Watch Now

Borderlands: Chip shortage sinks Mexican auto exports in July

Mexico's exports of vehicles to the U.S., Canada, Germany and other countries fell 24% year-over-year during the month of July. (Photo: Jim Allen/FreightWaves)

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Chip shortage sinks Mexican auto exports in July; Bennett Motors acquires American Eagle Logistics; Yokohama opens new distribution center near Dallas; and meth, fentanyl worth $13M seized at Otay Mesa port of entry.

Chip shortage sinks Mexican auto exports in July

The latest wave of COVID-19 infections around the world has further hindered the global supply of semiconductor chips, causing production issues in Mexico’s automotive industry, said Fausto Cuevas, director general of the Mexican Association of the Automotive Industry.

Automobile manufacturing in Mexico fell 27% in July compared to the same month last year, while exports fell 24% year-over-year, according to Mexico’s National Institute of Statistics and Geography (INEGI).

“The main cause of the very low production record for the month of July is the shortage of semiconductors,” Cuevas said during a recent monthly videoconference of industry statistics. “Most of the companies in North America have seen their production volumes affected and have to announce technical stops to adjust their production rhythms to the supply of parts and components they use, the most obvious being semiconductors.”

Mexico’s automotive production industry — which includes passenger vehicles as well as heavy-, light- and medium-duty trucks — has more than 30 foreign-owned factories across the country. This includes automakers such as Chevrolet, General Motors, Ford, Mazda, Nissan, Toyota, BMW and Volkswagen.

The sector is one of the country’s largest industries and employs around 900,000 people, according to INEGI.

Cuevas said automotive assembly plants across Mexico — along with factories around the world — have had to adjust production schedules because of the shortage of chips.

“The countries in the Asian region have performed better in terms of semiconductor supply. They have been less affected than what we have suffered and in the North American region,” Cuevas said.

Vehicle production in Mexico that has been most affected by the semiconductor chip shortage are light pickup trucks and service utility vehicles, according to Cuevas.

In July, Mexico exported 202,021 vehicles — led by General Motors (41,008), Stellantis (34,049), Nissan (32,183), Toyota (19,262) and Honda (13,405). 

More than 76% of the vehicles assembled in Mexico were exported to the U.S., followed by Canada (6.7%), Germany (5.3%), Colombia (1.5%) and the United Arab Emirates (1.4%).

Alberto Bustamante, director of foreign trade for Mexico’s National Autoparts Industry Association, said he expects automotive production in Mexico to improve the rest of the year.

“If you look at [data] between July and August, production is beginning to stabilize; it is already flattening out,” Bustamante said during the videoconference. “It has been reported that the semiconductors [supply] will stabilize by the end of this year.” 

Bennett Motor Express acquires American Eagle Logistics

Bennett Motor Express recently expanded its oilfield trucking services with the acquisition of American Eagle Logistics, according to a release.

American Eagle, based in Broussard, Louisiana, is an oilfield transportation provider serving the U.S. Gulf Coast region, with trucking terminals in Louisiana, Texas and Oklahoma. The company was founded in 2011.

Terms of the acquisition were not disclosed.

“The addition of American Eagle will allow us to expand our efforts in oilfield services substantially,” David Lowry, CEO of Bennett Motor Express, said in a statement. “Bennett and American Eagle will provide over 3,500 drivers and owner operators to its customers. We are fortunate to not only be able to increase our fleet capacity, but to gain additional drivers and owner operators with experience in specialized trucking.”

McDonough, Georgia-based Bennett Motor Express is a flatbed and specialized carrier serving customers in 48 states. It is one of seven operating companies affiliated with Bennett International Group.

Yokohama opens new distribution center near Dallas

Yokohama Tire Corp. announced it has opened a 430,000-square-foot distribution center in Wilmer, Texas, about 15 miles southeast of Dallas.

The facility will first be used to distribute Yokohama’s passenger car and light truck tires, followed by commercial truck and bus products in 2022, the company said in a release

“One of our biggest goals is to elevate our customer service and the new location in Texas will accomplish that,” Rick Alonzo, vice president of supply chain and logistics for Yokohama Tires, said in a statement. “We’ll have better control of having the right products in the right place at the right time, which is a huge benefit for dealers.”

Yokohama Tire Corp. is the North American manufacturing and marketing arm of Tokyo-based Yokohama Rubber Co. The company has 2,100 employees in the U.S., as well as manufacturing facilities in Salem, Virginia, and West Point, Mississippi. 

Meth, fentanyl worth $13M seized at Otay Mesa port of entry

U.S. Customs and Border Protection officers recently seized 2.8 tons of methamphetamine and fentanyl at the U.S.-Mexico border crossing in Otay Mesa, California.

It happened Aug. 5 at the Otay Mesa port of entry commercial cargo facility. Officers were checking a tractor-trailer hauling a shipment of household goods when they discovered 5,528 pounds of methamphetamine and 127 pounds of fentanyl powder in 414 packages, the CBP said.

Officials said it was one of the largest methamphetamine drug-smuggling seizures along the Southwest border. The estimated street value of the drugs was $13 million.

The truck driver was arrested for the alleged narcotic smuggling attempt. CBP officers turned the driver over to Homeland Security Investigations. CBP officers also seized the tractor, trailer and narcotics.

“This amount of fentanyl and methamphetamine is enough to ruin countless lives and fund transnational criminal organizations,” Pete Flores, CBP director of field operations in San Diego, said in a statement

Click for more FreightWaves articles by Noi Mahoney.

More articles by Noi Mahoney

Rivian considers Texas, Arizona for $5B auto plant

US settles labor dispute with Mexican auto parts factory

Golden Ray wreckage continues leaking oil off Georgia coast

Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact [email protected]