January 1, 2015

Border Bungle

Why our critical links with Mexico and Canada are still such a mess

The gauntlet can begin 50 miles south of the border. Northbound trucks from the Mexican interior, hauling anything from Sinaloa tomatoes to auto parts from Monterrey to bags of cement from Mexico City, are guided into a checkpoint to be scanned by a gamma machine detecting density anomalies that may reveal hidden contraband. That’s just the warm-up. 

Depending on Mexican authorities’ strategy for the day, there also can be roadside stops to verify the nature of the truck’s load, register license plates, or just because some soldier doesn’t like “suspicious responses” to questions. 

Finally, there’s that big cluster fuss at the international crossing. 

You line up with hordes of other trucks—dozens, maybe hundreds, depending on the traffic—and wait your turn, as the stream is fed, drop by drop, through the big people-and-payload processor. Whether you’re crossing the southern border or the northern border, it’s usually the same story: Expect delays.

Continuing backups for goods traveling across the United States’ international land borders are the major dark spot in all the positive news about trade in North America. More than $1 trillion a year in products flows between the United States, Canada and Mexico. The three nations have pioneered a new kind of shared manufacturing, with supply lines extending across international boundaries. Cars and airplanes are being assembled in “synchronized factories,” with components being produced in more than one nation and arriving at assembly plants on meticulously timed schedules.

Yet despite more than a decade of high-level talks, the three nations have not been able to overcome the “thickened” post-9/11 borders and the slow creep of goods across international lines. Those delays are more than just an annoyance: Annual losses from waiting in those border lines range from $23 billion to more than $50 billion, economists estimate.

Mexico’s Special Dilemma

At the Mexican border, shippers face unique challenges. Because most Mexican trucks are not allowed into the United States, about 90% of shipments are turned over temporarily to short-trip carriers, or “drayage” trucks, to deliver goods across bridges and through crossing points. Eliminating this unnecessary extra shipping step is one of the unresolved issues of the 20-year-old North American Free Trade Agreement. NAFTA was supposed to allow Mexican truckers to make deliveries in the United States. But because of resistance from American trucking groups, including the powerful Teamsters union, that freedom to roam for Mexican trucks was never implemented, except under a modest pilot program. The result: a time-consuming hang-up for Mexico-U.S. shipments.

Then, depending on the nature of the cargo, a truck can be sent to “secondary inspection” for examination by various federal agencies checking for unapproved plants, illegal drugs, hazardous materials and more.

On a good day in, say, Laredo, Texas—the busiest inland port of entry in North America, with more than 1.8 million trucks crossing its two bridges each year—a truck can be on its way in less than an hour. On a bad day, with paperwork glitches or a sniffer dog detecting a whiff of some illegal substance, the waits can extend to four hours or more. Trucks can even get stuck overnight, with drivers racking up overtime. One purchasing agent for a Canadian metals service center said his company had experienced delays of as long as 48 hours at the Mexican border because of certification issues involving drayage trucks.

“There can be full-blown searches,” says John Rippee, vice president for border solutions for the Tecma Group of Companies, an El Paso firm that, among other things, helps American companies navigate the border. “They can decide to count 20,000 screws to make sure you’re not trying to export 30,000. You never know.” Such searches are often prompted by NAFTA regulations, which provide preferential treatment for goods originating in a member nation but exclude those with components or raw materials from another country.

Shippers to and from Mexico also complain about limited hours of operation at ports of entry. Unlike the Canadian border, where U.S. Customs and Border Protection (CBP) operates 24 hours a day, the southern border runs only 16 hours a day—“missing out on more than 30% of our ability to use the border infrastructure,” says Martin Rojas, vice president of the 37,000-member American Trucking Associations, the nation’s largest trade association of truckers.

Truckers acknowledge that the fewer hours of operation in Mexico are more the result of the idiosyncrasies of the Mexican border bureaucracy than of unwillingness on the part of CBP to work longer hours. Mexican customs—Aduana de México— requires not just the extra step of drayage hauling but also the services of a customs broker to wrangle shipments through the complicated border system. Often there are fees or taxes that must be paid up front at a Mexican bank before crossing, unlike Canada, which allows so-called trusted shippers to pay fees or taxes post-entry. The Mexican complexities, with the added participants in the process, made round-the-clock bridge service impractical, Rojas says.

Estimates of annual losses from waiting in border lines range from $23 billion to
more than $50 billion.

Northern Border Bottlenecks

In the north, delays are mostly around historical chokepoints, like the 85-year-old Ambassador Bridge between Windsor and Detroit. That bridge alone carries 27% of all the trade between the United States and Canada, borne by some 1.5 million trucks a year. Backups at the Ambassador, the busiest bridge in North America, disrupt automotive supply chains, which rely on just-in-time deliveries to keep production lines moving, experts say.

Things do work a little smoother at Canadian border crossings, without that onerous truck transfer step. But squeezing a tide of trucks through just three openings inevitably involves delays. The Ambassador Bridge, the Blue Water Bridge (between Sarnia, Ontario, and Port Huron, Michigan) and the Buffalo-Niagara Bridge together carry roughly half the goods that pass between the U.S. and Canada. Trouble processing one truck quickly triggers backups.

“There could be 30 or 40 trucks lined up behind that one guy,” says Jim Phillips, president and CEO of the Canadian/American Border Trade Alliance. “Add up all the minutes they waited, times the number of trucks in the line, times the per-minute value of the truck when it’s working and you come up with some pretty big numbers.”

Delays at the Ambassador Bridge have had a particularly harmful effect on the auto industry, with its multiple shared-manufacturing arrangements across the border, prompted by NAFTA free trade provisions, says Sean McAlinden, of the Center for Automotive Research (CAR) in Ann Arbor, Michigan. Most involve production of parts on one side and assembly on the other, he says.

“Typically an assembly plant has about two-and-a-half to three hours of inventory on hand,” McAlinden says. “That would be hundreds of different pre-assembled parts, ready for production. A seven-hour delay can actually shut a plant down. That’s happened more than a few times.”

Thus, plant managers—for GM, Honda, Ford and Chrysler, among others—face the choice of risking shutdowns or paying for extra storage space.


Delays Cost Everyone

Border delays appear to affect some metals industries more than others. The industries most affected are those with their own truck fleets and those involved in manufacturing the car parts or aerospace components that supply synchronized factories.

“I know about the usual delays at the borders,” says Gary Stein, president of Triple-S Steel in Houston, Texas, which gets regular deliveries from steel mills in Mexico. “But I’m not directly involved in it and neither are my guys.”

Stein’s company, a metals service center, does not need meticulously timed deliveries. “Our business is holding inventory,” he says. “We always have safety stocks [to supply customers].”

But others say that although border delays may not inconvenience everyone, they increase expenditures for everyone. “It adds costs at every step of the way,” says Phillips, who has been invited by CBP and other federal agencies to participate in planning for a streamlined border.

During flush times, suppliers like metals service centers may be able to pass cost increases along to customers, Phillips says. “The problem comes in difficult times,” he adds. “During the 2008 and 2009 recession, people were screaming about the costs.”


Long-Awaited Improvements?

Many of the backup problems are being addressed by federal authorities, according to spokesmen for the Obama administration and trucking and shipping representatives like Phillips, who are involved in discussions to make the system more efficient. President Obama issued an executive order in February 2014 to streamline border procedures by 2016. Among other things, the order requires border-crossing trucks to be equipped with transponders to send their cargo data through a “single window,” rather than deal with as many as 40 different government agencies, each with their own import-export regulations.

Those agencies are mostly concerned with making sure that prohibited or restricted items don’t enter the country. They range from the Fish and Wildlife Service protecting endangered species and the Department of Agriculture guarding against entry of infected fruits or vegetables to the Centers for Disease Control and Prevention identifying hides that could be infected with anthrax to the Office of Foreign Assets Control blocking products from Iran or Cuba. Most of the federal agencies have delegated their enforcement powers to CBP, though some, like Agriculture and the Bureau of Alcohol, Tobacco, Firearms and Explosives, may assign their own agents to some ports of entry.

CBP initiatives “not only seek to create efficiencies within the agency’s business processes, but also seek to develop a consistent ‘one U.S. government’ approach at the border,” CBP’s then-assistant commissioner for international trade, Richard DiNucci, said at a congressional hearing in July. He acknowledged that currently there are “hundreds of paper forms being used to import and export goods.” (CBP declined interview requests for this article.)

“A seven-hour delay can actually shut a plant down. That’s happened more than a few times.”

Little wonder that many shippers, manufacturers and longtime border watchers are skeptical. “All I really observe is incrementalism,” says Rick Van Schoik, portfolio director at the North American Research Partnership, referring to discussions between Vice President Joe Biden and Mexican President Enrique Peña Nieto to address border issues. “If you move an organ stop, you might get a slightly different tone. But it’s basically the same old song.”


Slowed Down in the ‘Fast Lane’

Perhaps, but CBP and its stakeholders have come up with a number of initiatives to avoid border backups. One notable program is the Customs-Trade Partnership Against Terrorism (C-TPAT), begun by CBP a few months after 9/11. For importers and exporters, the relevant part of C-TPAT is its ability to certify them as “trusted shippers.” A C-TPAT decal on a truck qualifies it for “pre-inspection” at a checkpoint and for “fast lanes” at border crossings. More than 10,000 companies, accounting for 50% of U.S. imports, are now “certified partners.”

However, the program provides less of an advantage than its terminology implies, critics say. The fast lanes usually don’t begin until the border plaza, a few hundred feet before the inspection booths, so certified trucks still hit border traffic. (One exception is the Blue Water Bridge, whose fast lanes start about 3 miles from the border). “They should start a half mile or a mile back, segregating the low-risk trucks,” Rojas says. Aging roadways and other infrastructure issues are obstacles to adding extra lanes, he says. Adds Phillips, there are also often huge traffic management problems at major crossings, with even designated lanes getting overwhelmed by regular traffic.

And “pre-inspection” doesn’t necessarily mean “pre-clearance,” Rojas says. C-TPAT trucks are not always waved through but often reinspected by customs agents.

Critics complain about the costs of meeting C-TPAT standards. Though there are no fees involved, the expense of installing security systems at home offices, improving equipment and trucks, and meeting other standards can cost thousands of dollars per truck, shippers say.

The purchasing director of one metals service center said that the C-TPAT requirements are so onerous that the program’s benefits are questionable. The director, who asked that his name not be used for fear that border agents would retaliate against company trucks, cited “pointless” inspections that slowed down the loading process. “They want to vet our trucks before they leave the facility,” he said. “They want to check the undercarriage with mirrors.”

The system is often almost paralyzed by these kinds of security considerations, says Andrew Finn, a program associate at the Canada Institute of the Woodrow Wilson International Center for Scholars in Washington, D.C. “If there’s a question of getting things done faster by going from 99.9% secure to 99.8, the Department of Homeland Security will always stick with 99.9,” Finn says.


Infrastructure Problems Remain

The three NAFTA signatories have begun addressing some desperate infrastructure needs to speed up border crossings. For example, the United States has just completed a $225 million plaza in Nogales, Arizona, with 14 new lanes. There’s also a new railroad crossing in Brownsville, Texas. The governments of Canada and Michigan are close to agreement on a new Detroit-Windsor bridge, despite furious opposition from Ambassador Bridge owner Matty Moroun. (No timetable for completion is available because the project remains in flux.) The new bridge will not only provide new capacity for cross-border traffic, but it will also link up directly with Kings Highway 401, bypassing the 30-mile connector between the Ambassador and southern Ontario’s principal highway.

“On a typical afternoon it now takes 45 minutes to an hour on the Canadian side just to reach 401,” McAlinden says. “The problem is you have to get past 9 to 15 traffic lights, not to mention three Tim Hortons [the popular doughnut chain].”

Even with new infrastructure in place, though, CBP still needs more staff to man crossings. The government has acknowledged personnel needs, budgeting for 2,000 new border agents (although the allocation had not been approved by Congress at press time). In the absence of new staff, CBP has approved public-private partnerships allowing shipping companies and the municipal owners of bridges to kick in funds to alleviate traffic.

One such pilot program has been instituted in El Paso, Texas, says Christopher Wilson, an economist at the Wilson International Center in Washington, D.C. “The city government can decide to spend its own money to provide more staff or more overtime [on its three international bridges],” Wilson says. “They’re subsidizing the [federal] government, and they’ve had to increase their border-crossing fees. But they’ve been able to keep wait times down as a result.”

The bad news in all of this is that no one has come up with “a game-changer,” Wilson says. The good news is that border problems aren’t being ignored. “From an awareness point of view, we’re clearly much better off than we were five or 10 years ago,” Wilson says. “There’s recognition from members of Congress and the administration, and people are focused on the issue right now.”

Edmund Newton is a Washington, D.C.-based writer, formerly of the L.A. Times, Newsday and the New York Post, as well as the former managing editor of New Times-Broward Palm Beach. He has written for, among others, The New York Times, Time, People, Daily News Sunday Magazine, Black Enterprise, Ladies’ Home Journal, Essence and Audubon.