Over the past four years, the North American supply chain has begun a transformation driven by numerous large-scale events. Whether it's revaluating the viability of overseas manufacturing hubs in once-trade-friendly territories or circumventing the Suez Canal, supply chain managers are constantly on red alert these days.
Throughout all the challenges and changes in recent years though, one thing can be agreed upon by North American shippers: Mexico is booming.
Trade between the U.S. and Mexico has never been in a better place. As reported by FreightWaves, Mexico has solidified its position as the number one trading partner with the U.S., leading in trade for 13 of the past 14 months. In February, two-way trade between the two partners reached $67 billion — an 11% YOY increase.
What's Driving and Who's Benefiting?
Driven by the trade benefits of the United States-Mexico-Canada Agreement (USMCA) and ongoing nearshoring of manufacturing from China to Mexico, freight transportation across the Southern border is thriving.
In many situations, the most severe supply chain snarls experienced by shippers during the pandemic were a direct result of China's strict Zero-COVID policy. The forced lockdowns brought key manufacturing and transportation hubs to standstills for weeks and months at a time. Seeing how global supply chains could be upended overnight, many organizations now have more incentive beyond the USMCA alone to bring manufacturing closer to home.
What industries are benefiting the most you might be asking? Right now, the automotive and computer sectors are leading the manufacturing pack. Top imports from Mexico to the U.S. include passenger and commercial vehicles, auto parts, and computers. And top exports from the U.S. to Mexico include computer parts, computer chips, auto parts, and gasoline. Fuel aside, the advanced manufacturing exports from the U.S. (particularly computer chips and parts) are playing heavily into Mexico's growth as an automotive manufacturing and assembly hub.
Where Is It Moving & What Are the Challenges?
In March, Laredo, TX was the busiest international gateway ($27.8B) for U.S. trade for the 12th consecutive month. Over 250,000 commercial trucks moved between the U.S. and Mexico via Laredo, carrying a wide variety of goods destined for both sides of the border.
Though great for the North American economy, that amount of freight has also created its fair share of challenges for shippers. The imbalance of capacity demand on lanes between the U.S. and Mexico has been strained for several years. Consequentially, shippers can struggle to find adequate capacity when and where they need it.
Foremost, there is a greater need for drivers and equipment to move the larger number of northbound shipments into the U.S. and Canada. This imbalance causes delays on the U.S. side as shippers vie for limited space. Additionally, the infrastructure within Mexico is not yet at the level it needs to be to support the growing needs of the quickly evolving North American supply chain.
Challenges aside, shippers have to keep their businesses moving forward. And one way to accomplish that is to diversify your cross-border transportation and logistics strategy.
Be sure to download our white paper "Bypassing the Bottleneck: Solutions for Avoiding Freight Congestion at the U.S.-Mexico Border." This informative guide takes readers on deep exploration of the challenges facing shippers moving freight across the U.S./Mexico border and offers up innovative strategies to help them diversify and strengthen their cross-border operations.
What's On The Horizon?
Freight congestion along the border will not be an easy fix. Nonetheless, there is another development that shippers should keep an eye on in the years ahead: China.
Increasing Chinese Investment
North American supply chains may be moving away from China, but that hasn't stopped China from moving closer to them.
As trade tensions and tariffs complicate U.S.-China economic interactions, Chinese companies are increasingly turning to Mexico as a strategic base to maintain access to the American market. The significant investment surge from China into Mexican sectors such as automotive and electronics manufacturing is largely driven by nearshoring trends, as companies aim to circumvent American tariffs on Chinese goods by producing and assembling them in Mexico. This move not only benefits Chinese companies but also bolsters Mexico's manufacturing capacity and its role in the global supply chain.
This dynamic is reshaping trade flows and manufacturing strategies, as highlighted by the BBC’s coverage on how Chinese firms are strategically using Mexico as a backdoor to the U.S. market, indicating a significant shift in global manufacturing strategies aimed at leveraging Mexico's geographical and economic advantages.
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What Are The Implications?
The ongoing political scrutiny of Chinese investments in Mexico by the U.S. government, particularly in sectors like automotive manufacturing, could have significant economic implications for both Mexico and the U.S. — and the USMCA which is up for review by the U.S., Canada, and Mexico on 2026.
Is it possible that future tariffs could impact U.S. businesses that purchase goods from Mexico that are backed financially by Chinese interests? Possibly so. Nonetheless, no matter how the relations between the U.S. and China pan out: Mexico is clearly in demand.
Helping You Navigate The Challenges
At Averitt, we provide shippers over 50 years of supply chain and logistics expertise. Ranging from regional LTL and warehousing to customized distribution strategies covering the U.S., Mexico, and China, our team is dedicated to streamlining your supply chain from beginning to end. Our team has helped our partners overcome challenges, both, big and small. From USMCA expertise to assisting with establishing shipping operations in new countries, we can help you at nearly every turn in the supply chain.
And when it comes to cross-border logistics and transportation for your supply chain with Mexico, Averitt has you covered with over 25 years of expert service, assets, and partnerships that keep your business moving without delay on both sides of the border. Watch the video below to learn more, and visit our Cross-Border Mexico page to learn more.
