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Nogales vs. McAllen

Have the shipping lanes from Nogales, AZ, changed over the last few years?

Few conversations about incoming loads of fruit and vegetables don’t include mention of McAllen, Texas. Though receivers in both Nogales and McAllen are fiercely competitive, they are both essential to North American trade. Of late, for many the rivalry is less about competition and more about smart business decisions.

One receiver with a foot in both camps explains it this way.

“When Diazteca started in 1987,” said Rodrigo Diaz, marketing director at Diazteca Company, “70 percent of our business was out of Nogales and 30 percent McAllen. In the past 20 years, it’s shifted to 40 percent Nogales and 60 percent McAllen. After the market crash of 2008, the eastern United States was recovering faster economically than the West, so many shippers decided to ship more east; this fueled the move to McAllen.

“Business has grown at both borders,” Diaz continues, “but Texas is growing faster in produce crossings. Texas growth can also be attributed to the Bajio in Guanajuato, which has grown as a produce region more quickly than Culiacan on the West Coast. Volume from Culiacan has stayed steady, whereas Guanajuato, which grows many of the same commodities, has experienced more growth.

“From Nogales,” said Diaz, “most of our products—75 percent of which are tropicals like mangos and pineapple—are destined for the Los Angeles area where there are large Hispanic and Asian populations. About 15 percent goes to Phoenix and the rest to Colorado, Nevada, Oregon, and Washington.”

“We built a 60,000-square-foot warehouse in McAllen because we have a large summer program in Central Mexico and ship all over the United States and Canada,” said Atanasio Panousopoulus, managing member of Delta Fresh Sales, Inc., which specializes in year-round tomatoes as well as pickling cucumbers, peppers (bell and hot), and squash.

“Our main warehouse is in Nogales because a lot of our customers would rather purchase from here,” Panousopoulos said. “Even with all the sales coming out of McAllen, the deals are made in Nogales.”

“We ship a lot to the Midwest, the Southeast, and Texas,” said José Luis Obregon, president of IPR Fresh. “In the summer months, we have a presence in McAllen. Some customers like to pick up there for the logistics.”

For Bobby Astengo, managing member of Peppers Plus, LLC, it’s pretty simple. “There’s no equal on the border; the Nogales/Rio Rico area has seen the recent construction of several 200,000-square-foot facilities to complement the many existing cold storage warehouses within a 10-mile radius. It’s like a terminal market, but instead of stalls we have mega-distributorships.

“We’ve been here close to a century,” Astengo said. “You have generations of people who know how to handle and market produce like nowhere else. With this high concentration of produce-savvy companies and people, Nogales will always be the leader of handling large volumes.”

Gonzalez Quality Fruits and Vegetables is a full-line distributor that covers most of the United States with eight salespeople.

Says president Luis Gonzalez, “The West Coast is big for us, with most of our staff covering from San Diego to Vancouver. The others cover Texas, Chicago, St. Louis, Atlanta, and parts of Florida. For the future, I have to think about opening an office in McAllen to reduce freight costs.”

For Arizona Sky, many trucks are headed to Canada. “We always have trucks headed to Canada and three of our sales staff are focused on those markets,” said Roberto Franzone, director of Arizona Sky Produce, Inc. “Seventy-five percent of our business goes in that direction mostly to Montreal, Toronto, and Ottawa. We have three other salespeople—one who covers British Columbia, one covers Los Angeles, and the other the rest of California.”

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full supplement.