Mexico Floods Shut Busiest U.S. Cargo Crossing, Creating Logjam

Mexican trucks with goods bound for the U.S. are backed up as much as two days as flooded highways block access to Nuevo Laredo, the busiest international crossing on the southern border, the president of an exporters’ trade group said.

Trucks are being rerouted to Reynosa, 250 miles south of San Antonio, and the flow of cargo may not return to normal for as long as three days, said Monica Gonzalez, president of the National Council for the Exporting Maquila and Manufacturing Industry. Rain from Hurricane Alex on July 1 and 2 washed out roads and bridges in the states of Nuevo Leon, Coahuila and Tamaulipas.

“It’s been chaos for company logistics,” Gonzalez said in a telephone interview. “It’s causing a lot of disruption for transportation and delivery times.”

The majority of the more than $300 billion in annual U.S.- Mexico trade flows through Nuevo Laredo, located across the Rio Grande from Laredo, Texas. Some factories are beginning to reduce production or even halt operations because they can’t ship out product or they lack supplies of component parts they import through Nuevo Laredo, Gonzalez said.

Time is running out for many companies that have been working off stocked parts to keep factories operating. Businesses are also piling up inventory of finished goods while waiting for the highway to Nuevo Laredo to reopen, said Chris Hines, chief operating officer of Celadon Group Inc., which operates trucks in the U.S., Mexico and Canada.

‘Safety’ Margin

The number of Celadon trucks that have been able to cross north into the U.S. and south into Mexico has dropped to about 35 to 40 per day, from about 150 per day, Hines said.

“People are getting more and more nervous,” Hines said by telephone from Celadon’s central dispatch center in Queretaro, Mexico. “This is why you have safety stocks, but those safety stocks are starting to get smaller.”

The line of trucks waiting to cross into the U.S. at Reynosa, which is across the border from McAllen, Texas, is more than two kilometers (1.2 miles) long, Hines said. Kansas City Southern said it suspended rail operations at the Nuevo Laredo crossing because of damage to a bridge along the route that will take a “few weeks” to repair.

Kansas City Southern is working with Union Pacific Corp. to reroute traffic to border crossings at Brownsville and Eagle Pass, Texas, the company said today in a statement. Some manufacturing companies are resorting to air shipments to move goods, Hines said.

Mexico’s Federal Roads and Bridges agency confirmed the main highway into Nuevo Laredo remains closed because of flooding.

Flooded River

Omar Ortiz, technical director of the agency, said in a television interview yesterday that he couldn’t estimate when the Nuevo Laredo highway will reopen because officials are still releasing water from a dam that has caused the Rio Salado to flood.

“It won’t take long to work its way out once the road is open,” Hines said. “When will that road open is the million- dollar question.”

To contact the reporter on this story: Thomas Black in Monterrey at tblack@bloomberg.net

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