PRODUCE

Produce

Produce Enters the U.S. via the Nogales Gateway

Mexico is the top supplier of fresh fruits and vegetables to the U.S. Produce has a long history in Nogales, Arizona, a port with the highest tonnage of fresh product entering the U.S. Annually, about 120,000 trucks and $2.5 billion worth of Mexican produce crosses through Nogales (Pavlakovich-Kochi 2013). Even with recent improvements in infrastructure that drive produce through Texas ports and onward to Eastern and Midwestern US markets, Nogales remains dominant in commodities including tomatoes, cucumbers, peppers, squash, melons, watermelons, mangoes, grapes and more. Nogales has a strong competitive advantage with its brokers and distributors who organize customized solutions. They offer a particular strength in “mixed load” shipments. Nogales is agile and efficient in leveraging a well-connected network of geographically clustered produce companies.

Activities and personnel in Nogales that support the fresh produce industry include sales and distribution, customs brokerage services, warehousing and repackaging, and freight forwarding. Fresh produce generally requires cold storage and trucking in many cases with specialized warehouses and refrigerated container units for trucking. Innovations and strengths in Nogales, Arizona’s “cold chain” that support fresh produce include food safety, quality control, warehousing, packaging, distribution and customer focus. Perishable goods and a limited amount of processed food (Pace Picante sauce, Campbell’s soup) move primarily north, but crops such as Washington apples ship southbound at a rate of 40-50 trucks a day in season. 15 percent of California grapes go through Nogales to Mexico in season, along with items such as seeds and beef.

Distribution Snapshot

There are more than 85 produce distributors in Nogales, many of which have been owned and operated by the same families for generations. One such distributor operates a 95,000 square foot of warehouse and distributes tomatoes, bell peppers, squash, cucumbers and beans to customers in the U.S. and Canada. It is safe to say that the majority of wholesale, retail, and food services companies source a large portion of their fresh fruits and vegetables from Nogales area distributors. Moreover, through their commitment to food safety which is monitored and verified by 3rd party audits , Nogales area distributors provide the highest level of quality and food safety to their customers.

Packaging Snapshot

SunFed Case Study

Nogales area companies constantly innovate to obtain supplies of fresh, safe, flavorful, high-quality produce year round. Coordinating supplies from various producers in Mexic, Nogales area produce distributors have been on the cutting edge of innovations in electronic traceability in the supply chain via the Produce Traceability Initiative. Such innovations have yielded end-to-end visibility of produce from field to packing house to retailer to table.

Warehousing Snapshot

Cold storage space is at a premium in Nogales. Innovations in cold storage warehousing, with new local investment, is driving Nogales’ competitiveness. Several innovations in the joint use of warehousing space such as use of a multi-user bar-code-based warehouse facility which is independently certified for food safety has allowed global produce operations to leverage Nogales, AZ warehouses for in & out, on-site inspections, consolidation and transportation.

Sales/Marketing Snapshot

Nogales “just keeps a growin.” Recently a $6 million, 90,000 sq. ft. warehouse and office headquarters facility was completed by a Mexico-based parent company for its U.S. marketing arm. It opened in February 2015.

Customs Brokers Snapshot

Customs brokers offer services in both directions. Several dozen brokerages deal with agricultural goods as they head south to Mexico. Most are members of the Nogales US Customs Brokers Association which organization ensures border commerce needs are heard locally and nationally. Nogales’ customs expertise is based on long-term, solid relationships with both state and federal regulatory bodies in the region.

Trucking

There have been a lot of changes in the logistics industry. Rail was used early for shipping goods, but with the rise of interstate highways in the 1950’s, trucking costs dropped, and commercial trucking dominated. In the 1970’s, there was innovation in shipping commercial trailers on trains (piggy back trains), up until the 1990’s, when the industry went solidly to truck. Infrastructure needed was a crane, cold storage, and a flatbed.

Seasonal Produce

Unlike manufacturing, produce is seasonal, with most activity during the winter and spring months.

Mexican produce charts courtesy of Fresh Produce Association of the Americas.

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