As it stands, no moves have been made regarding a border closure from Mexico or Canada, but whispers in the wind have been heard on various platforms as the retaliation of tariffs escalates. Already we are starting to see some shifts such as Mexico cracking down on entry requirements for U.S. travelers at the start of spring break, and the U.S. announcing that Canadians that stay in the U.S. longer than 30 days will need to go through registration and fingerprinting.
What would it look like for the logistics industry if a border closure from the trade war was put into place by either Mexico or Canada?
Not allowing cross-border travel would impact the one million legal crossings that take place every day with 350 legal crossings annually between the U.S. and Mexico alone: the most frequently crossed international boundary in the world and with the border between Canada and the U.S. being the longest international border in the world with 119 legal land border crossing points, 39 railroad border crossings, and 13 international ferry crossings.
The impact would affect personal travelers and the logistics industry alike. This is more of a possibility than ever with the president of Mexico hinting at such and reaching out to other countries about the trade war, contemplating new trade partners, and potential collaboration talks between them and Canada.
It was said that cross-border freight estimated at $131 billion was moved by all modes of transportation according to the U.S. Bureau of Transportation Statistics, unchanged from November 2023. This shines light on the U.S. land borders being very busy and economically vital for North American supply chains. Even Covid barely, if at all, hindered the freight traffic trade with Canada and Mexico based off border crossings and closures. What was impacted though at that time was the overall economic activity.
A border closure in 2025 would on its own significantly impact logistics and freight forwarders with disruptions to supply chains, delays, increased costs, stock shortages, backlog of exports, and the need for alternative routes or shipping methods, as well as new markets to lessen the impact.
Key impacts for Supply Chain and Freight Forwarders in the U.S.
Immediately, a sudden border closure would cause backlogs at ports of entry and trucking disruptions, leading to delays in shipments and possible cargo pileups. Rerouting shipments to alternative border crossings would then be needed, thus leading freight forwarders to face higher costs in areas such as customs clearance fees and storage fees for goods being delayed.
The flow of goods would then become hindered and stock shortages for businesses reliant on the imports from affected counties could take place. Businesses relying on these cross-border trades would see many delays and a lack of fulfilling customer orders to even infrastructure and new project delays. All of this would require freight forwarders to rapidly adjust logistics plans, find alternative routes, manage complex documentation for new customs procedures and potentially requiring new transportation contracts. Depending on the affected border, the potential closures could lead to a shift in trade volumes to other countries, impacting market dynamics and creating opportunities for freight forwarders operating in those regions.
