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Border delays create negative economic impacts

Border delays create negative economic impacts

A cost paid for many goods that most individuals are unaware exists results from border delays of commercial shipments crossing between the U.S. and Mexico. These delays can affect trade flows, and the cost of items moving in both directions: components and assemblies going south, as well as finished products made from the aforementioned components and assemblies going north.

Transnational supply chain security experts from the Tecma Group of Companies’ Secure Origins recently explained why this is the case in an interview with Mexico’s most influential financial newspaper, El Financiero.

Nelson Balido, the vice president of Secure Origins, Inc., points to information that indicates that border delays and crossing wait times are the source significant estimated economic losses at a number of U.S. – Mexico commercial crossing points:

  • Laredo – Nuevo Laredo: $USD 3.6 million
  • San Diego – Tijuana: $USD 1.8 million
  • El Paso – Ciudad Juarez $USD 1.5 million
  • Otay Mesa – San Ysidro $USD 254,900
  • Nogales – Nogales, Sonora $USD 240,000

Temporal border delays in shipping are the root of the economic losses ennumerated above. Balido uses the term “bottleneck” to describes what happens at the U.S.-Mexico border commercial ports of entry. In concrete terms, it takes a bit under five hours for goods to pass from Tijuana to San Diego, and can take up to three hours to make the crossing from the Mexican border cities of Nogales, Ciudad Juarez and Nuevo Laredo to make it into the commerce of the United States. Border delays cause carriers to burn costly fuel, limit their ability to use their capital resources efficiently and, at times, cause costly interruption to production lines and distribution activities.

According to Secure Origins, Inc. president, Toby Spoon, the biggest wild card in the border crossing process has to do with the time that it takes Customs officials to perform inspections. Plant and production managers have little certainty of calculating the time that it will take to get their wares inspected. As is the case in any economic activity, border delays also are subject to the adage that “time is money.”

Secure Origins’ Balido communicated to El Financiero that, in an effort to speed the wheels of commerce and mitigate costly border delays, Mexican tax authorities will soon implement a pilot program at Laredo, Texas and Nuevo Laredo for the purpose of testing measures aimed at speeding up commerce. The program will consist principally of the sharing of commercial truck tracking technologies that will provide advance information to Customs authorities of any detours or stops that trucks have made prior to arriving at the commercial port of entry. According to Secure Origin’s Spoon this foreknowledge will speed up inspections, thereby reducing times related to one of the main causes of border delays.

Read the primary source for this post in its original Spanish at El Financiero.

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