News / Mexico-US trade may be buoyant, but still faces challenges, say forwarders

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US logistics providers are beefing up their capabilities to serve Mexico and the surging flows between the two neighbours. However, there are considerable challenges, despite improvements, as discussions over routing US-bound freight through Mexico during the port strike highlighted.

Not surprisingly, much of the action has been in surface transport. Late last month, online platform Cargado unveiled what is reportedly the first load board for US-Mexico truck freight.

It had rolled out the service in April and built up more than 60 clients and nearly 300 US-based trucking outfits before the official launch.

And XPO expanded its presence in the US-Mexico market this summer with its Mexico+ service, claimed to reach 99% of Mexico’s postal codes and traffic flowing through seven border crossing points. The service is C-TPAT-certified and allows customers to track shipments in real time.

North of the border, Realterm and Alliance Industrial acquired a 19.76-acre parcel of land in Laredo to build a 236,693 sq ft transload facility for cross-border operations. For 15 months, Laredo was the top US import gateway before it was dethroned in July when the port of Los Angeles was buoyed by a surge in imports.

“Laredo is set to benefit from near- and re-shoring supply chains and the major infrastructure initiatives supporting those activities, including the proposed expansion of the World Trade Bridge from 14 to 18 lanes and the construction of a high-capacity international rail bridge,” said Reatlterm’s VP of development, Joe Noon.

Inevitably, the ILA strike turned attention on Mexico as a possible alternative route for cargo headed to the US. Several logistics providers, such as CH Robinson and AS Intermodal, suggested that cargo owners should consider this scenario.

“Mexico is a viable option to some degree,” commented Bob Imbriani, SVP international of Team Worldwide. While it is best suited for destinations in the southern states, Team was also considering routing some traffic to New York that way.

He pointed out that shipping to or via Mexico posed challenges, especially for cargo owners that have not sent cargo that way before. He explained: “You’re dealing with imbalance of flows, crime, insurance issues, customs issues. Mexico has some of the strictest customs laws in the world.”

Carlos Duron, president of cross-border airfreight trucking provider Mexpress, also cautioned about challenges.

“Capacity at seaports in Mexico is minimal and expensive, complicated by regulations to move cargo destined for the US via Mexico,” he said.

Other commentators pointed out Mexico’s insufficient road and rail infrastructure and limited capacity at the main ports on the Gulf of Mexico, Altamira and Veracruz, while the port of Tuxpan is constrained by water depth and lack of rail connectivity.

While cross-border truck and rail volumes have gone through the roof, these modes are also affected by difficulties. In a market report, Uber Freight pointed to problems stemming from the imbalance in trade flows between Mexico and the US, and to crime.

Whereas goods worth $290.98bn moved from Mexico into the US in the first seven months of this year, the southbound tally was a comparatively modest $190bn, the report pointed out, adding that the ratio of trucks crossing north-south at Laredo in August was 5:1.

As a result, Mexican truckers have to include empty miles in their pricing to factor-in repositioning of equipment, Uber Freight noted. In addition, high demand is squeezing truck capacity into the US, and availability of US equipment in Mexico may shrink when the US domestic market finally recovers.

Insecurity on Mexican highways is the other headache mentioned in Uber’s report. According to the National Association of Enterprise Tracking and Vehicular Protection, five freight truck robberies a day in June were reported. The National Chamber of Cargo Transport reported that this had pushed transport costs up 27% over last year.

Switching to rail, where possible, does not eliminate this problem altogether. In July, 382 train robberies were reported, an increase of 119% on a year ago.