Chart of the WeekMarket InsightNewsTradeTrucking

Border town wait times explode prior to tariff announcement

FreightWaves’ SONAR chart of the week (June 9, 2019 – June 15, 2019)

Chart of the Week: Wait Time (El Paso, Laredo) (SONAR: WAIT.ELP, WAIT.LRD)

International trade has been a going concern for any involved in supply chain management over the past year as the current administration continues to impose tariffs on many goods entering the U.S. Combine the tariff concerns with immigration policy and you get a headache for many truckers attempting to haul freight out of two of the largest inland ports of entry in the U.S. of El Paso and Laredo, Texas. According to FreightWaves Wait Time Index, which measures the average amount of time a truck spends parked at a facility in minutes excluding drop trailers, drivers are spending over an hour more on average in El Paso and Laredo, Texas this May compared to 2018.

Earlier in the week FreightWaves Associate Editor John-Paul Hampstead reported how there has been little evidence on the brokerage side of another freight pull-forward like we have seen resulting from tariffs placed on Chinese imports. Of course, the president did not make the announcement about tariffs increasing on Mexican imports until May 30th, not nearly enough time to have an impact on wait times before the close of the month, but the tariff and immigration situation are related politically.

Earlier in April, the U.S. government decided to move 750 border agents from commercial to immigration duties to help alleviate the spiking number of illegal immigrants entering the country. This caused a massive delay at the border crossing for commercial vehicles. This resulted in a pileup of freight in May in the border markets, which is why wait times increased by as much as 41% in the largest crossing port of Laredo.

Illegal immigration has been a sticking point for the president, so with surging numbers of immigrants attempting to enter the U.S. from Mexico, a large number coming all the way from Central America, the president decided to use tariffs as leverage for action from Mexico.

Fortunately, the U.S. and Mexico came to an agreement this weekend where the U.S. would not impose a 5% tariff on all imports from America’s second largest supplier of goods. These tariffs would potentially impact the automotive and agricultural sectors significantly as they make up a lot of the import volume from Mexico.

Both items are difficult to source from other locations, produce being the most obvious as the growing season for a lot of the items imported is shorter north of the border.  Mexico is the largest supplier of agricultural imports, with $26 billion in total value imported in 2018. Vehicles are the highest valued import coming from Mexico at $93 billion. Total imports value was $346.5 billion.

The situation with Mexico is far different from the one with China logistically speaking. Sharing a border crossing makes the logistics of moving goods much easier than navigating the large amount of open water between the U.S. and China. Clearing customs tends to be more difficult as well due to the large amount of volume that clogs the ports from time to time.

Outbound Laredo volumes averaged 13% higher in May versus April. (Image: SONAR OTVI.LRD)

The trade situation has changed in the last year, however. Laredo surpassed Los Angeles as the largest port by trade value earlier this year, as the Texas port handled $20.09 billion in trade during March versus the port of L.A. handling $19.66 billion. The impact of Chinese New Year did open the window for this, but it is the first time in history this has occurred.

One thing is for certain, as long as trade is being used as a negotiating tool, companies with supply chains will struggle to keep costs manageable. The U.S. freight market is heavily dependent on goods coming from outside its borders, and policy changes more rapidly than companies can shift their supply chain infrastructure.

About Chart of the Week

The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week the Sultan of SONAR will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.

SONAR aggregates data from hundreds of sources, presenting the data in charts and maps and providing commentary on what freight market experts want to know about the industry- in real time.

The FreightWaves data-science and product teams are releasing new data-sets each week and enhancing the client experience.

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Zach Strickland, FW Market Expert & Market Analyst

Zach Strickland, the “Sultan of SONAR,” curates the weekly market update. Zach is also a one of FreightWaves’ Market Experts. With a degree in Finance, Strickland spent the early part of his career in banking before transitioning to transportation in various roles and segments, such as truckload and LTL. He has over 13 years of transportation experience, specializing in data, pricing, and analytics.

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