The rise of nearshoring: Ensuring efficiency on the Mexico-to-Canada trade route

My first article on the impact of nearshoring detailed some key considerations for companies looking to strategize an effective partnership with a carrier amidst changing business models.

To build on that, I’d like to now dive deeper into the Mexico shipping market specifically, and how that country is playing an increasingly important role inside the mammoth North American supply chain.

We know that Mexico is a very attractive nearshoring option because it is both geographically close and politically aligned with the United States and Canada. The United States-Mexico-Canada Agreement (USMCA) also allows companies to take advantage of duty-free or reduced duties on products shipped between the three countries.

It’s no wonder our southernmost neighbour is poised for significant growth. In fact, according to Statistics Canada trade data, Mexico’s annual imports to Canada have grown by 15.5 percent since 2020. That notably outpaces both the U.S. and China, which grew by more than 12.1 per cent and more than 5.2 per cent respectively.

Qualities of a strong shipping partner

For companies involved in nearshoring their operations to Mexico, identifying the ideal shipping partner becomes an imperative – one with knowledge and experience managing the nuances of the Canadian market and its transportation corridors.

Here are some key traits to look for:

• The more services, the better. Search for a courier with as comprehensive a portfolio as possible, that can manage as many needs as may arise. These include express and group shipments, postal delivery, LTL and FTL freight – as well as fulfillment and returns. Their service should be fully integrated, including the last-mile networks, and they must be flexible enough to respond fast when critical needs arise.
• The further the reach, the better. Canada has a broad geography defined by major urban hubs as well as a patchwork of rural communities. No matter the case, the shipping experience must be consistent, and is best dealt with by couriers with as broad a coverage model as possible within its own network (thereby eliminating handoffs).
• The ability to plug and play. In this day and age, the partnership should be seamless. For starters, there should be network flexibility, smooth IT integration, and efficient customer brokerage and compliance. If there are many hiccups in aligning processes, that is a noteworthy red flag.
• A team dedicated to solutions. The right courier should be able to customize plans to suit specific needs, particularly when crossing borders. This is typically led by an advanced solutions management team with diverse experts experienced in solving a variety of potential obstacles.
• Overboard on customer service. Just as a delivery partner should be able to offer customized service, it should also bring tailored customer service. Consider whether its solutions are built with customer service top of mind, or if it has specialized customer care teams with expertise in specific regions, products or industries. Additionally confirm there is a fallback plan in the case of issues like severe weather or labour disruptions.
• Eco-conscious operations. The rise of ESG (environmental, social, governance) needs no introduction, as companies and institutions of all stripes increasingly want to tighten the screws on sustainability when it comes to the supply chain. Partnering with a courier invested in sustainable products and practices will continue to escalate as a key priority.
• Safety is top of mind. Of course, when opening new trade lanes, it’s necessary to perform due diligence and stay proactively cautious. Safety and security must be part of the strategy, and it’s important to perform any threat assessments so that packages can be efficiently delivered as promised to their end recipients. This involves establishing shipping routes that make best sense from manufacturing centres to the border or to the next distribution hub.

For the past two years at Purolator, we’ve focused on expanding our cross-border network even further to accommodate a spike in demand from companies seeking to capitalize on the Mexico-to-Canada trade route. Many now operate manufacturing facilities in Mexico as key supply chain hubs – including those in automotive, industrial, technology, electronics, healthcare, and consumer goods sectors.

To maintain a high level of service, we leverage our strategically located hubs in the southern U.S. not far from the Mexico border. There, we specialize in consolidating freight and small package shipments, using an efficient approach to crossing the Canadian border and reaching major distribution hubs in short order. The uptick in nearshoring to Mexico becomes, as a result, a natural extension of our strong U.S.-to-Canada network.

If you’d like to learn more about Purolator’s cross-border logistics solutions, read more here.