Borderlands is a weekly roundup of developments in the world of cross-border transportation and trade between the United States and Mexico. This week: Mexico remained the United States’ top trading partner in July and Laredo was the No. 1 gateway; production and exports of Mexican-built trucks fell in August; Maersk partnered with Fabric to open an e-commerce center in Dallas; and a cargo checkpoint opens at a port of entry on the Texas border.
Mexico remains the United States’ top trading partner in July, Laredo the No. 1 gateway
The partnership between Mexico and the United States continues to strengthen, with Mexico being the United States’ largest trading partner in July with $65.3 billion, an increase of 0.24% year-on-year (y/y).
According to the latest data from the U.S. Census Bureau, it was the seventh time in the past eight months that Mexico ranked first in monthly international trade with the United States.
Mexico’s trade with the United States year-to-date is $462 billion, ahead of Canada at $450.3 billion and China at $322.3 billion.
If Mexico remains the United States’ top trading partner for the remainder of 2023, it would be only the second time in history that the country has done so. The first time was in 2019, when U.S.-Mexico trade totaled $612.8 billion, compared to $611.4 billion for Canada and $555.6 billion for China.
From the 1970s until 2014, Canada was the United States’ largest trading partner. China earned the top spot in the rankings from 2015 to 2018. Canada regained the top spot in 2021 and 2022.
Nearshoring manufacturing to Mexico is helping to increase cross-border trade with the United States, according to Patty Hinojosa, vice president of sales and operations in Mexico for CargoQuotes.
“We have recently seen a notable increase in partnership requests from new manufacturing facilities in [Mexican cities] of the areas of Ramos Arizpe and Monterrey,” Hinojosa said. “These companies are preparing to launch their first batch of final products to their eager customers in the United States.”
CargoQuotes, headquartered in Lee’s Summit, Missouri, is a full-service freight brokerage firm specializing in cross-border shipments.
According to Statista, the manufacturing sector in Mexico has already attracted nearly $10 billion in foreign direct investment in the first eight months of 2023, up from $13.7 billion for all of 2022.
According to WorldCity, for the sixth consecutive month, Laredo, Texas retained the top spot among the nation’s 450 international trade gateways.
Laredo recorded $26.1 billion in bilateral trade in July, with trade in Mexico accounting for $25.4 billion, according to the latest U.S. Census Bureau data analyzed by WorldCity.
The Port of Los Angeles ranked second with $24.3 billion and Chicago O’Hare International Airport ranked third with $24.2 billion in trade.
As nearshoring efforts continue to intensify in Mexico, there are signs of growing difficulties, according to Jordan Dewart, president of Redwood Mexico. Redwood Mexico is the cross-border shipping arm of Chicago-based fourth-party logistics provider Redwood Logistics.
Dewart said demand for cross-border trucking capacity continues to grow, but is impacted by rising diesel costs, a shortage of Mexican drivers, cargo thefts and the depreciation of the dollar-to-peso conversion, which have contributed to the increased shipping costs per mile and interest rates.
According to the Department of Agriculture, rates for shipments crossing the Texas-Mexico border averaged $3.08 per mile, compared to the U.S. domestic average of $2.09.
“If logistics providers and shippers complain about high interest rates in the United States, about 6%, that’s double that in Mexico,” Dewart said. “Mexican airlines are not rushing to expand their fleets while they are stretched to capacity. This has not created an irrecoverable problem at the moment, but if adequate investments are not made there could now be similar disruptions on the roads to what was experienced in ports from 2020 to 2022.”
Dewart said that as U.S.-Mexico trade continues to increase, the dollar-peso disparity should ease, but shippers should be proactive in locking in freight rates.
“The current shipping rates and interest rates that logistics providers and shippers are experiencing are exorbitant,” Dewart said. “The expectation is that this will continue as manufacturers experience increasing pain in their nearshoring moves. Shippers asking to have their rates lowered this summer are being urged by Mexican carriers to raise their rates and freeze them for the next three years to avoid seeing market rates skyrocket.”
Production and exports of Mexican-built trucks decline in August
After seven consecutive months of growth, Mexico’s monthly truck production and exports fell in August, according to data from the Mexican National Association of Bus, Truck and Tractor Manufacturers (ANPACT).
Heavy truck production fell 3.9% y/y to 19,413 units, while exports fell 15% y/y to 15,114.
ANPACT President Miguel Elizalde said the declines were not indicative of a market slowdown.
“These data are lower than last year, but it does not mean that it is a downward trend, on the contrary, the number of vehicles produced in August 2022 was very high, so if we compare it month by month, production was lower ,” Elizalde said during a recent video press conference.
The United States was the top destination for trucks produced in Mexico in August, accounting for 96% of exports, followed by Canada with 2.5% and Colombia with about 1%.
The 10 truck manufacturers and two engine manufacturers in Mexico that are members of ANPACT include Freightliner, Kenworth, Navistar, Hino, International, DINA, MAN SE, Mercedes-Benz, Isuzu, Scania, Cummins and Detroit Diesel.
Maersk partners with Fabric to open e-commerce center in Dallas
Container shipping giant Maersk has opened an automated fulfillment center in Dallas, powered by robotic solutions and Fabric technologies.
According to Erez Agmoni, global head of innovation for logistics and services at Maersk, the 38,000-square-foot facility is equipped with an AI-driven, automated e-commerce fulfillment solution aimed at maximizing warehouse productivity while reducing minimum real estate space requirements.
“The growth of e-commerce continues to reshape the retail landscape,” Agmoni said in a press release. “As we look to help our customers simplify their end-to-end supply chains, we see Fabric’s automated fulfillment solution as highly capable of meeting the demand for efficient warehousing and fulfillment where labor resources and real estate are scarce.”
Fabric, based in Tel Aviv, Israel, is a retail technology company that provides intelligent robotic fulfillment systems. Denmark-based Maersk’s business activities include shipping, port operations, supply chain management and warehousing.
Cargo checkpoint opens at port of entry on the Texas border
Officials on both sides of the U.S.-Mexico border recently unveiled a new $3.6 million checkpoint on the Mexican side of the Colombia Solidarity International Bridge, aiming to speed crossing times for both pedestrians and freight trucks.
The bridge connects Laredo with the city of Nuevo Laredo, Mexico.
The checkpoint was developed by officials in the Mexican state of Nuevo Leon, with input from the Border Patrol and U.S. Customs and Border Protection. It includes two lanes for pedestrian vehicles, three lanes for commercial vehicles and inspection booths for each lane.
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