Over the last few weeks, I and other Cato scholars have explained how ubiquitous supply chain problems imperiling the American economic recovery resulted from not only short‐​term, pandemic‐​related issues, but also longstanding and misguided trade, labor, and other government policies that have decreased system‐​wide flexibility and efficiency that’s today so badly needed. Now, via the Journal of Commerce, we can add immigration and Mexican trucking restrictions to the list:

Beyond physical infrastructure investment, US and European governments need to ease migration rules to ensure there’s enough people to power the cargo to consumers, [DHL CEO Frank] Appel said. When the drivers aren’t there to haul goods and commodities, the impact is nearly immediate, as has happened in the UK, with panic runs on fuel in September and stockouts at grocers and fast‐​food restaurants. When there aren’t enough warehouse workers to unload trucks at shipper receiving facilities, as is currently the case in major US import markets, the slower circulation of chassis and containers backs up to the ports, creating further congestion.…

US long‐​haul truckload and less‐​than‐​truckload (LTL) operators were struggling to recruit drivers before the COVID-19 pandemic, and that’s only gotten more difficult. Despite the growth in volumes, there are 5,900 fewer long‐​haul truckers and 4,100 fewer LTL drivers operating in the US than there were in July 2018, according to Bureau of Labor Statistics data as analyzed by Jason Miller, an associate professor of logistics at Michigan State University.

The political climate during the Trump administration — and now under President Joe Biden — isn’t favorable to easing visa restrictions to allow foreign drivers to operate on US highways. Trucking companies face a steep challenge in making the case that the potential domestic driver pool is too shallow, considering higher salaries and better working conditions could theoretically fill more cabs.

Mexico has the largest and closest supply of potential US truck drivers, but the number of drivers who have come north of the border to haul is miniscule. Only 13 Mexican carriers with a total of 55 trucks were granted authority to operate in the US as part of a pilot program that ran from 2011 through 2014. The pilot has since expired, and tellingly, the United States‐​Mexico‐​Canada Agreement, the successor to NAFTA, doesn’t include any language to allow more Mexican drivers to take to the US roads.

Conversely, Canada has national and provincial initiatives to help foreigners immigrate and haul. Feeling similar driver recruitment pressures, the Canadian government is fast‐​tracking visa applications after overall immigration plunged during the pandemic. Canada’s openness to foreign drivers is baked into the country’s broader openness to immigration, whereas many Western governments are looking to further restrict who they allow in.

As my Cato colleague David Bier noted last week, massive U.S. visa backlogs are contributing to our current domestic labor shortage, which many port officials, importers, and logistics experts — echoing Appel above — blame for bottlenecks at various points in the supply chain. Adding insult to injury are the NAFTA/USMCA trucking restrictions (detailed in this 2013 Cato paper), which have long been supported by the Teamsters union despite Mexican trucks posing little risk — per the U.S. government itself — on American highways. In particular, U.S. restrictions on Mexican carriers affect the current supply chain situation in two ways:

  • First, the total ban on Mexican truckers carrying freight within the United States prevents them from adding to badly‐​needed U.S. trucking capacity (e.g. hauling containers from West coast ports to inland warehouses);
  • Second, the almost‐​total ban on Mexican carriers hauling freight between Mexico and inland U.S. destinations forces them to transfer cargo at the border to U.S. truckers (who then complete the voyage), thus reducing the number of American trucks available to go to seaports currently lacking drivers.

A once‐​in‐​a‐​generation pandemic all but ensured that global supply chain stresses would appear over the last 18 months, but these policies — and many others — are undoubtedly and needlessly making things worse. If President Biden really wants to improve U.S. supply chain resiliency over the long term, reforming these programs is a great place to start.