The Friday Report: May 3rd, 2019

Will Mexico Add Tariffs as Payback for Border Slowdown?

Over the past month, truck crossings at the U.S.-Mexico border have been reduced to a crawl following the addition of 750 Customs and Border Protection (CBP) agents were reassigned to process incoming migrants rather than inbound goods.  This has left official points of entry (POE) understaffed. Mexico is the second largest export market to the U.S. 

As of April 4th, the wait time from trucks inbound to the U.S. from Mexico was five hours.  Local media reports have mentioned that some sections of the border are effectively closed.  Other reports indicate 12-24 hour wait times.

A reaction is still anticipated by the Mexican government to the Trump administration tariffs on Mexican steel.

Chick-fil-A Announces Shift to Company-Owned Distribution Center

In a move to gain increased control over its supply chain, Chick-fil-A is betting on the opening of its first company-owned distribution center to gain insight into ways it can drive cost savings and improved performance.  Running its own DC will enable the company to better manage aspects of quality control and food safety, hopefully increasing consumer trust in its brand.

According to the Chick-fil-A blog, the impetus for its new distribution center is the need to keep up with higher store volumes, including from delivery.  The company is trying to keep pace with the evolving fast food delivery market.

Is Free One Day Shipping Now the New Normal for Consumers?

With the recent announcement by Amazon that it is evolving to expedite its free delivery service and cut Prime shipping time in half, Walmart rushed to up the ante.  Taking to Twitter, Walmart announced “One-day free shipping…without a membership fee.  Now THAT would be groundbreaking.  Stay tuned.”  Was this a public pronouncement of a major new service offering or simply a tease?

The Tweet was actually a reframing of Walmart’s existing capabilities.  The build out of Walmart’s store pick up capabilities enables consumers to use an online transaction to receive goods in one day.  Both Amazon and Walmart are leveraging their considerable assets to gain the attention and confidence of consumers.

Similarly, Target is evolving its buy online, pick up in store offering.