Cross-border 🇺🇸🇲🇽Market Update

Jun 2024, Vol. XI

Monthly cross-border updates curated with insights from our experts.

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At Nuvocargo, we simplify U.S./MX cross-border trade, shining a light into the black box at the border for greater control and visibility. In this month's edition, we explore critical topics, including the projected global trade growth for 2024 and the impact of elections on trade volumes and rates. Additionally, we cover the upcoming changes to Mexico's Complemento Carta Porte 3.1 and provide essential information for planning the impact of the July 4th holiday on cross-border shipments.
Read on for some of the top trends and insights on cross-border trade, curated and analyzed by Nuvocargo’s team of experts.
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Cross- Border

Market Updates

In 2024, global trade is anticipated to experience a significant surge, potentially more than doubling its current growth rate. This optimistic forecast comes from projections by the International Monetary Fund (IMF) and the World Trade Organization (WTO), which attribute this acceleration to several key factors.
Recent economic policies and international agreements have paved the way for this expected growth. Easing trade tensions and implementing new trade agreements have created a more favorable environment for international commerce. Additionally, advancements in technology and infrastructure have facilitated more efficient and cost-effective trade routes.

• U.S.-Mexico Trade: According to the Bureau of Transportation Statistics, the value of goods traded between the U.S. and Mexico increased by 15.3% in April 2024 compared to the previous year, marking an eleven-month continuous growth streak.

The freight industry is inherently sensitive to political shifts, and the U.S. presidential election is no exception. For shippers and carriers, the aftermath of such elections can bring challenges and opportunities. As new policies are introduced and old ones are revised, the dynamics of cross-border trade between the U.S. and Mexico can shift significantly. Understanding these potential changes is crucial for shippers and carriers to navigate the post-election landscape effectively.

Our analysis of US-Mexico trade over the last nine election cycles, based on U.S. Census Bureau data, shows that import and export volumes typically decline around election periods due to policy uncertainty. This cautious approach is driven by anticipated changes in trade regulations and tariffs. However, the new administration's trade policies heavily influence long-term freight volumes. For instance, the USMCA in 2020 led to a 7% increase in trade volume, demonstrating the positive impact of supportive policies. Understanding these trends helps shippers and carriers prepare for potential shifts in the trade landscape.

Facts and Figures

By the Numbers: Freight & Elections

Global Trade Growth Set to More Than Double in 2024

Furthermore, our aggregated data on mean and standard deviations for imports and exports across each election cycle since 1988 indicates a steady and significant growth in trade values (measured in millions of U.S. dollars). This growth trajectory is encouraging, highlighting the potential and adaptability of the freight industry between the US and Mexico.

Complemento Carta Porte 3.1 Update

Nuvocargo’s opinion

The freight industry must navigate a complex landscape of uncertainty and change following the presidential elections in the US and Mexico. Fluctuating rates, potential price spikes, volume drops, and changes to trade agreements like the USMCA are all factors that industry stakeholders must consider. By leveraging data-driven insights and remaining adaptable, the freight industry can mitigate risks and capitalize on new opportunities in the post-election environment.

• Diesel Prices: According to the Energy Information Administration (EIA), diesel prices decreased by approximately 0.032 cents per gallon on average nationwide in June 2024 compared to last year.
• Dry Van Linehaul Rates: According to DAT, after being mostly flat for three weeks, the national average dry van linehaul rate increased by almost $0.02/mile last week to $1.77/mile. Unlike last year, spot rates are identical on a 4% higher volume of spot market loads.
• Logistics Managers Index: The Logistics Manager’s Index (LMI) for May 2024 rose to 55.6, up 2.7 points from April. Transportation Prices surged 13.7 points to 57.8, the highest since June 2022, while Inventory Levels fell to 46.5. Warehousing Utilization also significantly increased, driving overall growth in the logistics sector.

Editor’s Picks

• Next-Level Shipment Visibility: Introducing Real-Time GPS Tracking, by Nuvocargo.
• U.S. Expands Russia Sanctions, Targets Chips Sent Via China, by Reuters.
• U.S. to resume avocado inspections in Mexican state that were halted by violence, by CBS News.

Keep an eye out for more Nuvocargo cross-border market updates, coming soon. And if you want to receive more insightful content from Nuvocargo, click the button to join our newsletter.

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Key Numbers and Data Points:

• The projected global trade growth rate for 2024 is 4.5%, up from 2% in 2023.

• Developed countries are expected to increase growth rates from 1.5% in 2023 to 2.5% in 2024.

• Developing countries could see an increase from 2.5% in 2023 to 5.5% in 2024.

• Emerging markets will likely experience the highest growth, with rates rising from 3% in 2023 to 6.5% in 2024.

These projected growth rates could increase economic stability, job creation and enhanced international cooperation. The IMF and WTO highlight that this growth will not be uniform across all regions; developed countries might see moderate growth while developing and emerging markets could experience more substantial increases due to their expanding industrial capabilities and growing consumer markets.

Starting July 17, 2024, the Mexican Tax Authority (SAT) will mandate the use of version 3.1 of the Bill of Lading Supplement (Complemento Carta Porte, CCP). This update introduces several important changes for Mexico's transportation services and foreign trade operations.

Key Changes:

• The updated CCP now includes a mandatory “Customs Procedures” (“Regímenes Aduaneros”) section for foreign trade operations.

• The “Tariff Classification” (“Fracción Arancelaria”) field, which was mandatory in version 3.0, is now optional.

For more details and FAQs, please refer to the following document published by the SAT.

Customs Call-Out: July 4th Update

As we approach July 4th, it’s crucial for shippers and carriers to anticipate the potential impact on cross-border shipments. While July 4th is a significant holiday in the United States, shipments will continue to cross the border as usual. However, there are a few key points to keep in mind:

• Normal Border Crossings: Shipments will cross the US-Mexico border as usual, with customs operations continuing without interruption.

• Potential Delays: Expect delays due to reduced staffing levels at customs and other related agencies. While operations will be maintained, lower staff numbers could slow down processing times, especially if shipments are selected for examinations.

• Impact on the Private Sector: Many private sector businesses in the US will be closed, which may slow down supply chain operations. This could affect everything from trucking availability to coordination with US-based partners.

• Warehouse Operations: Despite the holiday, warehouses will generally remain open. This means that while there may be delays in the broader supply chain, goods storage, and handling at warehouse facilities will continue as planned.

By preparing for these factors, you can mitigate disruptions and maintain smooth logistics operations around the July 4th holiday period.