What’s Happening with the Cold Chain at The U.S. – Mexico Border

Learn about the steps being taken to improve United States cold storage warehousing and the cold chain at the southern border

The North American cold chain market is one of the fastest growing markets within the supply chain and logistics industry. According to the Bureau of Transportation Statistics, the North American cold chain market reached $61.8 billion in 2021 and is expected to hit $99.7 billion by 2027. Industry experts associate the growth of the North American cold chain market with the e-commerce boom that stemmed from the pandemic as well as changes in consumer dietary habits. As grocery inventories improve, consumers are purchasing more perishable foods like meats and fruits online. These products require more than one form of cold storage facility, different types of temperature-controlled trucks, and thermally insulated packaging for distribution. In addition, consumers continue to purchase prepackaged food and beverage items, which require temperature-controlled storage that can extend shelf life.

Although the imminent growth of the market is not surprising, the disruptions that the pandemic caused had a major effect on the cold chain connection between the United States & Mexico. Not only did cold chains face challenges such as vaccine mandates, inventory fluctuations, and labor shortages, but also the increased demand for cold storage warehousing. This created a perfect storm that resulted in cold chain companies modernizing processes to combat disruptions and propel the industry forward.

What is The Cold Chain?

The term cold chain refers to the temperature-controlled supply chain of perishable products like food and pharmaceuticals. The cold chain involves storage, production, and distribution processes to get goods from one point to the next. The cold chain is important because it ensures that products are safe for human consumption, protecting public health. The cold chain is divided into three main categories:

Temperature-controlled storage
Refrigerated transportation
Cold packaging methods

The cold chain industry is vital to safely supplying foods, beverages, and healthcare pharmaceuticals to consumers. The importance of product quality along with regulations has driven companies to utilize advanced technologies to improve cold chain temperature monitoring. Technologies powered by 5G and connected to the Internet of Things such as temperature sensors, RFID devices, & telematic tools are being used in cold storage warehouses and transportation vehicles to optimize cold chain processes for safer products and faster transportation times.

The North America cold storage market size was valued at USD 38.70 billion in 2020 and is expected to reach $86.48 billion by 2028

Globally, North America held the largest cold chain revenue share of more than 35% in 2021

The USMCA

The United States-Mexico-Canada-Agreement (USMCA) went into effect on July 1^st, 2020. The agreement was developed to replace the North American Free Trade Agreement (NAFTA). The USMCA was enacted to create a more balanced and reciprocal trade partnership between the U.S., Mexico, and Canada that benefits the economy as well as:

Workers
Farmers
Ranchers
Businesses

The USMCA builds upon NAFTA, making production in North America more profitable and efficient by providing benefits that streamline the movement of freight across North American borders. The changes to NAFTA involve modifications to rules of origin requirements as well as labor enforcement.

One of the most important provisions the USMCA provides is the allowance of companies to utilize a single set of data to ship goods across the borders of the three countries. If the appropriate customs data is submitted, the articles are valid no matter if the importer, exporter, or producer completes them.

Agreement highlights include:

Creation of a more level playing field for workers, including improved rules of origin for automobiles, trucks, other products, and disciplines on currency manipulation.
Benefits to farmers, ranchers, and agribusinesses by modernizing and strengthening food and agriculture trade in North America.
Support for a 21st Century economy through new protections for U.S. intellectual property and ensuring opportunities for trade in U.S. services.
Inclusion of new sections covering Digital Trade, Anticorruption, and Good Regulatory Practices.

An issue that cold supply chain industry executives find with the USMCA is that it does little to address how to manage congestion at the borders. Industry experts believe that developing a plan to address cold transports between North American countries is important to building a more resilient cold chain. One way that industry executives are doing so is by partnering with 3PLs and shippers that specialize in cross-border services. These companies are responsible for processes such as pinpointing the most efficient routes to take when transporting as well as clearing goods before they enter the country. This can improve day-to-day cold chain operations by speeding customs processes and alleviating north-bound and south-bound shipping challenges.

Texas’ biggest ports of entry — Port Laredo, Ysleta, Pharr International Bridge, Eagle Pass, El Paso, Brownsville International Bridge and Del Rio International Bridge made up nearly 65% of the total trade between the U.S. and Mexico in 2021.

Connecting the North and South: The Port-to-Plains Corridor

In March of 2022, President Joe Biden designated land for a new interstate. The Ports-to-Plains Corridor is a freight corridor that will provide truck drivers with a more seamless route for trade between the U.S., Mexico, and Canada. Three organizations make up the partnership that will support its development:

The Ports-to-Plains Alliance (200 communities in nine states)
The Heartland Expressway (areas between Colorado, South Dakota, and Nebraska)
Theodore Roosevelt Expressway (areas between Montana and The Dakotas to Canada)

The interstate designation has been pursued by members of Congress since 1998 after the North American Free Trade Agreement was adopted and it was deemed critical that an interstate be constructed to support north and south trade. NAFTA was replaced with the USMCA in 2020, paving the way for the White House to approve the interstate designation. The designation allows states to use funds from the Infrastructure Bill to improve upon existing road structures and build new ones. One of the most important parts of the route will pass through Laredo, Texas, which holds the busiest inland port in the nation.

The first part of the Port-to-Plains Corridor plan is to extend Interstate-27 to Laredo to create a parallel route that will enable truck drivers to transport cargo to border crossings in Del Rio and Eagle Pass, Texas. This will help to alleviate congestion on Intersate-35, which stretches from Laredo to Minneapolis, Minnesota.

Wait Times Have Increased:

Laredo

The Pharr-Reynosa International Bridge entry port wait times have increased from an average of 63 minutes to 320 minutes.

The Colombia Solidarity Bridge entry port wait times have increased from an average of 26 minutes to 300 minutes.

El Paso

The Ysleta-Zaragoza International Bridge entry port wait times have increased from an average of 52 minutes to 335 minutes.

The Bridge of Americas entry port wait times have increased from an average of 42 minutes to 300 minutes.

Cold Chain at the Southern Border

Cold chain industry experts believe that the Ports-to-Plains corridor will be particularly beneficial to the cold supply chain at the U.S.A – Mexico border because it will:

Provide easier access to ports of entry
Promote the construction of cold storage warehouse facilities along the U.S. – Mexico border.

The transformation of cold storage warehousing is a hot topic in the cold chain industry. During the beginning of the pandemic consumers opted for packaged and frozen food stuffs, which requires a different form of cold storage to retain shelf-life than fresh foods. As agricultural supply chains have recovered, consumers are now opting to purchase a wide variety of perishable foods such as dairy, meat, and produce. This has driven companies to expand their investment in modernizing refrigeration warehouses at the U.S. – Mexico border that can better handle fresh foods.

Companies are also hoping that their investments will help reduce food waste from spoiled or expired food. Food waste is a major contributor to greenhouse gas and accounts for 37 percent of global greenhouse gas emissions. Each year the United States alone produces approximately 170 million metric tons of carbon dioxide equivalent greenhouse gas emissions because of food loss and waste. Increasing the number of cold storage facilities will reduce the amount of food that turns to waste which can:

Lower greenhouse gas emissions
Improve inventory levels
Increase business profitability

Cold Storage Construction in Laredo

GAB Operations LLC is constructing a 45,590-square-foot cold storage facility. The warehouse will serve as a storage hub for GAB’s fresh produce customers in the U.S. and Canada.
Mission Produce plans to construct a 262,000-square-foot ripening, processing, and distribution center.
Garros Services has announced a plan to build a temperature-controlled facility. The 22,000-square-foot, 18-bay facility will be used to accommodate produce transported into the U.S. from Mexico. Garros currently operates two other cold storage warehouses in Laredo; one at the World Trade Bridge and another at the Colombia Solidarity Bridge.

New Cold Storage Warehouses in Laredo in 2021

Mastronardi Produce operates a 185,000 square-foot logistics facility
Nature Fresh Farms operates a 61,000 square-foot-distribution center for its fresh fruit imports from Mexico

Policies Affecting the Cold Chain at the U.S. – Mexico Border

Policies enacted to combat the spread of COVID-19 have had a major impact on the cold chain at the southern border of the U.S. Regulations banning unvaccinated truck drivers from entering at U.S. ports of entry stressed an already thin trucking labor force. Drivers who could not enter the U.S. were forced to return to Mexico, causing cargo to be diverted away from United States cold storage facilities. In addition, since the pandemic many of the appropriate approvals and truck inspection zones can only be found further north into U.S. territory. This led Mexican freight carriers that could complete cross-border transports to bypass cold storage facilities at the southern border, venture further into the U.S. and stay within the United States for longer periods of time. Consequently, Mexican cross-border truck drivers found jobs transporting goods within the U.S. instead of remaining near the border region or returning to Mexico. These choices have subsequently further the truck driving labor force in Mexico.

In addition to COVID-19, policies enacted at the U.S. – Mexico border by the Governor of Texas to deter illegal immigration and narcotics smuggling have also affected the cold supply chain. In April, The Texas Department of Public Safety started inspections into cargo shipments from Mexico. These inspections caused delays up to five hours at some border crossings and affected the cold chain by increasing the:

Energy usage necessary to keep goods cold
Amount of expired or spoiled foods

Goods that traversed the Pharr-Reynosa International Bridge resulted in imports of $4.5 billion in produce from Mexico in 2020

Goods that were processed through Port Laredo resulted in imports of nearly $4.2 billion in produce from Mexico in 2020

Automation at the Border

The utilization of the Internet of Things and cloud storage to transmit electronic is also impacting the cold chain at the U.S. southern border as cold chain service providers utilize advanced technologies to safely transport goods. The National Customs Agency of Mexico recently implemented a new requirement for cross-border shipping that is designed to speed freight transport into Mexico. The “crossing notice” is a document obtained through an online web portal and stored in the cloud that will clear goods before they enter the country. The goal of the crossing notice is to minimize inactive data usage to make clearing goods more seamless. Combined with a radio-frequency identification tag on truck windshields that will be read by IoT-sensors in automated lanes, the crossing notice will enable drivers to travel directly through ports of entry. This is important to the cold chain industry, especially when transporting meats. For example, U.S. companies transport 4,000 metric tons of pork per day to Mexico. From 2020 to 2021 pork exports to Mexico increased 17% to a value of $404.2 million. Much of the meat is shipped chilled in cargo bins instead of frozen in retail product boxing, making timely transportation to retailers or cold storage warehouses a necessity. Without proper temperature control, this commodity is at risk of being contaminated and affecting the health and safety of consumers.

Conclusion

The COVID-19 pandemic placed unprecedented stress on United States cold storage warehousing and the cold chain at the southern border between the United States and Mexico. Many of the disruptions were the result of policies to mitigate the spread of the virus. Border closings and vaccine mandates limited truck drivers’ ability to transport goods between the U.S. and Mexico. As a result, wait times at borders became longer. Coupled with a lack of cold storage warehouse space, perishable items went to waste. These issues placed the cold chain at the southern U.S. border under pressure to make sure that a wide variety of products are not only safe, but also in the right place at the right time.