On Friday, Abbott reversed course on an order it put into effect last week that required longer “enhanced security inspections” of commercial vehicles entering Texas. The efforts, he said, were to help stem the flow of illegal contraband and human trafficking.
Mexico is a fundamental supplier of vehicles, auto parts, electrical machinery, chemical and agricultural products. Nearly $9 billion worth of fresh produce crosses the Texas border from Mexico each year, said Dante L. Galeazzi, CEO and president of the Texas International Produce Association.
And for the past week, that commodity has been held hostage, with companies and goods “being used as currency,” Galeazzi said.
What used to be a routine border crossing turned into a 30-hour wait for some trucks. Meanwhile, the fruits and vegetables in those trucks spoiled, leaving some produce department shelves scarce or empty before the holiday weekend, he said.
“It could take a week or more, up to probably three weeks, before the supply chain realigns itself,” Galeazzi said.
In recent days, Abbott has met with the governors of the four Mexican states states bordering Texas, and reached agreements to end the increased controls. On Friday, after meeting with the governor of Tamaulipas, Abbott said the trade controls would end immediately.
The “financial pain” was a necessary consequence to “get the public to insist that their government leaders” take action to curb illegal immigration, Abbott said.
‘One thing after another’
losses to Producers of fruits and vegetables are estimated to exceed $240 million, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.
Consumers will also pay a price as growers look to recoup some of their losses and supplies run out.
Americans can expect to spend more on strawberries, avocados and asparagus starting this weekend, with the impacts being felt most in the Midwest and Northeast, Jungmeyer said.
“This is not just a localized problem,” said Jerry Pacheco, president and CEO of the Border Industrial Association in New Mexico. “It’s going to hit you in St. Louis or Seattle. We’re connected to a global supply chain.”
“It’s a bad time to add this to consumers’ pockets to pay out of pocket,” Jungmeyer said.
At El Corral Supermarket, a Mexican specialty grocery store and meat market in Stephenville, Texas, co-owner Santos Ávila was warned about shortages by his beer suppliers because the glass was delayed arriving in the U.S. from Mexico. .
“It’s just one thing after another,” Avila said, pointing to price increases and product shortages that have occurred in the past two years due to pandemic-induced supply chain disruptions.
At places like Luna’s Mexican Restaurant in St. Francis, Wisconsin, which Although they haven’t yet seen price increases as a result of delayed shipments from Mexico, the mere prospect of delays or shortages of staples like avocados, tomatoes and limes causes concern, said owner Jenny Bustillos, who runs the restaurant with her daughter. , Brittany. Sacristan.
Luna’s has already seen prices triple due to supply chain challenges related to the pandemic and inflation, Bustillos said. A box of limes that used to cost $30 a box before the pandemic it is now $90, and a box of avocados went from $40 to $120, Bustillos said.
“Everything [we make] It contains some kind of fresh vegetables, so it’s very concerning for a company like ours,” said Sexton, Luna’s manager. “All of us who work here, we’re supporting our families with this. We are not a chain [restaurant]. This is our livelihood.”
Adding to Supply Chain Instability
Ultimately, it could take several weeks for supply chains to recover from the week-long slowdown at the border, said Matthew Hockenberry, an assistant professor at Fordham University who studies supply chains and logistics.
“It’s also very hard to predict, because there’s a lot of supply instability right now,” he said, noting that China’s latest wave of lockdowns and the war in Ukraine are causing even more disruption. “The amount of supply uncertainty is so high that adding another drop here on the camel’s back is a dangerous proposition.”
the jam it also has the potential to exacerbate existing supply chain problems in the manufacturing industry, said Erik Lundh, chief economist at The Conference Board.
After the early stages of the pandemic, when shutdowns in China caused significant shipment delays, U.S. companies became interested again in working with suppliers in Mexico, he said.
“What are companies going to think about this?” he said. “What are they going to think when they see that Mexico, which has emerged as a potential alternative to China, can suffer these kinds of impacts in this US political arena?”
Those problems could further aggravate inflation problems that are already accentuated by the war in Ukraine and the new wave of covid that has hit China, he said.
“Along with the difficulty of crossing the border from Mexico,” he said, “two different types of sources of inflationary pressure overlap and make things even more complicated.”