The economic impact seems to have worsened on Thursday as Texas Gov. Greg Abbott (R) largely kept the new rules for inspecting commercial trucks entering from Mexico, with some companies saying they could not fulfill orders because the trucks were stuck in backups a few miles at a number of entry points.
Little Bear Produce is a Texas-based producer-packer-forwarder who grows 6,000 acres in Texas, supplementing its inventory with Mexican products so that it can be a year-round supplier to large food chains such as Wegmans, HEB, Publix, Albertsons and Kroger. .
Brett Erickson, Little Bear’s senior vice president of business, says additional inspections have already cost him “hundreds of thousands of dollars,” not to mention reduced wages for many loaders who have not had jobs because trucks aren’t showing up.
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“This has directly affected our business since the end of last week. We usually get 10 to 12 loads of watermelon a day from Mexico, as well as different types of herbs and vegetables. “Since the middle of last week, we have not received zero of these watermelon shipments,” he said. This means that the company failed to meet its business obligations with large retailers, which in turn had to find Mexican melons from afar, such as Arizona. The added distance means additional fuel costs.
“We all know that the price of fuel these days is outrageous. Ultimately, this means that consumers will bear the brunt of these increased costs, “said Erickson, adding that reduced supply in general also leads to higher prices.
“As a Texas business, we were really confused and disappointed by this decision by Governor Abbott, in a state that is touted as business-friendly,” he said. “It was a direct blow to the Texas business, a business that is already facing rising costs for fuel, fertilizer, labor and packaging.
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Created in response to the Biden administration’s announcement that the pandemic-era immigration hurdle would be lifted, Abbott’s state inspections forced thousands of trucks to return within eight miles to the ports of entry. Trucks containing household goods, car parts and other stable goods have been delayed, entangling supply chains that include hundreds of thousands of jobs on both sides of the border. Multi-day backups can ruin a lot of fruits and vegetables, making them useless.
Abbott, a two-term Republican who will be re-elected in November, said he wants Mexican governors to reach individual agreements with him to increase the safety inspection of trucks crossing the border. He held a press conference Wednesday with the governor of Nuevo Leon, Mexico, and said they had drafted such an agreement, promising to lift burdensome additional inspections in the area. It is unknown at this time what he will do after leaving the post.
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Many are not optimistic about what follows.
“Yesterday’s circus with Governor Abbott was just that: it’s all a show,” said Matt Mandel, Sun Fed’s vice president of finance, a producer and supplier of mostly Mexican-grown fruits and vegetables. “The protests on the bridges are over and the movement has started again, albeit very slowly. It remains to be seen whether the ongoing inspections create another scenario in which truck drivers refuse to work again. “
A statement from a number of Mexican government agencies, including the Business Coordination Council and the Confederation of Mexican Chambers of Industry, estimated the loss at $ 8 million a day.
Dante Galeazzi, chief executive of the Texas International Manufacturing Association, said consumers would start seeing empty store shelves this weekend in the fresh fruit and vegetable departments.
“Furthermore, it will take at least a week, if not longer, after a decision is made before the supply chain can be adjusted,” he said. “This means that the interruptions will continue even after the implementation of the decision.”
The losses from the remaining congestion in ports depend on Abbott concluding agreements with other Mexican governors today, said Lance Jungmeier, president of the American Fresh Food Association. The northeastern Mexican state of Tamaulipas is key, he said, because most of the production crosses the Rio Grande there via the Pharr-Reynosa International Bridge in Texas.
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Jungmeier said things were still looking rough at the opening of the business at the Texas ports of entry on Thursday, and that “very slow traffic” had been reported.
“I hear that the Texas Department of Public Safety is continuing with intensive inspections outside all ports of entry except what was announced yesterday,” he said. “The governor of Tamaulipas wants to meet with Governor Abbott today.”
If the meetings cannot be organized today, Jungmeier said, at least Abbott must give a “grace period” and stop inspections of other ports until he has a chance to meet.
Asked on Thursday afternoon if Abbott had other meetings scheduled with Mexican governors, a spokeswoman said they had no details to share.
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