March 10, 2024

Borderlands Mexico: Nearshoring boom brings more production closer to US


Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Nearshoring boom bringing more production closer to US; Mexican and US officials sign agreement to expand international bridge; Old Dominion Freight Line receives approval for new terminal near Phoenix; and construction begins for 785,000-square-foot logistics park in Houston.

Mexico registered a record $36 billion in foreign direct investment last year, a 2% year-over-year increase compared to 2022, according to data from the country’s Economy Ministry.

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

Mike Burkhart, C.H. Robinson’s vice president of North America surface transportation, said he is already seeing the results of the nearshoring of supply chains to Mexico.

“We’re transitioning to a new era now, where we can say the nearshoring boom has officially arrived,” Burkhart said. “The beauty of this is that more is on the way, we still expect this trend to play out more fully over the next five years.”

In September, brokerage giant C.H. Robinson opened a 400,000-square-foot cross-border facility in Laredo, Texas. The complex includes 154 dock doors and room for 700 trailers, while expanding the company’s footprint along the U.S.-Mexico border to 1.5 million square feet of logistics space.

“Last year, Mexico set a record with foreign direct investment, it was about 24% over 2020 and it marked the first time in two decades that the U.S. bought more goods from Mexico than China,”  Burkhart said. “U.S. imports from Mexico are up, while imports from China actually dropped 20%.”

Georg Rosch, vice president of direct procurement strategy at JAGGAER, said shippers are always looking for stable, reliable and cost effective supply chains.

JAGGAER is a provider of cloud-based business automation technology for business spend management. The company is headquartered in Morrisville, North Carolina, and has offices around the world.

“I would say right now, there is a good and bad in the global supply chain at the same time,” Rosch told FreightWaves. “What we’re seeing is companies learning from situations that we had, such as when COVID totally hit us, companies were like, ‘Oh my God, nothing is working anymore.’ So companies learn from that, and they build up resilience.”

Rosch said while shippers were recovering and learning from their experiences during the pandemic, other global incidents and conflicts began to disrupt supply chains over the last two years.

“There’s a lot going on and the longer these situations last, the harder it will get to circumvent them, the [Houthi attacks on merchant ships] in the Red Sea is one of these examples,” Rosch said. “The longer it drags on, the more problematic it gets for various different reasons, because freight takes longer, it has higher carbon emissions associated with it. So there’s a lot of different things that are impacted by this. Generally, I would say I’m still positive that we’ve learned from our mistakes that we made pre-COVID.”

Another sign that nearshoring is growing in Mexico is that the country’s industrial parks expect to receive 453 new companies by mid-2025, 20% of which are from firms based in China, according to a study from BBVA Research and the Mexican Association of Private Industrial Parks.

Rosch said JAGGAER is seeing shippers looking for supply chains outside of China and other Asian countries, but are not completely abandoning China.

“I see a spike in companies trying to find new sources, companies are actively trying to find different suppliers,” Rosch said. “It’s not that companies don’t look into China anymore, they still do, they are still trying to find suppliers in China, but the number is stagnant. We are seeing an uptick in other regions and other areas as supply chains shift. This is the nearshoring and friendshoring and all of these types of efforts. Resilience doesn’t mean risk avoidance, it means to be able to cope with the risks that are out there.” 

C.H. Robinson has helped manufacturers physically move entire production lines from Asia and Europe to Mexico, Burkhart said.

Burkhart also said that 2024 may be the first year ocean container volumes also shift due to nearshoring, as more companies bring in machinery, equipment, parts and raw materials to get operations running in Mexico. 

“It’s not just Asian or overseas companies that we’re seeing, we’re still seeing huge expansion with U.S. companies that are expanding in Mexico because of the United-States-Mexico-Canada-Agreement providing stability and cost savings through 2046,” Burkhart said. “We have customers, especially in the automotive sector, that treat the whole continent as one integrated supply chain. We move a lot between Canada and Mexico, and that seems to be growing as well. So whether it’s intermodal, whether it’s truckload, whether it’s consolidation, whether it’s less-than-truckload, we’re seeing much more intercontinental movements.”

US, Mexican officials sign agreement to expand international bridge

The mayor of Laredo, Texas, and the governor of the Mexican state of Nuevo Leon recently signed an agreement to expand the Colombia Solidarity International Bridge in Laredo.

The agreement between Laredo Mayor Victor Trevino and Nuevo Leon Gov. Samuel aims to increase the bridge from eight lanes to 16 lanes. The bridge is a key border truck crossing that connects the state of Nuevo Leon with Laredo. The agreement was signed March 1.

However, the plan to expand the Colombia Solidarity International Bridge must still receive a U.S. presidential permit.

Old Dominion receives approval for new terminal near Phoenix

Old Dominion Freight Line Inc. has received final approval for its plans to develop a new freight terminal in Buckeye, Arizona, a suburb of Phoenix.

The facility will be located on 72-acres and include 200 truck dock doors with parking for tractor-trailers and employees. The new terminal will be its fifth in Arizona.

The North Carolina-based less-than-truckload carrier anticipates that the terminal will create up to 350 jobs in Buckeye with an average median annual salary of $80,000. Construction on the terminal is scheduled to begin by the end of the year.

Houston-based Lovett Industrial and PCCP LLC announced the construction of Stafford Logistics Park, which will encompass two class A industrial buildings, totaling 785,000-square-feet, according to a news release.

Stafford Logistics Park will be located on 38-acres and feature a 520,000-square-foot cross-dock warehouse and a 265,000-square-foot front-load warehouse. The buildings will also feature 36-foot and 32-foot clearance heights for tractor-trailers, and will be able to accommodate 190 trailer parking spaces. 

Lovett Industrial is a real estate investment firm. PCCP LLC is a national commercial real estate investment firm. The companies did not provide a timeline for the project’s completion.

More articles by Noi Mahoney

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