Destinations

Trade between U.S. and Mexico has come back strong, but border issues remain a challenge

Aug 03, 2012 12:32 pm

Skift Take

Although Tijuana, Baja California remains the world’s busiest border crossing, most tourist arrivals to Mexico bypass the land crossings for airborne arrivals in Cancun, Mexico City, and other leisure destinations.

— Jason Clampet

Free Report: The Future of Personalized Marketing in Travel

U.S.- Mexico commerce has recovered from the Great Recession and reclaimed opportunities lost a decade ago to China, yet remains stifled by transportation bottlenecks, criminal violence, corruption and other challenges, experts at a border trade conference agreed Thursday.

“The trade relationship between the United States and Mexico is not just coming back — it’s coming back strong,” Anthony Wayne, the U.S. ambassador to Mexico, told several hundred trade professionals gathered in Mexico City. “But the increase in bilateral trade also brings with it a new set of challenges our two countries must be prepared to address.”

Hosted by the San Antonio-based Border Trade Alliance and Mexico Now, a Mexican publication focused on trade and manufacturing, the meeting aimed to evaluate and perhaps influence the risks and opportunities posed by the new six-year Mexican administration that begins with Enrique Pena Nieto’s inauguration on Dec. 1.

Gangland violence, which has killed some 60,000 people in six years, at various times has besieged and continues threatening Ciudad Juarez, Nuevo Laredo, Tijuana, Monterrey, and other industrial and border ports. But many companies simply have enhanced security measures and factored the costs in to their business plans.

Five hours or more

A more pressing issue, many speakers argued, is improving border crossing times for consumers, cargo trucks and rail cars along the entire border. Depending on the hour and the location, crossing cargo from Mexico into Texas and other U.S. border states can take five hours or more.

As in any business, time is money.

“Logistics are many more times important than manufacturing,” said Sam Vale, a McAllen businessman and the trade alliance’s chairman, whose family owns one of two privately held bridges spanning the Rio Grande. “That’s what this is all about.”

Seen as a priority

Though recognizing those concerns, U.S. officials say that securing the border against the threat of terrorists, violent drug gangs and undocumented migrants has to be a priority.

“While we all want people and goods to transit the border swiftly, we know that efficiency cannot come at the expense of security,” Ambassador Wayne told the gathering.

Sharing both a border and time zones with the United States, Mexico holds a distinct advantage for U.S. companies over Chinese and other Asian operations in the speed and cost of shipping as well as communications between factories and home offices.

“Being close to markets is critical for all manufacturers, in that sense Mexico has become much more competitive than it used to be,” said Luis Sada, a vice president of business development for FINSA, which operates industrial parks in cities bordering South Texas. “China has become much a less competitive opportunity or option for manufacturers.”

But Mexico’s logistics advantage can be nearly erased by Asia’s cheaper labor and other costs. And the competition will stiffen as well with the pending completion of the widening of the Panama Canal’s locks to serve larger container ships.

That will greatly lower shipping costs from across the Pacific to the U.S. Gulf and East Coast ports, warned Jaime Roberts, president of the Mexican Association of Industrial Parks.

Pacific port’s growth

Mexico and private business have responded by greatly expanding the Pacific port of Lazaro Cardenas, from which freight is shipped across the border via Laredo to the Houston area by the Kansas City Southern Railroad.

“We’re getting our Panama Canal through rail,” Roberts said. “That’s the way we are going to compete.”

Pena is returning the Institutional Revolutionary Party, or PRI — which ruled Mexico for most of the past century — to national power after 12 years of rule by outgoing President Felipe Calderon’s National Action Party. Many expect the new government to pursue much the same business-friendly policies as Calderon’s. But nothing is guaranteed.

“What I’d like to see is continuity,” said Erik Markeset, president of the Mexican chapter of the Council of Supply Chain Management. “Now we have this change of party, and we’re not sure what is going to happen.”

(c)2012 the Houston Chronicle. Distributed by MCT Information Services.

Tags: ,

Next Up

More on Skift

Best Travel Ads This Week: Emphasizing People Over Places
Skift Business Traveler: News From the Airline Passenger Experience Expo
HomeAway Vacation Rentals Get Broader Exposure With Expedia Launch
Register Now for a Webinar on “The Rise of the Silent Traveler”