Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Nearshoring forecast to boost US-Mexico trade in 2024; Texas receives $70M grant for hydrogen fuel stations; automotive manufacturer announces $400M factory in Mexico; and Texas logistics park receives $1.5M grant to expand services.

Nearshoring forecast to boost US-Mexico trade in 2024

Cross-border operators expect 2024 to be a busy year, with more tractor-trailers passing between the United States and Mexico daily, carrying everything from cars and auto parts to electronics and fresh produce.

With shippers attempting to return to normal freight seasonality amid uncertain economic conditions, Mexico is positioned to take advantage of potential nearshoring opportunities, according to Sri Laxmana, vice president of Americas at freight broker and 3PL giant C.H. Robinson.

“Mexico is an important region for us for various reasons. We do feel that the macroeconomics and geopolitical landscape of the world is certainly changing,” Laxmana told FreightWaves. 

Almost 40% of U.S. shippers have already taken advantage of nearshoring or are considering it, according to C.H. Robinson’s 2023 shipper survey. Laxmana said he wasn’t surprised by the results.

“We certainly have seen volatility in manufacturing here and some locations around the world due to so many different things,” Laxmana said. “I think the idea about nearshoring started being formulated, because you certainly saw Mexico’s proximity to the United States.”

Laxmana has been with C.H. Robinson for 23 years. Prior to working on global forwarding for U.S., Canada and Latin America, Laxmana was vice president of global ocean services at the company.

“During that time we certainly have seen volatility in manufacturing here and some locations in the world,” Laxmana said. “Due to so many different things, I think the idea about nearshoring started being formulated, because you certainly saw Mexico’s proximity with the United States.”

Laxmana expects nearshoring to increase trade in 2024 due to conversations he has had with many customers about tapping into the strategy of locating manufacturing capacity in Mexico to be closer to the U.S. market.

Some of the factors causing the supply chains’ shift away from Asia to Mexico include mitigating risk, Laxmana said.

“I think everybody had the desire to amortize risk, and try to think creatively, whether you’re shipping into the U.S. West Coast, moving to the U.S. East Coast or thinking about manufacturing in a different location,” Laxmana said. “We’ve seen manufacturing move from China to Southeast Asia. We’ve seen manufacturing for specific verticals going to India, going to Pakistan, going to different locations. So coming back, I do feel Mexico has become this attractive destination, for various reasons.”

Laxmana said Mexico’s workforce and the numerous international trade agreements the country has signed with other nations — including the United States-Mexico-Canada-Agreement (USMCA) — are other considerations for shippers looking to shift production.

“The USMCA replaced the North American Free Trade Agreement, and now there’s some favorable conditions for business by reducing tariffs and smoother transactions across the border,” Laxmana said. “Then let’s talk about the skilled workforce. The fact remains, Mexico has a growing pool of skilled labor, particularly manufacturing and engineering. Mexico’s workforce is often praised for its adaptability, productivity and proficiency in English, as well. It certainly helps the broader connectivity to do what we’re looking for.”

In September, C.H. Robinson opened a 400,000-square-foot distribution facility in Laredo, Texas, which has the capacity to handle as many as 350 shipments a day. (Photo: Jim Allen/FreightWaves)

Cross-border freight that is expected to see significant growth in 2024 starts with auto parts and vehicles, Laxmana said.

“Certainly the automotive industry goes without saying for growth,” Laxmana said. “If we look at some of the investments being made, you continue to see those very secondary original equipment manufacturers continue to invest. But growth really depends on some different factors — such as what is the availability for raw materials? If there’s no raw materials, then it’s very difficult to manufacture, so how do you get those raw materials there? I do feel other manufacturing industries are certainly following suit, but they have some different factors involved prior to making those decisions.”

C.H. Robinson is betting big on the continued expansion of commerce between the U.S. and Mexico. In September, the company opened one of the largest distribution facilities on the Mexico border in Laredo, Texas.

The 400,000-square-foot cross-dock facility includes 154 dock doors and room for 700 trailers. C.H. Robinson’s distribution center aims to handle as many as 350 shipments a day.

“On average, we handle one in every 10 shipments down in Mexico, so we’ve got a good footprint, we’ve got a good solution,” Laxmana said. “We do feel [the Laredo distribution center] is primed for success.”

Texas receives $70M grant for hydrogen fuel stations

The state of Texas recently received a $70 million grant to build up to five hydrogen fueling stations for medium- and heavy-duty trucks in Dallas-Fort Worth, Houston, Austin and San Antonio, according to the Federal Highway Administration.

The grant to the North Central Texas Council of Governments from the federal government’s alternative transportation infrastructure program will build the stations at existing truck stops within the Interstate 10, 35 and 45 corridors. 

The project will help create a hydrogen corridor from Southern California to Texas.

“This funding will help ensure that electric vehicle chargers are accessible, reliable and convenient for American drivers, while creating jobs in charger manufacturing, installation and maintenance for American workers,” Transportation Secretary Pete Buttigieg said in a statement.

Automotive manufacturer announces $400M factory in Mexico

China-based Shanghai Unison Aluminium Products Co. recently began construction of its first automotive manufacturing facility in Mexico.

The $400 million factory in the city of San Luis Potosi will produce a range of products, including bumpers, front subframes, instrument panel frames, battery trays and other aluminum auto parts for electric vehicles.

The 1 million-square-foot factory is scheduled to go online by the end of the year, creating 3,000 jobs. Some of Shanghai Unison’s clients include Tesla, Volvo and BMW. The company was founded in 1994.

Texas logistics park receives $1.5M grant to expand services

The TexAmericas Center recently received a $1.5 million grant that will be used to expand its logistics capabilities, according to a news release.

The TexAmericas Center is a mixed-use industrial park in the northeast corner of Texas, about 20 miles west of Texarkana and 180 miles east of Dallas. The center is near Texas’ borders with Arkansas, Louisiana and Oklahoma.

“We’re thrilled to receive this funding and look forward to using it for enhancing the rail capabilities on our campuses,” TexAmericas Center CEO Scott Norton said in a statement. 

Texarkana is a major east-west and north-south rail center, with seven rail lines converging in the area and over 125 trains passing through daily. Union Pacific, Kansas City Southern, Texas Northeastern Railroad and Lone Star Rail Car Service currently serve TexAmericas and the surrounding area.

More articles by Noi Mahoney

Canadian authorities suspend two more trucking companies after crashes

Mexico top US trade partner in November, Laredo No. 1 gateway

GXO to shut down Memphis facility, lay off 211 workers

The post Borderlands: Nearshoring forecast to boost US-Mexico trade in 2024 appeared first on FreightWaves.

Similar Posts

Leave a Reply