Trade between the U.S. and Mexico could be dramatically hit if violence continues to flare up across the country in the wake of the killing of a cartel boss, warns logistics companies concerned about shipping cargo on routes and borders involving major U.S. trading partners.
Nemesio “El Mencho” Oseguera Cervantes, leader of the Jalisco New Generation cartel, was killed along with other cartel members in a Mexican military operation supported by U.S. intelligence over the weekend. This led to outbreaks of violence and attacks on public infrastructure by cartel factions on Sunday and Monday.
Mexico is one of the United States’ major trading partners, and shipping companies are beginning to report impacts to air and trucking routes. The cancellation of flights to Mexico by major U.S. passenger airlines will also have a major impact on cargo movements. That’s because approximately 50 percent of air cargo by weight is transported by passenger aircraft.
american airlines Flights to and from Guadalajara, Mazatlan and Puerto Vallarta were canceled on Sunday. southwest airlines Flights were also cancelled. deltawhich also changed the flight. United Airlines and air canada Flights to the region were also canceled.
A spokesperson for cross-border logistics company Kuehne & Nagel said Guadalajara’s airport was affected and the many flight cancellations also included cargo ship operations to and from the airport. “This situation is impacting our ability to deliver and collect cargo,” a spokesperson said. “So far, we have not seen any problems with flight operations at the main gateways (Felipe Ángeles Airport and Mexico City Airport), but this situation will pose challenges to the delivery and pick-up processes to and from the affected states,” the spokesperson added.
In response to the violence, the U.S. State Department issued a curfew in the states of Jalisco (including Puerto Vallarta, Chapala, and Guadalajara), Tamaulipas (including Reynosa and other municipalities), Michoacán, Guerrero, and Nuevo León. In response to the violence, logistics companies such as Kuehne & Nagel have introduced work-from-home arrangements for employees in affected areas.
In addition to air cargo, CH Robinson He said the security situation in western Mexico is hurting container port collection and unloading. “The road closures have cut off some freight corridors, including the one originally connecting the Port of Manzanillo to Guadalajara and transporting cargo to the northeast,” said Veronica Gonzalez, director of North American Land Transportation Mexico at CH Robinson.
The Port of Manzanillo, the country’s busiest container port, has temporarily suspended container shipments. It reopened on Monday and was operating normally, but the blockade and fire continued to disrupt cargo transport. Located on Mexico’s Pacific Coast, the Port of Manzanillo handles more than 3.5 million containers annually and transports nearly half of all containerized cargo bound for Mexico. The port is also an important gateway for imports from Asia.
DHL said in a statement to CNBC that it continues to operate, realigning its network and operations across the country to minimize potential disruptions. DHL said its global forwarding network is experiencing lower than normal volumes from the ports of Manzanillo, Lázaro Cárdenas and Veracruz.
Gonzalez said the violence has also reduced truck traffic between the U.S. and Mexico border. On an average weekday, more than 20,000 commercial trucks cross the border between Laredo and Nuevo Laredo. “Many carriers have been reluctant to send drivers to some parts of western Mexico, and trucking capacity in the region has tightened rapidly. We don’t yet know the impact on air cargo,” he said.
Jordan Dewart, president of Redwood Logistics’ Mexico operations, said truck capacity is also a little tight in Laredo and El Paso, Texas. “When you have policy noise and major uncertainty events like we saw yesterday, it creates uncertainty, and shippers tend to move forward their shipments, and carriers become selective,” Dewart said. “This will rapidly compress production capacity at borders and within the country.”
Dewart said truck spot rates are going up, and truck dwell times are going up as well. “If uncertainty continues, production capacity could tighten quickly. There is not much headroom for cross-border shipping,” he added.
Logistics companies say they have experience monitoring crises on the ground and working with carriers and customers to reroute cargo where possible. But logistics experts warn that even though cross-border trade is flowing, delays are still possible on highways at major border crossings, including Laredo and El Paso.
“Anything that involves western Mexico is likely to be behind schedule,” Gonzalez said. “From 35 years of experience in Mexico, I think shippers should plan for delays until at least the first half of the week,” she added.
