by Bob Trotter
When you’re a business relying on just-in-time (JIT) inventory systems to meet consumer demand, long wait times at the U.S.-Mexico border can make the difference between profit and loss. What businesses need is a way to predict how long those waits will be so they can optimize their shipping schedules.
Congestion at border crossings has gotten worse in recent years. One reason: the fairly recent phenomenon of near-sourcing. Rising production and transportation costs abroad have made local production much more attractive. Businesses that once outsourced manufacturing overseas to countries like China are now moving it back to North America, especially Mexico. Add to that the expansion of the Panama Canal and Mexico’s recent investment in seaport and railroad improvements. Clearly, more cargo will be flowing between the United States and Mexico. In fact, it already is.
That’s good news for border communities like El Paso-Juarez. Increased cross-border shipping means increased economic vitality on both sides of the border. But increased freight traffic thanks to all that close-by production also means increased congestion at the border. And longer wait times at Customs Border Protection will put a dent in any JIT shipping plan. Production lines slow down or even stop manufacturing completely until existing inventory is shipped. Delays mean increased productions costs, and those … well, you see where this is going.
Our team at the Texas A&M Transportation Institute’s Center for International Intelligent Transportation Research is working on a reliable forecasting model that will help border communities—and the businesses that pass their goods through them—to make better-informed decisions. Caught between the need for profit and the demands of fierce competition, though, businesses can sometimes be reluctant to change. Our model will demonstrate the value of making that change.
We’re working with the Coalición Empressarial Pro Libre Commercio (CELC) and researching the way border congestion impacts JIT inventory systems of companies on both sides of the border. We also plan to assess existing systems for inefficiencies associated with crossing the U.S.-Mexico border. With improved information about border wait times at hand, businesses can improve their shipping efficiencies.
That’s good for business as well as the local community’s economic development. And lower production costs mean lower prices for consumers. It’s a win-win … win.
Bob Trotter is a senior research scientist with TTI’s Center for International Intelligent Transportation Research.