Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Truck capacity tight near Mexican border; drugs found in shipments of ketchup and onions; DHL opens new foreign trade zone in El Paso; and Commerce opens inquiry aimed at Mexican wire mesh.
Freight volumes rising across Texas as border capacity tightens
Long-haul freight volumes are rising across Texas — especially in Houston, Laredo, San Antonio and Austin — with strong week-over-week gains and high rejection rates.
The surge in long-haul volumes in Texas is from shippers scrambling for any available trucks near the U.S.-Mexico border, said Troy Ryley, president of Redwood Mexico at Redwood Logistics.
“The southern border market continues to be tight,” Ryley said. “Mexican carriers have not increased their fleets. Clients are paying to have equipment deadheading from the border into markets like Monterrey, Mexico.”
Northbound freight out of Mexico continues to tighten, reaching an all-time high earlier in July, according to Redwood Logistics.
“Laredo and El Paso outbound markets are incredibly tight. Available load-to-truck ratio spiked to 40-to-1 (on July 9) for Laredo and over 20-to-1 in El Paso. It is one of the tightest markets we have experienced in the last few years,” Redwood Logistics wrote in a letter to clients in July.
Officials at Chicago-based freight-tech firm Forager said they also “continue to see a crunch in northbound capacity” because of the imbalance in Mexico’s northbound and southbound volumes.
“The lack of export from the U.S. to Mexico at the moment is creating a gap in the network,” said Matt Silver, founder and chief executive officer of Forager.
Silver said the coronavirus pandemic has added to the trade imbalance because more “essential goods” are staying in the U.S.
“Essential goods that were exporting to Mexico, but also serving the U.S., are staying in the U.S. to service U.S. citizens first and those consumer goods aren’t making it to Mexico,” Silver said. “We’ve also seen shippers willing to pay more for northbound shipments, allowing them to deadhead capacity from Laredo to the Bajio, Mexico City and Puebla.”
The imbalance in north-south truck traffic from Mexico has made Houston one of the tightest of all major outbound markets in the country right now, according to data from the FreightWaves SONAR platform.
Outbound tender rejections in Houston are up around 8.4%, 554 basis points (bps) week-over-week. Houston outbound volumes are up 13% week-over-week, while its headhaul index has jumped 27% week-over-week. The haul index measures the likelihood of being able to find a load out of a market.
San Antonio’s outbound volumes are up 19.7% week-over-week, while Austin is up 7.6% and Laredo is up 6%. The outbound tender rejection rates also rose in each of these cities week-over-week, creating volatile spot market rates.
Ryley said he expects Mexico cross-border truck capacity to remain tight through the end of summer.
“The clients that approached the post-COVID-19 market asking for rate reductions are now paying the price of lack of capacity,” Ryley said. “Usually peak season ends July 4 or so. We expect this situation to run through July and possibly August.”
DHL opens foreign trade zone at El Paso airport
DHL continues to expand its foreign trade zone (FTZ) footprint by opening a location at El Paso International Airport in West Texas.
FTZs are secure areas in which shipping goods are handled and supervised according to U.S. Customs and Border Protection (CPB) regulations. FTZs are aimed at reducing, deferring or mitigating the impact of tariffs and taxes, according to DHL.
The newest FTZ joins seven other DHL locations: New York, Atlanta, Chicago, Dallas-Fort Worth, Miami, San Diego and Los Angeles.
“An FTZ is a vital resource for customers that want to compete in international trade,” said Marc Gephart, director of U.S. customs product development and FTZ for DHL Global Forwarding.
Three additional FTZs are planned for San Francisco, Laredo, Texas, and San Juan, Puerto Rico, according to DHL officials.
$3 million in drugs found in shipments of ketchup and onions
More than $3 million worth of marijuana and methamphetamine was recently seized in commercial trucks from Mexico.
The busts occurred separately at two U.S.-Mexico border ports of entry, according to releases from CBP.
The first occurred at Pharr-Reynosa International Bridge in South Texas on July 17.
CBP officers assigned to the bridge cargo facility encountered a tractor-trailer hauling a commercial shipment of ketchup weighing 7,645 pounds.
Officers quickly discovered that the buckets contained more than just ketchup, removing 968 packages of alleged marijuana that were hidden inside. The drugs have a street value of $1.53 million.
The second incident occurred July 19, when border officials found 614 pounds of methamphetamine inside a shipment of green onions at the Otay Mesa Port of Entry in Southern California.
Officers stopped a truck hauling “mint leaves and other spices” in a tractor-trailer. During an inspection, officers found 40 wrapped packages of a crystal meth with the green onions. The drugs have a street value of $1.5 million.
Both drivers were arrested and the cases have been turned over to the Department of Homeland Security.
US Commerce opens inquiry aimed at Mexican wire mesh
The U.S. Department of Commerce has initiated anti-dumping and countervailing duty investigations into imports of wire mesh from Mexico, according to a release from the U.S. International Trade Administration (ITA).
The petitions were filed by Insteel Wire Products Co., Mount Airy, North Carolina; Mid-South Wire Company, Nashville, Tennessee; National Wire LLC, Conroe, Texas; Oklahoma Steel & Wire Co., Madill, Oklahoma; and Wire Mesh Corp., Houston.
The alleged dumping margins range from 64.07% to 152.68%. In the CVD investigation, Commerce will determine whether Mexican producers of standard steel welded wire mesh are receiving unfair government subsidies.
Imports of steel welded wire mesh from Mexico were valued at $46.7 million in 2019.