CROSSTRADE\\\


>> 18 c r o s s i n g s 24 border


trade, is one of


stretching from Brownsville to Baja.


On the Mexican side,


thousands of maquiladoras manufacture everything from cars to consumer electronics, aircraft parts to apparel, medical devices


to drones.


Global multinationals operate the factories specifically designated for customs and duties reductions. Another major crossing,


Pharr-Reynosa International Bridge, accounts for 60% of fruits and vegetables to the U.S., or 13 billion pounds. That makes the crossing at McAllen, about an hour southwest of Brownsville, the No. 1 port of entry for produce, according to, of all sources, Rolling Stone, the iconic music ’zine that joined the rest of the commentariat in the ongoing Trump Administration feud with Obrador’s government.


USMCA Impact


That tussle seemed to be settled—or not, depending on whom you talk to—when the U.S., Mexico, and Canada last October signed the so-called USMCA, U.S.-Mexico-Canada Agreement, often referred to as NAFTA 2.0. The most relevant


provisions here pertain to automobiles. Vehicles must have three-quarters of their parts manufactured in one of the three countries to qualify for tariff exemptions, up from NAFTA’s 62.5%. If the USMCA is ever


Issue 1 2019 - FBJNA


“The USCMA is going to affect automotive companies because


it’s tightening the screws on the rules, but they haven’t been implemented, and I don’t know if they will with this Congress.”


-- Frank Parker Jr., Park & Co. Jose Minnaro, Senior Vice


ratified, which some say may be unlikely given the current political environment, many execs, including BNSF Railway’s Paul Hirsch, Assistant Vice President, Mexico Business Unit, see benefits. “The new Rules of Origin for


up to 45% of autos’ parts to be made by workers earning at least $16 an hour; maquiladoras pay around $2.50 per hour, according to reports. On this side of the border,


executives’ responses to the USMCA vary. “The USCMA is going to


President of Customs at Transplace, a transportation- management company based in Frisco, Texas, doesn’t sees any major shifts in how both American and Mexican supply chains are managed under the USCMA. “Trade among the countries


should continue to be robust, and the outcome should be a win-win for all parties involved,” he says. If anything, the agreement


would provide certainty, allowing shippers to “properly prepare for capital investments and supply-chain changes,” he maintains. For now, then, the primary


challenge appears to be ever- increasing loads—and logjams. “Delays at the border add


A forklift at a Parker & Co. warehouse on the US side handles Canadian product for a steel wheel in Monterrey, Mexico, while a truck with a retail rack system, manufactured in Mexico, heads to a US destination in a file photo from 2016. (Photo and caption courtesy of Valley Business Report)


automotive freight should lead to an increase in the number of parts manufactured in North America and, therefore, a rise in the cross-border flow for railroads and trucks,” he says. Another rule would require


affect automotive companies because


it’s tightening the


screws on the rules, but they haven’t been implemented, and I don’t know if they will with this Congress,” says Frank Parker Jr., President & CEO of Park & Co., a Brownsville-based customs house. Michelle Comerford, Project


Director and Industrial & Supply Chain Practice Leader at Biggins Lacy Shapiro & Co., a site-selection firm, says the USMCA is “really just an updated version of NAFTA” to reflect trade patterns and imbalances. “The good news is that the new agreement allows supply chains that have been integrated between the U.S., Mexico, and Canada over the past 25 years to remain intact.” The KCS spokesperson


A Kansas City Southern train chugs across the International Bridge International Bridge at the Laredo- Nuevo Laredo border. (KCS photo.)


adds, “The USCMA continues recognition of this important economic reality by supporting mutually beneficial trade and robust economic North America.”


unnecessary costs and reduce competitiveness in the region,” says BNSF’s Hirsch, adding that checkpoints lack standardized rules and procedures, along with redundant inspections and “the inability to seamlessly share information among parties.” At the same time, Minnaro


cites an imbalance between north- and southbound freight, forcing “shippers to examine strategies to better utilize truck and rail capacity as they move products.”


Employees of OmniTRAX work on the short-line rail company’s Brownsville & Rio Grande International Railway. (OmniTRAX photo.)


new carriers not available in Laredo.” As for nittier-grittier issues,


some rise from Washington like so much ephemeral desert dust. “People are always talking


about trucks not stopping at the border, but trucks will always stop at the border,” Parker says. “You’ve got a driver that’s come in from Mexico and he’s going to look for diesel, want to take a shower.” He adds: “It’s a


misconception you always hear from Washington about delays on the border, but the


executives say, while Minnaro goes on to name that ever- expanding juggernaut: e-commerce: “Consumers’


orders


from large e-commerce companies continue to grow exponentially. Processing these smaller e-commerce shipments through the ports of entry get treated the same way as large shipments, which is difficult.” Expanding on others’


thoughts about the proposed trilateral pact and potential benefits, he says: “The new USMCA will address some


“The new Rules of Origin for


automotive freight should lead to an increase in the number of parts manufactured in North America and a rise in the cross-border flow for railroads and trucks.” – Paul Hirsch, BNSF


He suggests using “multiple growth in


modes of transportations such as intermodal, to be less reliant on over-the-road capacity and implementing consolidation strategies at the border in Laredo.”


delay is like, ‘I’m a driver. I’ve got to eat. I’ve been in line crossing the border.’ That’s the delay.” Paperwork malfunctions are


another problem, he says. “It’s not like shipping to


of these challenges and help improve the processes of handling these smaller shipments. This will improve supply-chain efficiency for products being shipped around the world.”


Because Laredo is one of


the world’s most active, and potentially most congested, international land gateways, shippers should consider Eagle Pass, El Paso, and McAllen as alternatives, he says, noting: “Shippers can reduce their exposure to both controllable and uncontrollable variables, as well as acquire access to


19


North Dakota. People tend to complain about their shipments stuck at the border, but their shipment’s stuck because they didn’t know the proper preparation to make sure everything was set up before they sent the shipment to the border.” Minnaro further notes that


the chronic driver shortage in U.S. trucking contributes to additional bureaucratic snafus. “The ability for drivers to


acquire a B1 visa has been difficult and has hindered the number of cross-border shipments that can be completed.” Still, the primary jam remains high volumes,


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