Mexico’s booming exports expected to boost cross-border trade in 2024

As more global supply chains shift manufacturing to Mexico, cross-border operators said nearshoring will be a key economic driver for the North American freight economy in 2024.

SOURCE: Freightwaves

Nearshoring — the relocation of production and manufacturing operations from one country to another to be closer to end consumers — has fueled manufacturing growth across Mexico as shippers look for supply chains that are closer, cheaper and more favorable to doing business with the U.S.

One of the largest nearshoring projects headed to Mexico will be Tesla’s $5 billion automotive factory in Monterrey, which is scheduled to be completed within the next two years.

The increased focus on bringing supply chains back to North America helped Mexico replace China as the top U.S. trading partner in 2023. Mexico has been the top U.S. trading partner since the beginning of the year, reporting $656 billion in two-way trade from January through November, according to the U.S. Census Bureau.

FreightWaves recently spoke with trade professionals who mostly remain bullish about the prospect of U.S.-Mexico cross-border freight flows next year. They also discussed nearshoring, cargo capacity and hot commodities in 2024. Trade professionals interviewed include:

• Jordan Dewart, president of 3PL Redwood Mexico.
• Ed Habe, vice president of Mexico sales for cross-border LTL carrier Averitt Express.
• Deepak Chhugani, founder and CEO of cross-border technology platform Nuvocargo.
• Mike Hamill, vice president of strategy for the transportation division at Trimble.

More freight will flow between the US and Mexico in 2024

Dewart: “What we’re seeing is certainly … foreign direct investment is still pouring into Mexico. Just every single day, multiple companies are announcing either brand new construction or expansions of existing facilities for players that are already in Mexico. Production is coming and a lot of it is going to be coming online in 2024. We’re very, very bullish about 2024.”

Habe: “I’m bullish on Mexico in 2024. Just say even if global manufacturing were not to increase next year, just the jockeying of existing manufacturing to Mexico will represent good things, not just for Averitt, but North America in general. At Averitt, we are in a good spot. We have terminals in the southeastern U.S.. We’re also on the Texas-Mexico border. Cross-border trade is a natural positive for us.”

Chhugani: “We expect 2024 to be a year of expansion and of consolidation. For companies already trading between Mexico and the U.S., we’re seeing accelerated expansions into more facilities and new commodities in their supply chain. And for companies new to trade across the U.S. and Mexico, we’re seeing more and more entrants consolidating their positions and committing to this trade lane long term. For us this has translated into an opportunity to help companies take their first steps into U.S.-Mexico trade and act as a key ally to set up everything — freight, customs, insurance — for them for added simplicity end to end.”

Hamill: “Many forecasts indicate there will be little to no overall growth in the freight market for 2024. There’s also a lot of uncertainty around consumer demand with very little consistency in consumer spending as it relates to specific end markets. Consumer spending has shown resilience over the past several quarters and has the ability to continue in 2024 despite interest rates, the global economy and geopolitical environment. I’m taking a neutral position related to end markets due to consumer spending patterns, which I believe will closely correlate with interest rates. I expect some opportunities for improvement in … automotive, consumer packaged goods and retail, with less opportunity in chemicals.”