US-Mexico supply chains intact despite coronavirus

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: US-Mexico supply chains intact despite coronavirus; border agents foil drug smuggling attempts worth $2.7 million; Port Houston reopens container terminals following positive coronavirus test; Pharr Bridge Business Park opens 100,000-square-foot distribution center.

US-Mexico supply chains intact despite coronavirus 

Despite adding new travel restrictions to both the northern and southern borders of the United States, U.S. officials said “economic activity” with Canada and Mexico would be allowed to continue.

“We want to make sure that cargo continues, trade continues, health care workers continue to be able to traverse that border. But tourism, some recreational activities and other things need to stop during this [coronavirus] crisis,” Chad Wolf, acting secretary for Homeland Security, said during a press conference Friday.

Mexican Foreign Relations Secretary Marcelo Ebrard added, “The border is not closed.”

“It is not going to affect commercial activity between the two countries,” Ebrard said on Friday.

That is welcome news to logistics professionals and trade analysts, who said closing the borders to trade would have been damaging to the economies of the U.S., Mexico and Canada.

“I do not foresee any closing of the border to trade because that would only exacerbate the economic hardship,” Kenneth Smith Ramos told FreightWaves.

Smith is a former chief negotiator for the United States-Mexico-Canada Agreement for the Mexican government. He is currently a partner at Mexico City-based Agon, Economía, Derecho, Estrategia.

“Trade has not been affected per se, but the coronavirus will have a strong impact in every economy, without a doubt,” Smith said. “Things are very uncertain in Mexico and there is a general feeling of unease because the Mexican government has not taken the same types of measures that the U.S. and Europe are now undertaking to contain COVID-19 (closing restaurants, bars, gyms, prohibiting large gatherings, etc.) and if they are, it is late in the game.”

Matt Silver, founder and CEO of Forager, said freight volume into and out of Mexico “tanked thanks to General Motors, Ford, Fiat Chrysler and Nissan all shutting down production for the next few weeks.”

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

Automakers such as Ford, General Motors, Fiat Chrysler, Honda and Toyota have taken preventive measures to protect workers from the coronavirus in factories across North America.

Silver said if the coronavirus continues to spread, especially to cities like Laredo, Texas, that are ports of entry for Mexico, “it could have a massive impact.”

“I imagine this will slow things down because inevitably, customs agents will be infected and we’ll see a shortage in staffing,” Silver said.

“Production in a lot of industries is going to grind to a halt and we’re going to see capacity lighten up but, at the same time, we may see volume increases for the core products that people need right now, like food, fresh and frozen produce, beverages and medical supplies, a lot of which is produced in Mexico,” Silver said.

Officials at Fr8Hub said the coronavirus might disrupt trade in the short term, but U.S., Mexican and Canadian trade is strong enough to weather any storm in the long run.

“Anything that you can think of is manufactured in Mexico; there is a huge demand over there right now for consumer goods,” Ohad Axelrod, Fr8Hub co-founder and CEO, told FreightWaves. “It is causing spiking prices in dry vans anywhere between 10% to 25%, depending on the demand and on the region.”

Fr8Hub is a digital freight marketplace that matches cross-border shippers in Mexico and the U.S. with available trucking companies and drivers.

“So we see the huge demand continuing, and we have some phenomenal carrier partners. And, you know, we’re definitely growing fast, and we’re trying to solve as many problems as we can to ensure the focus will continue smoothly,” Axelrod said.

Jesus Alvarez, Fr8Hub’s head of carrier sales, said the U.S., Mexico and Canada need to view each other as partners, not trade adversaries.

“We should see ourselves as U.S., Canada, Mexico — we should all bond, and find solutions for North America, find the necessities our population needs to keep pushing forward; the borders need to stay open,” Alvarez said.

Source: freightwaves.com

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