On Friday, Abbott reversed the course of an order he imposed last week, which called for longer “enhanced safety checks” on commercial vehicles entering Texas. Efforts, he said, should help stem the flow of illegal smuggling and human trafficking.
Mexico is a critical supplier of vehicles, automotive parts, electrical machinery, chemicals and agricultural goods. Nearly $ 9 billion in fresh produce crosses the Texas-Mexican border each year, said Dante L. Galeazzi, chief executive and president of the Texas International Manufacturing Association.
And in the last week, these products have been held hostage, with businesses and goods “being used as a bargaining chip,” Galeazzi said.
What used to be a routine border crossing has become a 30-hour wait for some trucks. Meanwhile, the fruits and vegetables in these trucks are spoiling, leaving the shelves of some product departments sparse or empty before the holiday weekend, he said.
“It could take a week or more, possibly three weeks, before the supply chain can be readjusted,” Galeazzi said.
In recent days, Abbott has met with governors of the four Mexican states bordering Texas and reached agreements to end the intensified inspections. On Friday, after meeting with the governor of Tamaulipas, Abbott said trade inspections would be completed immediately.
“Financial pain” was a necessary consequence to “make the public urge their government leaders” to take action to curb illegal immigration, Abbott said.
‘one thing after another’
The loss to fruit and vegetable growers is estimated at more than $ 240 million, said Lance Jungmeier, president of the American Fresh Food Association.
Consumers will also pay a price as producers seek to recoup some of their losses and supplies run out.
Americans can expect to spend more on strawberries, avocados and asparagus this weekend, with the effects being felt most in the Midwest and Northeast, Jungmeier said.
“This is not just a localized problem,” said Jerry Pacheco, president and CEO of the New Mexico Border Industrial Association. “It will hit you in St. Louis or up in Seattle. We are connected to a global supply chain. ”
“This is a bad time to add this to consumers’ pockets to pay for your pocketbooks,” Jungmeier said.
At El Corral Supermarket, a Mexican grocery store and meat market in Stevenville, Texas, co-owner Santos Avila was warned of a shortage of his beer suppliers because of glass that was delayed in arriving in the United States from Mexico.
“It’s just one thing after another,” Avila said, noting price increases and shortages of products over the past two years due to a supply chain pandemic disruption.
In places like Mexico’s Luna’s restaurant in St. Francis, Wisconsin, which has yet to see prices rise due to delayed shipments from Mexico, the very prospect of delays or shortages of basic products such as avocados, tomatoes and limes is worrying, said owner Jenny. Bustilos, who runs the restaurant with her daughter Brittany Sexton.
Luna’s prices have already tripled due to pandemic and inflation challenges in the supply chain, Bustilos said. A box of lime that used to cost $ 30 in the case of the pandemic is now $ 90, and a box of avocados has risen from $ 40 to $ 120, Bustilos said.
“Everything [we make] contains some kind of fresh vegetables, so it’s very worrying for businesses like us, “said Sexton, Luna’s manager.” Everyone who works here, we support our families with that. We are not a chain [restaurant]. This is our livelihood. “
Addition to supply chain instability
It could eventually take several weeks for supply chains to recover from a week-long border delay, said Matthew Hockenberry, an assistant professor at Fordham University who studies supply chains and logistics.
“It is also so difficult to predict because there is so much supply instability at the moment,” he said, noting that the latest wave of blockades by China and the war in Ukraine are causing even more disruption. “The uncertainty of supply is so great that adding another straw to the back of the camel is a dangerous proposition.
The congestion also has the potential to complicate existing supply chain problems in the manufacturing industry, said Eric Lund, chief economist at The Conference Board.
After the early stages of the pandemic, when the blockade in China led to significant supply delays, it sparked renewed interest from US companies in working with suppliers in Mexico, he said.
“What will the companies think about that?” He said. “What will they think when they see that Mexico, which is emerging as a potential alternative to China, could suffer similar effects in this US policy area?”
These problems could further complicate the inflation problems already exacerbated by the war in Ukraine and the new wave of Covid that has hit China, he said.
“Combined with the difficulty of moving things across the Mexican border,” he said, “it layers two different sources of inflationary pressure on top of each other and makes things even more complicated.”
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