Borderlands: Avocado Prices Soar 59% Ahead Of Super Bowl

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Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Avocado prices soar 59% ahead of the Super Bowl; Mexican court halts $1B expansion plans for Port of Veracruz; Tesla is expanding its factory in Austin; and Gebrüder Weiss expands into Texas for nearshoring opportunities.

Avocado prices soar 59% ahead of Super Bowl

Just ahead of the Super Bowl, avocado prices so far in February in the U.S. recorded a 59% year-over-year increase at the supermarket.

For the week before the Super Bowl, the average price of a Hass avocado (the most popular variety) was $1.24, compared with 78 cents last year, according to a U.S. Department of Agriculture report.

The USDA's National Retail Report on Specialty Crops, 5,505 stores ran ads or special promotions on avocados last week, compared with nearly 20,000 stores the same period last year, likely meaning less bargains at the supermarket.

Mexico avocado production is down about 8% this growing season, partly attributable to avocado trees that needed to recover following record production the previous year, according to the USDA.

Aaron Acosta, corporate relationship manager at La Bonanza Avocados in Mission, Texas, said freight costs were higher this year compared to 2021. The U.S. remains the primary destination for Mexican avocados this time of year, accounting for 85% of imports.

There was a run-up in outbound tender rejections in Texas in the Laredo (OTRI.LRD) and the McAllen and Pharr markets as the Super Bowl approached. Laredo and Pharr's outbound tender rejection indexes have both risen about 22% since Jan. 31.

Chart: FreightWaves SONAR (OTRI.LRD). To learn more about FreightWaves SONAR, click here.

Acosta said certain destinations in the U.S. have seen a 50% increase in freight costs over the course of the last 18 months.

"Freight costs have had the largest impact, the price of an avocado being shipped from McAllen, Texas, to New York is up significantly," Acosta said. "Two years ago, I could get a truck to New York for $6,000. Now it costs $9,000, a 50% increase. The whole supply chain is basically adding its cost in aggregate until it reaches the consumer."

The U.S.-Mexico ports of entry in Pharr and Laredo represent the top two border crossings for Mexican avocados.

From Feb. 1 to Thursday, Pharr handled 1,322 truckloads and Laredo totaled 1,043 truckloads, with every truck carrying 40,000-pound shipments of avocados.

The Hass Avocado Board, which represents Mexican avocado growers, said U.S. consumers ate more than 2.8 billion pounds of Hass avocados in 2021, according to a Los Angeles Times report.

This year, U.S. consumers will eat about 124 million pounds of Hass avocados during Super Bowl festivities, mostly in the form of guacamole dip.

Acosta said it was still a good avocado season and anyone who wants avocados should be able to enjoy them during the Super Bowl.

"The final numbers aren't in yet, but I would say given the current economic landscape, avocados are performing very well," Acosta said. "Based on the availability, the size curve and market demand, I don't think any consumers will be disappointed this Sunday."

Mexican court halts $1B expansion plans for Port of Veracruz

The Supreme Court of Mexico recently ordered the suspension of a project to expand the Port of Veracruz, the third largest commercial seaport in the country.

In a unanimous decision, the court ruled Mexico's federal environment ministry (SEMARNAT) violated Mexican citizens' human rights when it approved the project's environmental impact assessment "in a fragmented manner," according to a statement.

The court ordered a new analysis of the impact of the port's planned expansion on reefs and wetlands. Construction of the expansion will not resume until there is a new resolution of the environmental impact.

"The authorities must comment on the environmental impact (cumulative, synergistic and residual), as well as on the plausibility of authorizing the continuation of such works, considering the protected natural area of the reef system of the Veracruz National Park and the national regulation, as well as the applicable agreements," Mexico's Supreme Court said in its ruling issued Wednesday.

The Port of Veracruz is located in the Gulf of Mexico in the state of Veracruz. Veracruz is a key strategic point for trade on Mexico's east coast and is the closest seaport to Mexico City.

During 2021, Veracruz moved 1.16 million twenty-foot equivalent units, a 15.8% year-over-year increase compared to 2020.

The $1 billion project includes expanding an area called "Bahía Norte," which will have 35 new berthing positions, according to Mexican authorities. Veracruz's current port, "Bahía Sur," has 18 berthing positions.

The purpose of the expansion is to reduce the stay times of ships that arrive at Veracruz.

Tesla expanding its factory in Austin

Automaker Tesla TSLA is planning to add another industrial building adjacent to its 4.3 million-square-foot Gigafactory Texas manufacturing facility in Austin.

Colorado River Project LLC, an affiliate of Tesla, recently filed for a building permit to expand its $1.1 billion plant to make cathodes, a key component for its new line of lithium-ion batteries. The application for the site is still pending.

The battery factory is planned on 32 acres between the gigafactory and the Colorado River, the Electrek reported.

Tesla's gigafactory facility sits on about 2,200 acres just east of Austin. Tesla will manufacture its Cybertruck, Semi and Model 3 sedan at the facility.

Tesla began to produce its Model Y vehicles at the gigafactory facility in December.

Gebrüder Weiss expands into Texas for nearshoring opportunities

Gebrüder Weiss, an international transport and logistics company, has opened a new location in El Paso, Texas.

The El Paso facility is part of a strategic move to support international businesses as they rely on nearshoring operations to meet customers' demands in the U.S., according to a release.

"We have been planning to expand in the Southwest region for quite some time," Mark McCullough, CEO of Gebrüder Weiss USA, said in a statement. "Companies have learned that they must be agile and that they have to be able to adapt to survive in this precarious environment. We anticipated nearshoring, and we are ready to support our customers' needs with expertise in cross-border logistics."

Antonio Acuña will be leading Gebrüder Weiss operations in El Paso as director of border logistics US-MX.

Austria-based Gebrüder Weiss is a global freight forwarder offering ground, air and sea freight logistics. The company employs more than 7,400 people worldwide with 170 locations.