Trump’s Border Threat Raises Stakes For Food Supply Chains — Panjiva


Trump’s Border Threat Raises Stakes For Food Supply Chains

Ags - Fruit/Veg 82 Ags - Grains/Beans 164 Ags - Meat/Dairy 138 Cons. Staples - Food/Beverages 398 Mexico 506 Mode - Truck 48 U.S. 3310

President Donald Trump has repeated his prior threats to close the U.S. border with Mexico, Axios reports, with a move as soon as “this week” (i.e. from April 1 onwards) in a measure that “could be (applied) to all trade” according to an official transcript.

The move would be in response to concerns about continued mass migration from Central America and follows the President’s decision to cut aid to three countries including Honduras, according to Reuters.

Presuming the President’s reference to trade covers specifically trade via truck then the closure would have an impact on $484.4 billion of bilateral trade in the 12 months to Feb. 28, Panjiva data for Mexican imports and exports shows, or 64.5% of the total.


Chart segments Mexican trade with the U.S. handled by trucks by direction (imports to and exports from Mexico) on a monthly and 12-month average basis.   Source: Panjiva

Proportionally Mexican exports are more exposed to trucking than vice versa in accounting for 70.7% of total shipments in the past 12 months. Logically shipments of perishable goods and those involved in just-in-time manufacturing processes would be the most exposed to the customs complications resulting from a border closure.

Shipments of agricultural products can ill-afford disruptions given Mexican exports to the U.S. by truck only increased by 0.5% year over year in the 12 months to Feb. 28 to reach $13.5 billion, though that has accelerated to 5.5% in the three months to Feb. 28. Automotive industry exports meanwhile soared 25.6% in the past 12 months, to reach $46.0 billion, and 17.7% in the last three months.


Chart segments Mexican exports to the U.S. by industry – defined at HS-2 product level – on a monthly and three-month average basis.    Source: Panjiva

Mexico’s truckborne agricultural exports are led by fruit, which accounted for $6.47 billion of exports in the past 12 months, or 47.9% of the total, followed by vegetables at $5.15 billion with all other products including meat, dairy and fish representing the remainder.

The downturn in shipments in the past 12 months has been down to a 4.1% drop in shipments of fruit, though like other products there has been a rebound more recently. From a timing perspective a border closure comes at a bad time given shipments tend to peak in March and April each year.


Chart segments Mexican agricultural exports to the U.S. by product, defined at HS-2 level.    Source: Panjiva

Leading exporters that could face disruption from a border closure include: soft fruit exporter Driscoll with $1.44 billion of exports in the 12 months to Feb. 28; Grupo Viz’s meat-packer Sukarne with $678 million; avocado exporters Mission Produce and Del Monte with $303 million and $185 million respectively; and vegetable shippers Taylor Fresh Foods and Desert Glory with exports of $251 million and $190 million.

Given each exporter tends to focus on a specific product line there’s a risk that the impact of the border closures at the product will be a function of shippers’ disaster recovery planning adequacy.


Chart segments Mexican agricultural exports to the U.S. by shipper and product in the 12 months to Feb. 28, dominated in dollars.    Source: Panjiva

PANJIVA RESEARCH is a service provided by Panjiva, Inc. ("Panjiva") to relevant global subscribers, and are deemed to be Panjiva "Services" subject to the Panjiva Terms & Conditions of Use. Information contained within or made available via the Services is for informational purposes only and nothing in the Services shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Panjiva, Inc. or its affiliates of an investment strategy or whether to "buy", "sell" or "hold" an investment. The Services may include views and commentary about customers of Panjiva. No aspect of the Services is based on consideration of your individual circumstances, and you should determine on your own whether you agree with the information contained within or made available via the Services. Employees involved in Panjiva Research may hold positions in securities analyzed or discussed in the Services. Panjiva does not make any express or implied warranties, representations, endorsements or conditions with respect to the Services and the information contained within or made available via the Services, including without limitation, warranties as to the usefulness, completeness, accuracy, currentness, reliability or sufficiency of any information (including, without limitation, conclusions, statements, opinions, estimates, forecasts or projections of any kind) and expressly disclaims any implied warranties. Neither this disclaimer nor any of its contents may be forwarded or redistributed without the prior written consent of Panjiva. © 2019 Panjiva, Inc. All Rights Reserved.