Experts say Nuevo Laredo should focus on becoming a logistics and foreign trade hub

Laredo Texas

The Mexican border city of Nuevo Laredo should "bet more on logistics and foreign trade" than on attracting more maquiladoras, according to trade experts.

"Nuevo Laredo no longer needs to invest in maquiladoras, because it is a city more oriented towards customs and services," said Cirila Quintero, a professor at El Colegio de la Frontera Norte (College of the Northern Border) in Tijuana, Mexico.

The college is a prestigious Mexican institute specializing in teaching and research on border issues. Quintero specializes in the research of Mexico's maquiladora industry.

Quintero was part of a recent study conducted by the Mexico City-based Economic Information Bank (BIE), which indicated in recent years the number of export maquiladoras in Nuevo Laredo has decreased.

Quintero said one reason not to rely too heavily on maquiladoras for economic growth in the future is changing technology.

"I think that if local governments want to bet on the maquiladoras, they should understand that the maquiladoras have already changed and are something else," Quintero said in an interview with Primerahora.com.

Quintero added, "the only ones [maquiladoras] that are going to exist are the ones that are going to export, and many of those are going to be robotized, and the point is that if you want to invest in maquiladoras, you should no longer see them at the local level, but in the case of Nuevo Laredo you have to see Laredo, Texas, and see which sectors in Laredo are developing the most."

Nuevo Laredo – located directly across the U.S.-Mexico border from Laredo, Texas – has 35 maquiladoras that employed 29,878 workers, according to the BIE study. In contrast, in the Mexican cities of Reynosa and Matamoros, maquiladoras are still trending upward.

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What US companies should know about expanding manufacturing to Mexico

manufacturing in Mexico

As of 2019, Mexico is the largest goods trading partner with the U.S. with over $600 billion in imported and exported goods. This relationship has created 1.2 million jobs as of 2015, according to the latest data available from the U.S. Department of Commerce. It's also been reported, as of February 2019, that U.S. trade with Mexico increased 3.36%, while trade with Canada decreased by 4.12% and with China by 13.52%. This illustrates the direct impact of the current administration's trade war with China in particular, which ultimately has had negative repercussions for the U.S.

Generally speaking, products manufactured in Mexico are high-mix, low-volume, such as automotive and aerospace parts. This level of product is more expensive to move from China to North America when compared to shipping from Mexico. They also require more engineering skills than many products manufactured in China, which trend toward low-mix, high-volume, such as sunglasses or clothing.

As a result of Mexico's cost-effectiveness, global companies with a stake in the North American market, including Nestle and the BMW Group, have increased investments in their Mexican factories in recent months. In 2014, Nestle planned a $1 billion investment over five years to build and expand three of its factories in Mexico. And earlier this year, the BMW Group announced its new automotive plant in San Luis Potosi, Mexico as a boost to their "regional production flexibility in the Americas."

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Borderlands: CBP opens new fastlane at Laredo’s World Trade Bridge

World Trade Bridge

On August 5, U.S. Customs and Border Protection (CBP) held a ribbon-cutting ceremony for the completion of the World Trade Bridge's new Free and Secure Trade (FAST) Lane.

The new $10 million paved lane is for northbound FAST empty tractor-trailers to run directly from the bridge, and will decrease wait times at cargo facilities. The FAST program allows expedited processing of trucks owned by commercial carriers that have completed background checks and fulfill certain eligibility requirements.

"The World Trade Bridge processes on average 16,000 trucks daily, carrying goods valued at more than $300 billion annually," said U.S. Rep. Henry Cuellar (D-Laredo). "The creation of this FAST Lane will streamline trade and promote economic growth in the region."

Around 500 empty trailers will be processed daily and the hours of operation for FAST Lane will be Monday through Friday, 8:00 a.m. to 4:00 p.m.

"These improvements serve as vital assets to not only Laredo, but the entire United States economy," said Laredo Mayor Pete Saenz.
CBP officials estimate they process around 8,000 northbound truckloads daily at the World Trade Bridge facility.

"The ever-growing traffic volumes have far exceeded the limits of the present facilities and we will work hand in glove with our stakeholders at the federal, state and local levels to assist with improvements that will facilitate traffic at the busiest cargo facility in the southwest border," said David P. Higgerson, director of field operations at the CBP Laredo Field Office.

There were 195,918 commercial vehicle crossings at the World Trade Bridge in June, representing a 0.7 percent increase from the same time last year, according to the latest data from the city of Laredo.

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Mexican officials: wait times at Otay Mesa Port of Entry up to five hours

Delay Times at Port of Entry

Truck wait times on the Mexican side of the Otay Mesa port of entry have jumped as the inspection process lengthens, leaving trucks backed up for hours, said officials in Mexico.

"Both Mexican and American customs are spending more time reviewing the trucks – with wait times between four and four and one-half hours," said Salvador Díaz González, president of the Tijuana-based Industrial Association of Otay Mesa (AIMO).
The long lines for the commercial crossing checkpoint in Otay affects not only the companies and transporters, but also the people who [travel] through the area, since the [trucks] massing invade the surrounding roads, Díaz said in an August 14 report in elimparcial.com.

Carrier wait times in the whole Otay Mesa/Tijuana/San Diego market have been trending up since June 1 – up 30 percent to 133 minutes average per load/unload event per month.

The average wait time for commercial trucks in the market is 126 mins over the last year. This information comes from the FreightWaves SONAR platform.

While traffic may be affected in Tijuana, wait times are not affecting the U.S. side of the border. Wait times are hovering around 40 minutes, as of noon August 14, according to U.S. Customs and Border Protection.

With the FreightWaves SONAR Van Inbound Tender Rejection Index (VITRI.SAN) at 1.81 percent and dropping, carriers are still willing to accept loads into the Otay Mesa/San Diego market. SONAR's Van Outbound Tender Rejection Rate (VOTRI.SAN) is also around 1.81 percent, meaning there are no capacity issues in the market.

Díaz said he understands why officials have been stricter with inspections, but the negative effects are causing lower carrier productivity, more air pollution in the Tijuana area and traffic jams that affect others who drive in the area.

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Regional Development Key to a Strong North American Trade Bloc

North American Trade Bloc

For many years now, a concern of mine has been that the purpose of free trade and the agreements that envelop trade between regions has not been properly explained or promoted to communities, especially at the grass roots level.

Recently, Guillermo Malpica, trade commissioner of Mexico and executive director at the American Chamber of Commerce in Monterrey, Mexico, paid San Antonio a visit for a series of roundtables and presentations on the United States-Mexico-Canada Agreement(USMCA). At an energy sector meeting with Malpica, San Antonio energy industry leaders investing in Mexico were expecting to get a sense of direction and clarity regarding Mexico's energy policies.

One roundtable participant asked "what industries are the winners and the losers" in the USMCA. When you ask questions like these, you are basically taking apart a macroeconomic tool and looking at the individual parts. Separate parts don't work unless they are put together like a precision clock.

These types of agreements are not meant to be dissected. Not unlike the cute little frog you dissected in school, the innards don't look pretty. Trade agreements are macroeconomic tools that are designed to benefit economies. Yes, there were industries that were hit very hard once NAFTA came into play, but those industries were not ready.

The signals were clear when Mexico agreed to enter the General Agreement for Trade and Tariffs GATT in 1978 (today the World Trade Organization). My father, the Deputy Director General for the Foreign Trade Institute of Mexico during the 1970s, would have conferences and meetings with Mexican manufacturers, warning them to be ready to compete, up their quality, and export.

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Transportation Secretary Elaine Chao Stresses Benefits of Long-Term Highway Bill

Secretary Elaine Chao

June ended with the country's top transportation officer emphasizing that a multiyear highway policy directive from Washington is more beneficial to state agencies than a series of short-term extensions of federal guidelines.

Secretary Elaine Chao drilled down on this point, admittedly obvious to stakeholders, during an in-depth conversation with Hugo Gurdon, editor of The Washington Examiner, on June 26.

"The general pattern is in fact to just have extensions, not full reauthorization. But clearly, the certainty of having a longer time frame is very important to those who are involved in infrastructure," said the secretary, sitting across from the journalist on stage at the Heritage Foundation. "State and local governments, you know, if they know they're going to have this money for five years rather than six months, they can actually plan for the future. So a longer-term horizon is better."

The conservative think tank is a few blocks from the Senate side of the Capitol, where the surface transportation panel on July 10 ideally will kick off the obvious task of determining a strategy for reauthorizing surface transportation policy. The current highway law expires in less than 15 months.

By now, a consensus has been established inside the Beltway that advancing comprehensive infrastructure policy is unlikely this year. Separate press conferences in May from President Donald Trump and Speaker Nancy Pelosi announcing their failed negotiations on a $2 trillion infrastructure measure cemented the notion that top-level infrastructure talks had collapsed.

Since then, Trump has focused on immigration policy. Pelosi has pressed forward with investigations into Trump's political and business worlds. The Republican leadership in the Senate has not proposed an infrastructure measure during Trump's tenure.

Reacting to Gurdon's suggestion that comprehensive infrastructure policy would not advance in the foreseeable future, Chao exclaimed, "I haven't given up hope yet."

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OEMs Offer Over-the-Air Software Updates as Latest Advance in Truck Maintenance

Latest Advance in Truck Maintenance

Computer and smartphone users don't have to take their devices to their dealers for each software update. Now, the same can be said for trucks.

Truck manufacturers increasingly are enabling fleets to update truck software and programming parameters "over the air" — an innovation that is saving days of downtime.

Ken Calhoun, fleet optimization manager at Altec Service Group, said the potential benefits are "huge."

"Obviously, our greatest desire is always to be able to keep the truck on the road doing its job, and if we can eliminate a significant portion of those service events, how is that not a win?" said Calhoun, who also is general chairman of American Trucking Associations' Technology & Maintenance Council.

Volvo Trucks North America introduced its remote programming offering in the fourth quarter of 2018 after a soft launch with certain customers earlier in the year. The service provides software updates for powertrain components, with more updates on the way, and 250 parameter updates for speed limiters and other functions. Updates are available for both over-the-road and vocational applications.

Ashraf Makki, product marketing manager, said Volvo fleet customers are notified by an agent that a software update is available. Software updates require about 20 minutes. Parameter updates require 10 minutes, including the conversation between the agent and the driver. The truck must be parked due to safety concerns, with the battery healthy enough to ensure the service won't be interrupted.

The challenge during testing wasn't on the technical side, Makki said. Instead, the company had to train its agents to communicate with customers to instill confidence so they would change their long-standing procedures.

As of late April, Volvo had 783 customers using the service with a total of 18,535 trucks. Those using the service range from large national fleets to single-truck customers.

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Trucking industry sifts through an abundance of tech options

technology in the trucking industry

As the transportation industry adapts to a digital world, owner-operators to large fleets are all grappling with how to adopt new technology.

"There are more technology choices than ever. Bob's trucking, Sue's trucking, Mario's trucking are hearing from nine million different sources, trying to sort that out," said industry consultant Randy Mullett of Mullett Strategies during Transparency19 on May 8.

Matt McLelland, innovation strategist at Covenant Transport (NYSE: CVTI) and Mario Pawlowski, CEO of iTrucker.com, joined Mullett in a discussion with FreightWaves Associate Editor John Paul Hampstead about how technology trends are affecting the transportation industry.

The wide-ranging conversation included the current struggles among some owner-operators to adapt to electronic logging devices (ELDs), to the ultimate implications of 5G wireless technology and green trucking.

"If drivers and small fleet owners don't adapt, they are going to be out of business," said Pawlowski, whose company provides ELDs and other tech solutions.

At Covenant, McLelland is tasked with identifying emerging technology and working with executives to incorporate it into the fleet.

"We're figuring it out. We don't have a lab or a testing facility," McLelland said.

The company will be taking delivery on a 2020 Freightliner Cascadia, which includes Level 2 automation, largely covering safety features.

The adoption of 5G networks may not deliver any immediate benefits to the industry. But it will open the door to bigger breakthroughs in technology because of the additional bandwidth.

"That may translate into someone who can drive a truck with a joystick sitting in a room somewhere," Mullett said.

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Tomatoes from Mexico could soon get a lot more expensive in U.S.

tomatoes from Mexico

Fresh tomatoes may soon be in short supply, and those still available are going to cost significantly more, as the Trump administration is readying a new tariff on the produce imported from Mexico.

The administration on Tuesday said it had terminated an agreement that had continued a non-protectionist policy in play since 1996, paving the way towards a 17.5 percent tariff, or tax, on tomatoes from Mexico.

"The Department of Commerce remains committed to ensuring that American domestic industries are protected from unfair trading practices," Commerce Secretary Wilbur Ross said in a statement. "We remain optimistic that there will be a negotiated solution."

The ruling could be a victory for U.S. growers, mostly in Florida, who contend Mexican producers unfairly undercut them on prices and have far lower labor costs.

In the wake of the Commerce Department's announcement, Mexico's economy ministry said American consumers can expect to pay 38 percent to 70 percent more for tomatoes. Mexico supplies about half the tomatoes consumed in the U.S., which receives about $2 billion worth of tomatoes from its southern neighbor.

Experts at Arizona State University calculate U.S. consumers might end up having to pay 40 percent to 85 percent more for fresh tomatoes. Costs might increase 40 percent from May to December, then skyrocket further in the colder months, when there are fewer domestic supplies available, according to economists led by Timothy Richards, the Morrison chair of agribusiness at ASU.

"U.S. consumers pay for the lion's share of the tariff impact because the demand for tomatoes in the U.S. is relatively inelastic, meaning that consumers do not change how much they purchase in response to higher prices," Richards said in a statement.

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Tech group calls for national road-user fee

national road user-fee

The federal government should be taking advantage of GPS technology to establish a national "road user charge" (RUC) system for cars and commercial trucks to replace fuel taxes, a tech-based policy group contends.

The Information Technology & Innovation Foundation's (ITIF) is taking its proposal to Capitol Hill on April 25 to try to influence lawmakers as Congress debates how to pay for highway infrastructure.

According to the plan, "A Policy User's Guide to Road User Charges," passing legislation to implement a national RUC system would require a transition period of at least three to five years as automakers develop a standard technology, and as the U.S. Department of Transportation (DOT) funds the development of a national payment system. "During this period, electric-vehicle adoption will grow, further weakening the gas tax as a sustainable funding method for the highway trust fund," the ITIF plan states.

The most recent calls for "user-pay" based infrastructure funding - such as a vehicle mileage tax - started in January after the new Congress settled in and fresh debate began over reauthorization of the FAST Act, the-multi-year surface transportation bill set to expire in September 2020.

While House of Representatives' Transportation & Infrastructure Committee Chairman Peter Defazio (D-OR) has agreed to consider user fees as a long-term option, he supports raising the gas tax as the most efficient way to address the depleting Highway Trust Fund, which is due to run out of money by 2021.

According to the ITIF, while the trucking industry may not be able to pass along all the costs associated with an RUC system to customers in the short run, "truckers should be able to do so in the moderate term and long term if the fees are stable or changed with sufficient advance notice."

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