May 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

Election years and the freight industry

National elections tend to be seen as times of uncertainty for international markets, with the arrival of policy changes ruled by different ideologies and visions for the future of each country. With elections in Mexico and the US taking place in June and November, respectively, the cross-border freight industry appears to be entering a period of uncertainty. However, after examining various expert opinions, the industry will likely continue to grow, thanks to the stability provided by the USMCA.

Under the USMCA, ?trade has grown well over 30% from July 2020 to July 2023 ?between Canada, USA, and MX. Combined, these three countries account for almost a third of the global GDP and sustain an estimated 13 million jobs across North America, with 5 million of those depending directly on the US-MX trade relationship.

Mexico is the United States' largest trading partner, with?trade valued at $1.5 million USD per minute . Mexico relies on the US to purchase the majority of its exports and serves as a cost-effective outsourcing destination for American manufacturers.

All three governments use USMCA, NALS (North American Leaders’ Summit), and bilateral initiatives to support trade growth and build more resilient supply chains, develop an electric vehicle industry, expand semiconductor production, develop other emerging technologies, renew infrastructure, and confront environmental challenges. Sustaining and deepening such policies and investments will encourage the private sector to increase nearshoring and reshoring to North America.

This means that even with changes in policies and practices, the USMCA is set to enhance trade between the US and Mexico until 2026. At that time, the governments of Canada, the US, and Mexico will reconvene to revise the agreement, theoretically further boosting trade among these countries.

This boosts analysts' confidence that the economy in the US will maintain its growth, with?Steven Marcus, president and CEO of Raymond Limited US , stating: “We anticipate an uptick in the market following a new administration coming in, or the re-election of the current administration. It doesn't make a difference if the Republicans or Democrats go back in next November; we do predict that the US market will swing upwards”.

As for Mexico,?according to Reuters, ?the gross domestic product (GDP) is expected to rise 2.2% this year and 1.9% in 2025, according to median estimates of 34 analysts polled on April 8-18. The consensus forecast for next year has been downgraded from the 2.1% predicted in a January poll.

Facts and Figures

• According to the?Energy Information Administration (EIA) , diesel prices went up .050 cents per gallon on average nationwide in May compared to last year.
• According to DAT , the national average dry van linehaul rate decreased by 4 cents per mile on a 6% higher volume of loads moved than last year.
• The?Logistics Manager’s Index? dropped to 52.9 for the first time in four months. It’s down 5.4 points from March to April, mainly due to the contraction of Inventory Levels, which creates a cascading effect across the supply chain.
• According to the?Bureau of Transportation Statistics , the value of goods traded between the U.S. and Mexico increased 3.6% in March 2024 compared to the previous year, a ten-month continuous growth streak.

Expert’s Take

Unlocking Potential: How Mexican Talent enhances cross-border logistics operations

Identifying the right talent at every production stage is crucial for nearshoring to reach its full potential in Mexico. Navigating the complexities of cross-border operations requires individuals adept at uncovering supply chain efficiencies, making nearshoring a valuable strategy. ?

"With a median age of 30 and an economically active population of 60 million, I foresee significant restructuring within the education sector and various industries. This evolution will create more educated and skilled professionals equipped to handle sophisticated logistics programs and emerging technologies.”

—?Roberto Icaza

Co-founder, President, and COO of Rapido Solutions Group

Read the full interview here.

By the Numbers: Land port transit times

The Bureau of Transportation Statistics (BTS) provides detailed data on U.S. border crossings collected by U.S. Customs and Border Protection (CBP), focusing on inbound vehicles, containers, passengers, and pedestrians. This dataset is crucial for analyzing truck traffic in the U.S.-Mexico land-freight gateways, revealing trends in commercial vehicle movement and cross-border trade.

A thorough review of commercial truck crossings from 2020 to 2023 (with 2024 projections) yielded vital insights:

• Laredo, TX, is the busiest port in the US, averaging 2,656,026 trucks per year, far surpassing other ports.
• Otay Mesa, CA; Hidalgo, TX; Calexico East, CA; and Nogales, AZ also maintain high traffic volumes, highlighting their importance in trade.
• Most ports show stable truck traffic from 2020 to 2023, except El Paso, TX, which decreased from 273,228 in 2020 to 89,772 in 2023 due to infrastructure modernization and increased inspections.
• Emerging or less frequently used ports include Tornillo, TX, which began recording traffic in 2023, and Lukeville, AZ, with low traffic volumes.
• Preliminary 2024 data show Laredo, TX, maintaining high volumes, El Paso, TX, recovering, and Hidalgo, TX, continuing high usage.

The analysis also identified the ten busiest ports and their average wait times as of May 20, 2024. Laredo, TX, the busiest land port, has low wait times, indicating efficient processing. Eagle Pass, TX, and Calexico East, CA, also handle high volumes efficiently. Conversely, Ysleta, TX, and Nogales, AZ, have higher wait times, suggesting the need for infrastructure or traffic management improvements.

Nuvocargo’s opinion

For shippers and carriers using high-traffic ports such as Laredo, TX, Hidalgo, TX, and Otay Mesa, CA, we recommend the following:

• It's crucial to streamline operations through advanced scheduling and routing technologies.
• Leveraging data analytics can optimize loading and unloading times, minimizing delays.?
• Developing strategic partnerships with port and customs operators to prioritize shipments and ensure timely processing is necessary.?
• Anticipating and mitigating potential bottlenecks with port authorities can be reduced by engaging in regular communication with them.
• It’s worth keeping a close watch on emerging ports like Tornillo, TX, which might offer shorter wait times and less congestion. Evaluating and integrating their capacity into logistics networks can provide growth opportunities and competitive advantages.
• We also recommend that all parties leverage their data to make strategic decisions, including but not limited to utilizing detailed traffic data to inform operational decisions on route planning and resource allocation.
• ?Enhance security measures, ensure compliance with regulatory requirements, prevent delays caused by inspections, and improve overall operational efficiency by leveraging data analytics and automation.

All things considered, with existing digital tools, a wealth of public data, and your company's historical data, you can leverage the various land ports facilitating commerce between the US and Mexico to uncover additional efficiencies and optimizations for your existing cross-border operations.?

Editor’s Picks

• The US suggests the possibility of penalties if the production of Chinese electric vehicles moves to Mexico by The Hill.
• Mexico Tariffs on Steel, Plastics to Affect 7% of Total Imports , by Bloomberg.

If you want to learn more about how Nuvocargo can help you streamline your cross-border logistics, schedule a call, and one of our team members will be happy to help. Click here and fill out the form!

Keep an eye out for more Nuvocargo cross-border market updates coming soon.