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‘Just so big’: China’s outsize role in trade at Texas border crossings

‘Just so big’: China’s outsize role in trade at Texas border crossings

Though well behind Mexico, China ranks second for international trade at the three largest United States-Mexico border crossings in Texas: Laredo, El Paso and Pharr.

Its status on the border is buoyed by imports of auto parts, cellphones, electrical circuit boards and other goods, say public officials and industry experts.

Teclo Garcia, Laredo’s economic development director, said cellphones were the top imports from China through Port Laredo during 2020.

“We had $1.16 billion in total trade with China last year, and cellphones and related equipment were by far the biggest category at 26% ($305 million),” Garcia said. “Textiles was No. 2 with 9.3% ($108 million), and then computers were No. 3 at 7.2% ( $82.8 million).”

France was Laredo’s third-largest trading partner, accounting for $540 million in trade with Laredo in imported aerospace equipment. Laredo’s other top trading partners were Japan, Nicaragua, Malaysia, Germany and Thailand, according to U.S. Census Bureau data compiled by WorldCity.

Garcia said in the past, Laredo city officials have not proactively pursued trade relationships with China or other countries, but “that is the plan going forward.”

“We’re developing a comprehensive trade plan to sort of align us and focus Laredo going forward,” Garcia said. “In Mexico, we’re looking at the six markets/regions that we trade with the most and developing a plan to focus on them. Then we’re looking at those other markets around the world that are really important to us, obviously; China and France and Canada are some of those other top markets.”

Rahul Oltikar, chief operating officer of Laredo-based Jamco Group, said his firm has many customers who have products coming in from all over Asia and Europe.

The Jamco Group is a Laredo-based global logistics provider. 

“China is the predominant country, but we see products from Japan, Thailand and Vietnam,” Oltikar said. “Commodities include textiles, electrical components, automotive products, etc.” 

While China is No. 2 for the three largest land ports across Texas, accounting for about $2 billion in trade in 2020, Mexico accounted for the overwhelming majority of the trade for each of them during the same period — about $262 billion.

China was the No. 1 trade partner for Port Houston and Dallas-Fort Worth International Airport last year, accounting for $21.2 billion.

“China is just so big and does so much,” Ken Roberts, founder and president at Miami-based WorldCity, told FreightWaves. “So much of what is manufactured in Mexico is going to have or can very well have Chinese parts in them.”

FreightWaves’ SONAR data platform shows that imports from China (SONAR: CSTM.CHNUSA) have been on a roller coaster for most of April caused by global supply chain issues and delays at the ports of Los Angeles and Long Beach.

Imports from China to the United States (CSTM.CHNUSA) are up 2.8% since April 21. (Chart: FreightWaves SONAR. To learn more about FreightWaves SONAR, click here.)

WorldCity is a company that tracks trade through more than 240 countries, along with data on airports, seaports and border crossings, in monthly trade reports. 

China accounted for $551 million in total trade at Pharr-Reynosa International Bridge last year — the majority of which was equipment and parts related to power supplies, transformers, automotive parts and medical supplies.

After Mexico and China, Pharr’s largest trading partners in 2020 were South Korea, Japan, Indonesia, Malaysia, Germany and Thailand.

Luis Bazán, director of the Pharr-Reynosa International Bridge, said although they don’t directly target China or other countries besides Mexico, “our customers are importing products from many countries and have been doing so since 1994 with NAFTA.”

“The trade community in this region, not just in Pharr, is strong, and many manufacturing facilities have expanded to our neighboring city of Reynosa, Mexico,” Bazán said. “We’re a global bridge, and we service the biggest market share of products being shipped from other countries in the South Texas region. We’re trading with up to 90 or more countries.”

At the El Paso border crossing in West Texas, China accounted for $334 million in trade last year — mostly in auto parts, electronic goods, medical equipment and textile supplies.

“We are experiencing an increased level of reshoring opportunities in our region from China and other parts of Asia, but mainly China,” said Jon Barela, CEO of the Borderplex Alliance, an El Paso-based economic development nonprofit. “I think that is going to continue for the next year or two.” 

After Mexico and China, El Paso’s top trading partners were Malaysia, Taiwan, Thailand, Japan, Singapore and South Korea.

Troy Ryley, president of Redwood Mexico for Redwood Logistics, said the flow of Asian or European goods into Mexico is usually through Mexican seaports.

“Asia predominantly ships their goods to Mexico through the Port of Manzanillo or the Port of Lázaro Cárdenas, in order to bring cargo into Mexico,” Ryley said. “That’s parts, raw materials, automotive, electronics, contract manufacturing; whatever Asia is sending, it’s most likely flowing over those [Pacific Coast] ports.”

Ryley said the U.S. could see more manufacturers leave China or other Asian nations and nearshore their operations in the near future because of the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA.

“I think companies learned — especially with the Port of Long Beach issue with the ships that couldn’t unload because there was a backlog — you can’t go to Asia right now to easily take care of your business and your company and your relationships. I think that’s making Mexico even more attractive,” Ryley said.

Roberts said 2019 and 2020 were two of the more volatile trade years in recent memory, with Mexico and China trading places several times as the U.S.’ top trade partner.

Four different ports were also No. 1 during 2020: the Port of Los Angeles, Port Laredo, Chicago O’Hare International Airport and John F. Kennedy International Airport in New York.

“I think you’re going to see in 2021 China sort of becomes a top trade partner again to the U.S., and the Port of Los Angeles remains on top,” Roberts said. 

Click for more FreightWaves articles by Noi Mahoney.

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26 April 2021, 13:00