San Francisco (Trends Wide) — Texas Governor Greg Abbott’s protest this week against President Biden’s recent immigration policy reached a resolution Friday, but the blockade it created has resulted in hundreds of millions of dollars lost and delays in shipments of all kinds of products, from avocados to car parts, that will have a long-term impact.
On Friday, Abbott backed down on an order it put into place last week that required longer and “enhanced security screenings” for commercial vehicles entering Texas. The efforts, he said, were to help stem the flow of illegal contraband and human trafficking.
Abbott’s move, which Texas Agriculture Commissioner Sid Miller criticized as “political theater,” ended up creating a trucking gridlock between the US and its largest commodity trading partner. Vegetable growers say their produce spoils on stopped trucks and they are losing hundreds of millions of dollars.
Mexico is a major supplier of vehicles, auto parts, electrical machinery, chemicals, and agricultural products. Nearly $9 billion of fresh produce crosses the Texas border from Mexico each year, said Dante L. Galeazzi, CEO and president of the International Produce Association of Texas.
And, for the past week, those products have been held hostage, with companies and goods “used as bargaining chips,” Galeazzi said.
30-hour delays for some trucks
What used to be a routine border crossing turned into a 30-hour wait for some trucks. Meanwhile, the produce from those trucks spoiled, leaving some produce department shelves scarce or empty before the holiday weekend, he said.
“It could be a week or more, probably up to three weeks, before the supply chain readjusts,” Galeazzi added.
In recent days, Abbott has met with the governors of the four Mexican states that border Texas and has reached agreements to end the increased controls. On Friday, after meeting with the Tamaulipas governor, Abbott said the business controls would end immediately.
The “financial pain” was a necessary consequence to “make the public insist that their government leaders” take action to curb illegal immigration, Abbott said.
A long line of trucks is seen stopped at the Zaragoza International Bridge, one of the two ports of entry in Ciudad Juárez going to the United States on April 12.
‘One thing after another’
Losses to fruit and vegetable growers are estimated at more than $240 million, said Lance Jungmeyer, president of the Fresh Produce Association of the Americas.
Consumers will also pay a price as producers try 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 impact 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 New Mexico Border Industrial Association. “It’s going to affect St. Louis or Seattle. We’re connected to a global supply chain.”
“It’s a bad time for consumers to pay more out of pocket,” Jungmeyer said.
At Supermercado El Corral, a Mexican grocery store and butcher shop in Stephenville, Texas, co-owner Santos Avila was warned of a shortage by his beer suppliers due to glass that was delayed arriving in the United States from Mexico.
“It’s 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.
Concerns in shops about rising prices
At places like Luna’s Mexican restaurant in St. Francis, Wisconsin, which has yet to experience any price hikes as a result of delayed shipments from Mexico, the mere prospect of delays or shortages of staples like avocados , tomatoes and limes is cause for concern, said owner Jenny Bustillos, who runs the restaurant with her daughter, Brittanie Sexton.
Luna’s has already seen prices triple due to supply chain issues related to the pandemic and inflation, Bustillos said. A box of limes that used to cost $30 before the pandemic now costs $90, and a box of avocados went from $40 to $120, Bustillos said.
“Everything we make contains some type of fresh vegetable, so that’s very concerning for a business like us,” said Sexton, manager of Luna’s. “All of us who work here are supporting our families with this. We are not a chain restaurant. This is our livelihood.”
Police officers block the entrance to the Pharr-Reynosa International Bridge on April 13.
Increased instability in the supply chain
Ultimately, it could take several weeks for supply chains to recover from this week’s 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 the latest wave of shutdowns from China and the war in Ukraine are causing even more disruption. “The amount of supply uncertainty is so high that adding another straw to the camel’s back here is a dangerous proposition.”
The logjam also has the potential to exacerbate existing problems in the manufacturing industry’s supply chain, said Erik Lundh, chief economist at The Conference Board.
Following the early phases of the pandemic, in which shutdowns in China caused significant shipping delays, there was renewed interest from US companies in working with suppliers from 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 sphere?”
These issues could further aggravate inflation problems that have already been exacerbated by the war in Ukraine and the new wave of covid that has hit China, he said.
“Coupled with the difficulty of getting things across the border from Mexico,” he said, “two different types of sources of inflationary pressure overlap and make things even more complicated.”
