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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‘Confidence in Mexico’: U.S. and Mexican top brass to talk business, border

USA Mexico Trade

MERIDA, Mexico (Reuters) - A meeting of U.S. and Mexican government and business leaders on Thursday aims to shore up investor confidence in Mexico and defuse U.S. President Donald Trump's threats to close their shared border if illegal immigration is not halted

Part of regular business forum the U.S.-Mexico CEO Dialogue, the talks in Mexico coincide with renewed tensions over trade and the border after two years of uncertainty sparked by Trump's push to rework the North American Free Trade Agreement (NAFTA).

They also give Mexico an opportunity to address investor concerns about how President Andres Manuel Lopez Obrador has run Latin America's No. 2 economy since taking office in December.

"We want the American investors that visit our country to go back home feeling confident about their investments here," said Moises Kalach, a top executive in the CCE business lobby, which represented Mexico's private sector at the NAFTA talks.

Lopez Obrador and officials including his foreign minister and energy minister, plus U.S. Commerce Secretary Wilbur Ross and U.S. Chamber of Commerce President Tom Donohue, are scheduled to attend the two-day meeting in the city of Merida.

Among investors due to attend is Larry Fink, chief executive of the world's largest asset manager BlackRock Inc.

The leftist Lopez Obrador took power vowing to fight entrenched corruption, crime, inequality and poverty, scourges that cost Mexico billions of dollars every year.

He has said he wants to boost both private and public investment, but some of his early decisions, such as canceling a partially-built $13 billion Mexico City airport and steps to rein in the autonomy of regulatory bodies, have spooked investors.

Questions remain over the future of trade in the region because the deal agreed to replace NAFTA, the United States-Mexico-Canada Agreement (USMCA), has yet to be ratified.

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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.

Blockchain can help reduce large-scale food recalls due to contamination fears

blockchain

Henry Avocado Corporation, a California-based avocado company, recalled shipments early this week that it had sent out to six states in the U.S., after fears of its avocados being contaminated with bacteria that could cause major health risks. The bacterium under the scanner is Listeria monocytogenes, a microorganism that can cause severe infections in children, those who are immunity-deficient and older people, which could sometimes end up being a fatal affliction.

The company in its statement mentioned that it voluntarily recalled the avocado shipments sold in bulk in retail stores, as a routine government inspection in its California packing facility tested positive for the bacteria. The company has exerted caution in removing the crates off shelves, even though there have been no reported cases of illness caused by consuming avocados from this specific batch.

Henry Avocado has recalled its California-grown conventional and organic avocados that were packed in California, from the states of Arizona, California, Florida, New Hampshire, North Carolina and Wisconsin. However, avocados that were imported from Mexico and distributed by the company are not affected and continue to be sold at retail outlets.

In a similar incident last week, Arkansas-based Tyson Foods had recalled 69,000 pounds of chicken strips after a couple of consumers reported that they found metal pieces in the product. Though this was an isolated incident, the company had to recall all the items that were produced in a single plant in Rogers, Arkansas, that included 65,313 pounds of Tyson's fully cooked chicken strips and crispy chicken strips that were sold in 25-ounce bags. The company also recalled 3,780 pounds of fully cooked chicken breast strips that were sold in 20-pound boxes.

Though Henry Avocado and Tyson Foods deal with two distinct food products and had completely different reasons for recalling their produce, the extent of the recall cannot be ignored. Discarding hundreds of pounds worth of consumables for a few pounds of contaminated items is highly inefficient and if done frequently, could end up affecting a company's bottom line.

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The retail apocalypse, omnichannel and supply chain analytics

supply chain analytics

Three of the most important themes in retail right now are the retail apocalypse, omnichannel and supply chain data analytics. In our view, this is not a coincidence: the industry is abuzz with talk about the tools that will bring retail into the future and improve customer experiences; meanwhile, we're bearing witness to the destruction of numerous brands that have failed to adapt. In this piece, we explore how these three themes are interwoven in an attempt to articulate exactly what the challenges and opportunities are in contemporary retail.

What is the retail apocalypse? CB Insights, the leading intelligence platform and media company on high-growth private companies, has studied the phenomenon better than any other company. The 'retail apocalypse' is a catch-all term for the nearly 80 major retail bankruptcies since 2015. This year has already seen bankruptcies of nine major brands – Beauty Brands, Charlotte Russe, Diesel, FullBeauty Brands, Gymboree, IMS (Innovative Mattress Solutions), Payless Shoesource, Shopko and Things Remembered.

More illuminating than the number and names of the restructuring companies, though, is the insight into the reasons why the companies failed. David's Bridal cited its struggle to keep up with online competitors when it filed Chapter 11 in November 2018; the month prior Sears pointed to the challenge of personalizing the customer experience and improving operational efficiency; in August 2018 Brookstone hired liquidators to close 100 stores due to declining mall foot traffic.

"Retailers who survive the e-commerce disruption by executing on omnichannel will do so by executing a fulfillment strategy that is as nimble as possible," said Chris Kirchner, CEO of Slync. "Survivors will have to find solutions that provide real-time supply chain data in order to balance competitive threats and ever-shifting consumer demands."

In general, companies that recently expanded their brick-and-mortar footprints were the worst off. Doubling-down on physical retail stores indicated a lack of commitment to e-commerce and blindness to the fact that physical locations were less and less productive. Plus, the debt used to finance growth in real estate holdings quickly became burdensome.

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Binational pact aims to keep industrial plants in border region

Binational Pact

Brownsville officials were among Rio Grande Valley economic development leaders who signed a bi-national collaboration agreement on March 5 between South Texas and the state of Tamaulipas, Mexico, aimed at boosting economies on both sides of the border.

The initiative was led by the Rio South Texas Economic Council and the Ministry of Economic Development of the state government of Tamaulipas, with the signing ceremony in Weslaco. Besides officials from Brownsville, also participating were economic development leaders from Alamo, Donna, Edinburg, Harlingen, Hidalgo, Laredo, McAllen, Mission, Palmview, Pharr, Roma, Rio Grande City, San Benito, Sullivan City and Weslaco.

From the Mexican side, in addition to Matamoros, were leaders from Altamira, Camargo, Ciudad Victoria, Diaz Ordaz, Guerrero, Madero, Mier, Miguel Aleman, Nuevo Laredo, Reynosa, Rio Bravo, Tampico and Valle Hermoso.

According to RSTEC, the agreement is intended to strengthen investment recruitment and job creation in communities north and south of the Rio Grande.

Mario Lozoya, executive director of the Greater Brownsville Incentives Corporation and one of the agreement's signatories, said the agreement was forged partly in response to a situation with U.S.-owned maquiladoras (industrial plants) in Matamoros that has prompted some of them to relocate to the United States or Mexico's interior.

A mandate from Mexico's new president, Andres Manuel Lopez Obrador, doubling the minimum wage along a narrow strip of the country's northern border, led to a dispute between labor unions demanding higher wages for employees making above minimum wage and "maquila" management, who refuse to raise wages, arguing that their employees were already making the wages Obrador sought to bring about.

Another piece of Obrador's northern-border program entailed slashing the value-added tax on maquilas in the border region so they could afford the wage increase. At any rate, tens of thousands of maquila workers have walked off the job in Matamoros.

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USMCA opens a can of worms

USMCA Agreement

Traditionally, Mexico has offered foreign manufacturers cost advantages in the form of low wages. That may change soon.

Labor organizations in the U.S. and Canada often cite low wages and paltry workers' rights as the reasons why many jobs have been lost to Mexico. Hence, it is no surprise that the U.S. and Canada made it a point to include provisions that addressed these issues in the proposed replacement for the North American Free Trade Agreement.

For example, in addition to increased regional value content rules, the new United States-Mexico-Canada Agreement includes labor value content requirements. Under those provisions, 40 to 45 percent of a vehicle's value must be manufactured by employees earning at least $16 an hour. Automakers will be able to credit up to 10 percent from R&D and 5 percent for assembly in high-wage regions.

The precise formulas will be addressed in the uniform regulations still under discussion.

The underlying intention of this new requirement is to slow the outsourcing of U.S. manufacturing to Mexico. The unintended consequence is the increased compliance cost that will ultimately be transferred to the consumer.

Further, as part of the concluded trade deal, Mexico agreed to reform its labor laws. Passage of the USMCA by the U.S. Congress is conditioned on it. The two main objectives of the Mexican reforms are:

  1. Achieving labor union democratization, transparency and liberty.
  2. Shifting the dispute settlement process from local employment courts to the federal judicial branch.

Perhaps most important to labor organizations is the first, the issue of workers' representation in unions. It is widely claimed that Mexican labor unions don't legitimately represent their members' interests, lack transparency in their governance and are structured to advance economic interests over workers' rights. That is why many believe wages in Mexico have remained so low despite overall good macroeconomic performance in the country.

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Suppliers and buyers clash over tomato trade policy change

tomatoes from Mexico

The debate surrounding this move to withdraw from the 6-year-old agreement with Mexico demonstrates that President Trump's "Buy American" ethos is not a simple concept in today's economy.

Supporters of withdrawal are mainly suppliers of tomatoes and say it didn't serve its purpose of protecting American farmers. Supporters include Florida tomato growers along with Sen. Marco Rubio and nearly 50 other lawmakers largely representing Southern and Eastern states along with Michigan, California and Puerto Rico. In a letter to the Secretary of Commerce requesting termination of the agreement, these parties wrote Mexico's market share of tomatoes sold in the U.S. has gone from one third to half of the market.

"The U.S. tomato industry has been the canary in the coal mine for domestic fruit and vegetable production over the last three decades. Immediately terminating the suspension agreement will reinvigorate the anti-dumping investigation on fresh tomatoes from Mexico and send the message that the U.S. will ensure vigilant enforcement of our existing trade laws and trade agreements," said Rubio in a statement.

But other U.S. constituencies, mostly on the buy-side of industry, are less supportive of the tack by the Commerce Department. The Border Trade Alliance called the decision "a move that attempts to tilt trade policy in favor of parochial Florida farmer interests, but jeopardizes the health of the national agriculture industry."

The Fresh Produce Association of the Americas is also against withdrawing, stating: "Even a 5% reduction in supplies of Mexican tomatoes would result in consumers paying up to 25 cents more per pound at supermarkets, or up to $790 million more per year for tomatoes."

There is still a chance that a resolution may be reached in the intervening 90 days, but the timing is particularly demonstrative of how no trade deal, no matter how specific, happens in a vacuum. With the USMCA still not ratified by the U.S., Mexico or Canada, these smaller fights may have an impact far beyond farms and grocery stores.

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What Auto Manufacturers Need to Know About Mexico Under the USMCA

Mexico and USMCA

Building upon the centuries-old business relationship between Mexico and the United States, NAFTA allowed both countries to benefit from a seamless workshop that clearly made the pie larger. The 25-year-old contract needed to be revised, though, with motor vehicles and auto parts taking the lion's share of the modifications (for better or worse depending on how well your company coordinates upstream and downstream operations and record-keeping).

Mexico's economic relevance to the United States is frequently overlooked. The 11th largest economy in the world, Mexico has a population (126 million) roughly 40 percent that of the U.S. and is close to three times the size of Texas. The country has a network of 12 Free Trade Agreements (FTAs) with 46 countries, and seven additional ones will be added with the renewed Trans-Pacific Partnership (an agreement now known as CPTT, Comprehensive and Progressive Agreement for Trans-Pacific Partnership, TPP 11 in short), from which the U.S. withdrew under the Trump Administration.

Mexico was, in 2018, either the first or second largest export market for more than 50 percent of states in the Union. (It was first for six states –Arizona, California, Kansas, Nebraska, New Mexico and Texas, and second for 22 States–Colorado, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, and Wisconsin.) It is also the third-largest source of imports in the U.S.; has an expanding middle class that has grown accustomed to purchasing American goods and services; has demonstrated to be a near-shore, reliable manufacturing partner; as well as will benefit from a demographic bonus during the next several years that will help neutralize the dwindling U.S. population (and necessarily its workforce).

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