ports of entry to get to ‘neighbouring’ facilities.

Mexico is the US’ 3rd largest goods trading partner with goods trade totalling $611.5bn in 2018. Delays at the border can therefore have a significant impact further down US supply chains. The border city of San Diego annually loses of $500m in revenues because of customs inspection wait times at the US-Mexico border.

Although the situation has since returned to normal, after weeks of eight to 10-hour delays, industry experts are warning both importers and exporters to plan for further disruptions.

Firstly, as summer fast approaches Mexican routes will become busier with holidaymakers. The additional volume of traffic on the road could lead to even greater bottlenecks this time around.

The potential for Trump to instigate a disproportionate response poses a risk. He has previously threatened to shut the border as punishment for Mexico not controlling immigration flow. Despite backtracking on this, saying he will not close the US-Mexico border for another year, his unpredictable behaviour leaves little trust. The increasing number of migrants from Central America reaching the southwest border could be the trigger for an irrational response. Trump runs the risk of cutting his nose to spite his face regarding his border policies.

Trump has also recently announced that he will not fund new infrastructure plans without Congress passing the highly anticipated USMCA trade deal, in a ploy to bargain with the Democrats. The deal, set to replace NAFTA, was signed by all three parties in November 2018, and is essentially the same pact with some updates to suit 21st century trade, however it needs ratification from all governments to proceed and the US Congress has not yet approved it. The longer ratification is left, the more uncertain it becomes, however, recent moves to repeal steel and aluminium tariffs by the administration is a positive step forward.

It is hoped, by both US and Mexican businesses and logistics providers, that ratification of the deal could bring about some respite to cross-border trade issues, following a particularly challenging last few months.

Source: Transport Intelligence, May 28, 2019

Author: Holly Stewart