June Cross-border Market Update
At Nuvocargo, we simplify U.S./MX cross-border trade, shining a light into the black box at the border for greater control and visibility. In this month's edition, we delve into several crucial topics, including the impact of national elections in the US and Mexico on the freight industry, strategies for unlocking qualified talent in Mexico to meet the demands of nearshoring, and a detailed analysis of transit times at the various land ports shared by the two countries.
Read on for some of the top trends and insights on cross-border trade, curated and analyzed by Nuvocargo’s team of experts.
Enjoy!
Highlight Trend of the Month
Global Trade Growth Set to More Than Double in 2024
In 2024, global trade is anticipated to experience a significant surge, potentially more than doubling its current growth rate. This optimistic forecast comes from projections by the International Monetary Fund?(IMF)?and the World Trade Organization?(WTO), which attribute this acceleration to several key factors.
Recent economic policies and international agreements have paved the way for this expected growth. Easing trade tensions and implementing new trade agreements have created a more favorable environment for international commerce. Additionally, advancements in technology and infrastructure have facilitated more efficient and cost-effective trade routes.
Key Numbers and Data Points:
? The projected global trade growth rate for 2024 is 4.5%, up from 2% in 2023.
??Developed countries are expected to increase growth rates from 1.5% in 2023 to 2.5% in 2024.
??Developing countries could see an increase from 2.5% in 2023 to 5.5% in 2024.
??Emerging markets will likely experience the highest growth, with rates rising from 3% in 2023 to 6.5% in 2024.
These projected growth rates could increase economic stability, job creation and enhanced international cooperation. The IMF and WTO highlight that this growth will not be uniform across all regions; developed countries might see moderate growth while developing and emerging markets could experience more substantial increases due to their expanding industrial capabilities and growing consumer markets.
Facts and Figures
Complemento Carta Porte 3.1 Update
Starting July 17, 2024, the Mexican Tax Authority (SAT) will mandate the use of version 3.1 of the Bill of Lading Supplement (Complemento Carta Porte, CCP). This update introduces several important changes for Mexico's transportation services and foreign trade operations.
Key Changes:
For more details and FAQs, please refer to the following document published by the SAT.
Customs Call-Out: July 4th Update
As we approach July 4th, shippers and carriers must anticipate the potential impact on cross-border shipments. While July 4th is a significant holiday in the United States, shipments will continue to cross the border as usual. However, there are a few key points to keep in mind:
By preparing for these factors, you can mitigate disruptions and maintain smooth logistics operations around the July 4th holiday period.
By the Numbers: Freight & Elections
The freight industry is inherently sensitive to political shifts, and the U.S. presidential election is no exception. For shippers and carriers, the aftermath of such elections can bring challenges and opportunities. As new policies are introduced and old ones are revised, the dynamics of cross-border trade between the U.S. and Mexico can shift significantly. Understanding these potential changes is crucial for shippers and carriers to navigate the post-election landscape effectively.
Does volume change?
Our analysis of US-Mexico trade over the last nine election cycles, based on U.S. Census Bureau data, shows that import and export volumes typically decline around election periods due to policy uncertainty. This cautious approach is driven by anticipated changes in trade regulations and tariffs. However, the new administration's trade policies heavily influence long-term freight volumes. For instance, the USMCA in 2020 led to a 7% increase in trade volume, demonstrating the positive impact of supportive policies. Understanding these trends helps shippers and carriers prepare for potential shifts in the trade landscape.
Furthermore, our aggregated data on mean and standard deviations for imports and exports across each election cycle since 1988 indicates a steady and significant growth in trade values (measured in millions of U.S. dollars). This growth trajectory is encouraging, highlighting the potential and adaptability of the freight industry between the US and Mexico.
Do prices spike?
These projected growth rates could increase economic stability, job creation and enhanced international cooperation. The IMF and WTO highlight that this growth will not be uniform across all regions; developed countries might see moderate growth while developing and emerging markets could experience more substantial increases due to their expanding industrial capabilities and growing consumer markets.
Nuvocargo’s opinion
The freight industry must navigate a complex landscape of uncertainty and change following the presidential elections in the US and Mexico. Fluctuating rates, potential price spikes, volume drops, and changes to trade agreements like the USMCA are all factors that industry stakeholders must consider. By leveraging data-driven insights and remaining adaptable, the freight industry can mitigate risks and capitalize on new opportunities in the post-election environment.
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