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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Driver Training Center in Mexicali Offers Greater U.S.-Mexican Highway Safety

Driver Center in Mexicali

On April 6, officials from the municipality of Mexicali, CANACAR (Camara Nacional del Autotransporte de Carga, Mexico's counterpart to the American Trucking Association), Cecati 84 (workforce/training agency for the State of Baja California), Kenworth Mexicana, and U.S.A. de C.V. a subsidiary of truck manufacturer Kenworth Trucks, gathered in Mexicali, Baja California for the inauguration of a new heavy truck driver training center.

John Kearney, CEO of Advanced Training Systems LLC (ATS), which supplied CECATI 84 with 2 Fleetmaster - KW 680 motion-based simulation technology and ATS's Quadrant Driver Training Methodology for the new center, and Enrique Mar, COO, ATS, issued a joint statement that "This center provides dynamic world class simulator-based effective training for new drivers. It will mean better prepared drivers resulting in safer deliveries and highways on both sides of the border."

The director for the new Mexicali center CECATI 84, Jesus Omar Bon Campos, notes that its training will be provided through the ATS Quadrant methodology of integrating "adaptive training" into a time-tested three-element approach: instructor-led training, computer-based training, and simulator-based training. He pointed out that aspiring drivers can learn the basics of driving, as well as develop the skills necessary to deal with adverse weather and road conditions— before boarding a real truck. They have five simulators, two trailers, and a maneuvering track of 20 hectares (about 50 acres).

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DOT sends HOS rule change to White House for review

DOT Changes Rules

Under current HOS rules, drivers can be on the road no more than 11 hours in a 14-hour period. If they stop to avoid rush hour or are stuck in a port waiting for a container, the clock on this 14-hour period keeps going.

Drivers want more flexibility and the ability to stop the clock on the 14-hour period if they take a break. This has become even more of an issue for drivers since the use of electronic logging devices (ELD) became mandatory.

"No one is looking for more drive time," Brian Brase, a heavy hauler out of Pennsylvania who helped plan a protest of HOS rules, told Supply Chain Dive earlier this year. "They just want some flexibility in it."

An early study on the effect of the ELD mandate showed it increased HOS compliance. The share of inspections that resulted in HOS violations fell from 6% before the mandate to 3.8% during a light enforcement period and finally to 2.5% during a strict enforcement period.

The DOT published an Advanced NPRM last August to get input on HOS and "received more than 5,200 comments, which have been carefully noted and considered," Chao said. This Advanced NPRM continues to receive comments.

"HOS needs more flexibility to allow for bad weather, delays at shippers and receivers, and traffic situations (wrecks, delays, construction, etc.)," a commenter named Sean Wright posted yesterday.

Many of the comments focus on a rule that requires drivers to take a 30-minute break after eight hours of driving. Peter Dombrowski, in a comment posted yesterday, suggested ending the 30-minute break requirement, saying drivers already take these breaks throughout the day.

Still, others are happy with the way things are: "Please keep the hos as is! Elogs are keeping companies from working drivers 18 hours a day," Robert Parker posted in February.

The details of the NPRM won't be known until its posted on the Federal Register. There is no set timeline for when this might happen or how long OMB will spend reviewing it.

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Delays at U.S.-Mexico border crossing hits autos, trucks still lining up

border slowdown

CIUDAD JUAREZ/MEXICO CITY -- Long delays at the U.S.-Mexico border crossing for goods destined for American plants and consumers are hitting the U.S. auto industry, and the gridlock reduced by half the number of northbound trucks that crossed the entry point last week

Washington's decision to move some 750 agents from commercial to immigration duties to handle a surge in families seeking asylum in the United States has triggered the delays at crucial ports on a border that handles $1.7 billion in daily trade.

"The situation in Ciudad Juarez is very serious because these auto parts go to plants in the United States and obviously they put at risk the operation in the United States," Eduardo Solis, the president of the Mexican Auto Industry Association (AMIA), said on Monday.

The North American auto industry is highly integrated and many car parts cross the border several times before they are finally installed on a vehicle.

Seventeen 17 hours before the crossing to El Paso even opened on Monday morning, trucks were already lining up in Ciudad Juarez to avoid the fate of some 7,500 trailers that failed to cross last week, said Manuel Sotelo, vice president at the Mexican National Chamber of Freight Transport's north division.

That is roughly half the number of trucks per week that usually cross there, carrying everything from car and plane parts to refrigerators, washing machines, TVs, cellphones and computers.

"This is not normal. We had never seen this before in Ciudad Juarez," said Sotelo.

Despite elevated costs, some Mexican exporters are turning to air freight to avoid the mile-long lines at the border.

"We're using charter (planes) which cost between $35,000 and $100,000 depending on the volume and merchandise," said Pedro Chavira, who heads the manufacturing industry chamber INDEX in Ciudad Juarez.

Air freight is typically a last resort used by automakers and suppliers to get parts to an assembly plant for just-in-time delivery.

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Ventus Global Logistics operates out of every port in Mexico and we can reroute your goods through other ports even with a border slowdown or shutdown. In addition to land freight, our air and ocean freight services cover both consolidated shipments (LCL) and containers (FCL). Call us today for a FREE quote or fill out our online form.

Border wait times swell amid customs officer shuffle to handle migrant crisis

border slowdown

NUEVO LAREDO, Mexico - U.S. President Donald Trump hasn't followed through on his threat to shut the border with Mexico, but one crossing here that connects this Mexican city with Laredo, Texas provided a glimpse of the chaos and economic disruptions that it would likely ensue.

Lines of 18-wheeled semi-trucks carrying auto parts, produce and other goods for U.S. consumers and businesses stretched more than six miles into Mexico Wednesday after the Trump administration shifted Customs and Border Protection agents from Laredo and other Texas border crossings to El Paso and the Rio Grande Valley to deal with the flood of asylum seekers from Central America. Waits to cross the World Trade Bridge, which normally run 30 minutes, reached more than three hours.

The impact of the delays was being felt on both sides of the Rio Grande, with those who depend on U.S.-Mexico trade barely able to consider what would happen if the Trump closed the border. Ernesto Gaytan, president of the Laredo company Super Transport International, which has 200 trucks on the American side of the border and 300 more on the Mexican side, said he couldn't put a number on it, but knew the delays were costing him money. A complete border shutdown, he estimated, would cost his company $200,000 a day.

On the other side of the border, Roberto Hernandez was idling at the back of the line with hundreds of 18-wheelers ahead of him. Hernandez doesn't get paid by the hour, but rather by the number of loads he delivers.

Usually, he makes four cross-border runs a day, earning the equivalent of about $15 per load. But he was only able to make two trips on Tuesday and his is daily pay fell to $30 from $60.

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Ventus Global Logistics operates out of every port in Mexico and we can reroute your goods through other ports even with a border slowdown or shutdown. In addition to land freight, our air and ocean freight services cover both consolidated shipments (LCL) and containers (FCL). Call us today for a FREE quote or fill out our online form.