Mexico violence after cartel boss killing hits key cross-border trade
Trade between the US and Mexico could suffer dramatically if violence continues across Mexico in response to the killing of a cartel boss, warn logistics companies concerned about shipping operations across the border and routes involving the US’s key trading partner.
Nemesio “El Mencho” Oseguera Cervantes, head of the Jalisco New Generation Cartel, was killed along with other cartel members during a military operation in Mexico with the help of U.S. intelligence over the weekend. This led to violence and attacks on public infrastructure by cartel groups on Sunday and Monday.
Mexico is among the United States’ largest trading partners, and impacts on air and trucking routes are beginning to be reported by shipping companies. The cancellation of flights to Mexico by major US passenger airlines will also have a significant impact on freight transportation. This is because approximately 50 percent of air transportation by weight is carried by passenger aircraft.
American Airlines canceled flightRound trip to Guadalajara, Mazatlán and Puerto Vallarta on Sunday. Southwest Airlines Moreover canceled flightstogether with Deltaat the same time directed flights. United Airlines and Air Canada Moreover canceled flights to the region.
A spokesperson for cross-border logistics firm Kuehne + Nagel said the large number of flight cancellations affected airports in Guadalajara, including cargo operations in and out of the airport. “The situation is impacting our ability to deliver and receive cargo,” the spokesperson said. “So far, we have not observed any issues in terms of flight operations at our major gateways (Felipe Angeles Airport and Mexico City Airport), but this will create difficulties in delivery and pickup processes to/from the affected states,” the spokesperson added.
In response to the violence, the US State Department issued a statement. shelter in place Order for territories of the State of Jalisco (including Puerto Vallarta, Chapala, and Guadalajara), the State of Tamaulipas (including Reynosa and other municipalities), the State of Michoacan, the State of Guerrero, and the State of Nuevo Leon. The violence prompted logistics companies, including Kuehne + Nagel, to enable employees in affected areas to work from home.
In addition to air transportation, CH Robinson He says pickup and drop-off operations at the container port have been negatively affected by the security situation in western Mexico. “Road blockages initially resulted in the disruption of some freight corridors, including routes connecting the Port of Manzanillo to Guadalajara and moving freight to the northeast,” said Veronica Gonzalez, Mexico director of North American ground transportation for CH Robinson.
The Port of Manzanillo, the country’s busiest container port, was temporarily closed to the entry and exit of containers. While it reopened and operated normally on Monday, blockades and fires continued to disrupt freight movement. The Port of Manzanillo, located on Mexico’s Pacific coast, handles more than 3.5 million containers annually and transports almost half of the containerized cargo to Mexico. The port is also a vital transit point for Asian imports.
DHL said in a statement to CNBC that it is continuing its operations while recalibrating its nationwide network and operations to minimize potential disruptions. DHL said its global shipping network is seeing lower than normal volumes from the ports of Manzanillo, Lázaro Cárdenas and Veracruz.
The violence also reduces the volume of trucking between the U.S. and Mexico border, according to Gonzalez. More than 20,000 commercial trucks cross the border An average weekday is between Laredo and Nuevo Laredo. “Trucking capacity in the region has shrunk very quickly due to many carriers not wanting to send drivers to parts of Western Mexico. We are not yet aware of any impact on air cargo,” he said.
Jordan Dewart, president of Redwood Logistics’ Mexico operations, said his firm has also seen some contraction in truck capacity in Laredo and El Paso, Texas. “When you have policy noise and major unrest events like we saw yesterday, it creates uncertainty and shippers tend to move their loads forward and shippers become selective,” Dewart said. “This is rapidly squeezing capacity at the border and within the country.”
Trucking spot rates and trucking wait times are also increasing, according to Dewart. “Capacity could shrink rapidly if uncertainty continues; there is not a lot of slack across the border,” he added.
Logistics companies say they have prior experience monitoring crises in the field and working with carriers and customers to reroute freight where possible. But logistics experts warn that despite the flow of cross-border trade, highways at major border crossings including Laredo and El Paso will continue to suffer delays.
“Anything that touches western Mexico will probably be behind schedule,” Gonzalez said. “Based on our 35 years of experience in Mexico, I would say shippers should plan for delays at least through the first half of the week,” he added.
