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Border slowdown from waves of migrants equals big trade trouble

Waves of migrants at the Mexican border have prompted the Department of Homeland Security to temporarily assign Customs and Border Protection agents at the southern ports of entry to the Border Patrol. Their new role is not necessarily the traditional duties of watching the border and conducting interdiction – rather, they are being reassigned mostly to process migrants who are giving themselves up at ports of entry to seek asylum, and to transport these migrants to and from medical checkups and holding houses.

In an April 11 online report, The Journal of Commerce quoted multi-modal logistics company C.H. Robinson Worldwide as saying that the shift of CBP officers to Border Patrol “has reduced cargo processing capacity along the border by 30 to 40 percent.” In the major cargo ports of entry on the Mexican border, crossing lanes have been reduced, FAST (rapid crossing) lanes suspended, and weekend crossings limited. This has added delays that are resulting in extra hours crossing northbound cargo into the U.S. Border crossing times for cargo have stretched to as long as 10 hours in Laredo and up to nine hours in El Paso (video of the lines of trucks and cars waiting to cross at the Santa Teresa Port of Entry can be seen on the Border Industrial Association’s Facebook page).

Trucks wait in line to cross into the United States at the Santa Teresa-San Jeronimo border crossing in 2016. The waits have become long lately because Customs and Border Protection agents have been transferred to Border Patrol duties to process a wave of migrants crossing the border seeking asylum. (Andres Leighton/For The Albuquerque Journal)

Commercial drivers are sleeping in their trucks so as not to lose their place in line when ports of entry open the next day. At the Nogales, Ariz., Port of Entry, the primary port for Mexican produce entering the U.S., companies are nervously watching the increasing crossing times worried that at a certain point their shipments will spoil before they reach consumers.

What is described above is occurring at the border as Congress and the White House fail to propose any workable solution to fixing the immigration/asylum issue, and put more boots on the ground to keep trade flowing between the U.S. and Mexico. And this is not a “border” or Mexico issue; it is a national and North American issue. Let’s explore.

Stanco Metal Products located in Santa Teresa uses steel to produce industrial parts that are later shipped to Mexico. Above, Stanco worker Joe Martinez loads steel rolls to be later used to produce parts. Businesses are suffering because of delays in commercial crossing from Mexico into the United States as agents process migrants entering the U.S. (Roberto E. Rosales/Albuquerque Journal)

A steel mill in Indiana produces flat steel that is rolled into a 47,000-pound coil that is shipped to a distributor just north of the Santa Teresa Port of Entry on New Mexico’s border with Mexico. The distributor sells the coil and some steel that is already cut to specifications to a company in Juárez, producing heating and air conditioning components. The Mexican company sends its products to an American distributor located in Denver, which sells the product to customers in the western U.S. Normally, this production sharing and cross-border trade works very smoothly and results in an ample supply of products at competitive prices.

However, the severe delays caused by a broken U.S. immigration system without adequate personnel to deal with it are not normal, and are wreaking havoc within the supply chain. The steel coil company in Santa Teresa has a contract to buy a certain amount of the steel mill’s production. The Indiana mill partly bases its production on this contract. Because the northbound commercial cargo lanes have been reduced due to lack of personnel, the products being made in Mexico and shipped to the U.S. fall to a trickle of what they were previously by the simple fact that fewer northbound shipments can occur because of delays.

The Mexican company has to notify the Santa Teresa distributor that it is cutting its orders in half. Because it is on contract to purchase a set amount of steel, the Santa Teresa company continues to accept shipments until its warehouse is full. It then has to go to Indiana to try to suspend or renegotiate its contract with the steel mill. A compromise could be reached, but then the steel mill faces the prospects of having to lay off some of its employees because all of its steel coil distributors on the border are asking for the same renegotiation. Meanwhile, the distributor in Denver is short on product for its orders, and prices start to creep up because demand outstrips supply.

Some might say that the solution is simple: The Mexican producer should set up production in the U.S. to get around the bottlenecks. However, production cannot be established overnight. If this eventually occurs, the price of heaters and air conditioners will most likely increase, and the U.S. consumer ultimately will be forced to pay the higher price.

The U.S.-Mexican production and trade relationship are what help North America compete against other trade blocs in Asia and Europe. Trade affords both countries with competitive advantages that collectively make North America a more attractive and stronger production base. Delays in commercial shipments at the border are affecting the automotive, consumer products, aviation, and agricultural industries, among others.

Politicizing the current situation only lengthens the path to a solution of crafting sensible immigration and asylum laws, and funding additional CBP personnel at our southern border. Perhaps when the bottlenecks and delays at the border start putting jobs in the Midwest and other parts of the U.S. in danger, the rest of the country will realize what is happening is not a “border” issue, but a much larger one.

Jerry Pacheco is the executive director of the International Business Accelerator, a nonprofit trade counseling program of the New Mexico Small Business Development Centers Network. He can be reached at 575-589-2200 or at jerry@nmiba.com.

 

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