The promo industry has a new cause for supply chain concerns aside from existing delays in products shipped from China.
On Friday, the Texas Department of Public Safety began inspecting trucks crossing into the U.S. along the state’s border with Mexico. The move, implemented on the order of Gov. Greg Abbott, was reportedly made in response to the impending end of the federal government’s pandemic-era emergency health order Title 42 that allowed border authorities to turn away migrants, even those seeking asylum.
- The inspections, however, duplicate work already conducted by U.S. Customs and Border Protection (CBP) and have led to extensive delays at the border and sparked protests on the Mexican side.
Background: Texas’ border with Mexico, at 1,254 miles in length, represents approximately 64 percent of the contiguous border between the U.S. and its southern neighbor. In 2018, $408 billion in trade between the countries traveled through Texas, according to the Texas Comptroller’s office, and delays at border crossings further strain a supply chain already groaning under pandemic-related closures, port backlogs and other issues.
- CBP reported on Tuesday that wait times at some border crossings are exceeding five hours and commercial traffic has dropped by as much as 60%.
- The agency points to the DPS inspections of commercial vehicles already screened and cleared by the federal authorities for the delay. DPS inspections can take between 45 minutes to an hour.
Making Matters Worse: Mexican truckers, who are generally paid by the mile, have staged protests over the delays on the Mexican side of the border at the Pharr-Reynosa International Bridge, south of McAllen, Texas, and at the Ysleta Port of Entry, near El Paso, Texas. This has further slowed traffic at border crossings, bringing the Pharr Port of Entry to a standstill on Monday.
The Promo Perspective: Promotional products are among the goods that come over the border from Mexico. Several industry companies have factories in Mexico, many of which operating under a maquiladora framework—a widely used legal entity that allows companies to continuously and rapidly export U.S.-made raw materials, duty-free, and import the finished products, duty-free.
In the Association’s letter, PPAI President and CEO Dale Denham, MAS+, says, “We ask the governor’s office to provide relief to the U.S. companies and jobs affected by the lack of supply resulting from the severe delays of commercial deliveries into the U.S. The delays are causing unreasonable repercussions for American businesses and their employees.
“Many American companies, including in the promotional products industry, have recently diversified their supply chains due to a variety of factors, including passage of the U.S.-Mexico-Canada agreement. Those supply chains are difficult to move and the cascading effects could be imposed on Texans for the foreseeable future. Reports show some companies in other industries are already considering relocating their fulfillment centers outside Texas to avoid the harmful effects of this border policy. This would mean lost jobs for Texans.”
Supplier MAC Specialties in Oceanside, New York, has a manufacturing facility in Monterey, Mexico, and imports goods back into the U.S. via the Pharr-Reynosa International Bridge, south of McAllen, Texas. MAC Specialties President Mark Cohen says, “We had a truck that was supposed to cross at Friday noon and didn’t cross until Tuesday. The trucks were waiting in line from Friday until till Tuesday afternoon. In the heat, because they couldn’t run the engine all day because of fuel access.”
MAC Specialties is permitted by the Mexican government to only cross at the Pharr Port of Entry. Fortunately, Mexican authorities moved expeditiously and temporarily relaxed the rules limiting companies to certain ports of entry. Cohen says, “Once the Mexican government made it available, we drove 70 miles to another border crossing where there as less traffic. We have been working in Mexico since the late ’90s, and this is the first time anything like this has ever happened.”
Other Industries’ Voices: Fruit and vegetable imports are at particular risk due to the border crossing delays, as U.S. agricultural imports depend on a relatively quick inspection process to pass goods through. The U.S. imported almost $34 billion in agricultural goods from Mexico in 2020—$9 billion, or 1.3 billion pounds of it, passing though Texas—which are at risk of spoilage when sitting too long at the border. The refrigerated trailers rely on diesel to operate and refueling is unavailable to vehicles sitting in lines.
In a letter to Gov. Abbott, Dante L. Galeazzi, CEO and president of the Texas International Produce Association, says, “Border security is an important element of this region, but so is the trade that keeps millions of Texans employed. According to a study from Texas A&M University, fresh produce arriving from Mexico not only employs nearly 8,000 Texans but is also responsible for $850M in economic impact to the state. Further, our industry is in the midst of the ‘Easter Pull’ in which grocery stores are ordering products for the holiday promotion. The execution of this order has wreaked havoc up and down our supply chain and is likely to leave state store shelves with limited fresh produce supplies.”
The Texas Trucking Association (TXTA) has also highlighted the border delay’s impact on supply chains. In a statement released Wednesday, TXTA President and CEO John D. Esparza, said, “As delays increase at the border, deliveries are postponed or cancelled, perishable goods spoil, and grocery and retail store shelves begin to empty. Exports in Texas also await empty trucks on the Mexican side of the border and the lost revenue due to these delays will be felt by consumers as the price of goods increase across the country.”
Latest Developments: On Wednesday, Gov. Abbott announced that DPS would cease inspecting cargo at the Laredo border crossing to Nuevo León after Nuevo León Gov. Samuel García agreed to augment border security in his region. The inspections would continue at other border crossings in the state.
