Cross-border 🇺🇸🇲🇽Market Update
December Cross-Border Market Update, Vol. XVIII
Monthly cross-border updates curated with insights from our experts.
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In this final edition of 2024, we recap November’s key developments, including signs of a freight market recovery, demand surges driven by tariff changes, and Mexico’s Q3 economic growth. Looking ahead, we highlight what to expect as the year ends, from seasonal demand shifts and proposed NMFTA and FMCSA changes, to potential weather disruptions. Plus, we delve into the impact of the holidays on cross-border freight and explore the potential of blockchain technology in logistics.
Read on for some of the top trends and insights on cross-border trade, curated and analyzed by Nuvocargo’s team of experts.
Enjoy!
A look back: What happened in November?
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Market Updates
FreightWaves CEO Craig Fuller declared that the “Great Freight Recession” has officially ended, citing key data like tender rejections climbing above 6% as evidence of a market rebound. This shift reflects tightening conditions, giving carriers greater leverage in load selection. According to Fuller, the freight industry is transitioning to a more balanced environment, offering carriers improved opportunities and shippers a more stable market landscape.
Blockchain technology has the potential to transform US-Mexico cross-border freight by enhancing transparency and security. In this guest post by Graham Perry, writer at Business Tech Innovations, he explores how blockchain’s decentralized ledger ensures data integrity, streamlines compliance, and boosts operational efficiency. By adopting blockchain, stakeholders can gain real-time visibility and build trust throughout the supply chain.
Read the full article on the blog.
Looking forward: What to expect in December?
Food for Thought: Inside the US-Mexico Trade Lane
The Great Freight Recession is officially over according to Freightwaves
The holiday season typically brings a surge in freight volumes due to increased consumer spending. However, in 2024, many retailers and manufacturers imported holiday goods earlier than usual to mitigate potential supply chain disruptions. Compounding this, major retailers like Walmart have reported importing fewer holiday goods due to weaker consumer demand. This dual shift is expected to result in a muted peak season, with freight volumes stabilizing or even declining during December.
President Trump’s re-election and proposed new tariffs have created ripple effects in the trucking industry, as companies scramble to expedite imports to avoid looming cost increases. This urgency is particularly evident in sectors like automotive manufacturing, where cross-border trucking plays a vital role in moving components. Automakers and EV manufacturers are bracing for higher costs, prompting an increase in freight demand as businesses push to bring goods into the U.S. before the tariffs take effect. The resulting surge in cross-border activity could strain capacity and drive up trucking rates, particularly along key trade lanes between the U.S. and Mexico.
How Blockchain technology can enhance transparency and security in US-MX cross-border freight
Trump Announces Potential New Tariffs on Foreign Goods
In Q3 2024, Mexico’s economy grew by 1.5% year-over-year, exceeding market expectations of 1.2%. This growth was fueled by robust domestic demand and a recovering agricultural sector. Exports also played a critical role, with Mexico’s total goods and services exports rising from $502.47 billion in 2019 to $647.64 billion in 2023—an average annual growth rate of 6.5%, according to World Bank data.
This sustained export growth highlights Mexico’s increasingly pivotal role in North American supply chains, showcasing its economic resilience and the strength of its manufacturing and trade sectors.
Mexico’s Q3 growth highlights its rising role in North American trade
NMFTA prepares to change freight classification rules in 2025
Seasonal Demand Fluctuations
The National Motor Freight Traffic Association (NMFTA) has announced significant updates to the National Motor Freight Classification (NMFC) system, set to take effect in early 2025. The updates will introduce a standardized density scale and streamlined commodity classifications, simplifying the LTL shipping process, reducing disputes, and improving efficiency for both shippers and carriers.
As the holiday season approaches, the freight industry encounters heightened demand and unique challenges. Increased consumer spending, seasonal product launches, and amplified shipping volumes place additional pressure on logistics networks. Here’s how these dynamics are shaping the market:
FMCSA proposes tougher broker transparency rules
The Federal Motor Carrier Safety Administration (FMCSA) has proposed new rules to enhance broker transparency, aiming to make electronic transaction records accessible to carriers within 48 hours upon request. These changes will aim to improve accountability, ease access to information, and help resolve disputes more efficiently. While carrier groups like OOIDA support the updates to protect their rights, the Transportation Intermediaries Association opposes them, arguing the regulations are outdated and unnecessary in today’s market. Comments on the proposed rules are open until Jan. 21, 2025.
Anticipate potential weather-related disruptions
Winter weather could affect U.S.-Mexico cross-border freight, with freezing temperatures and snow potentially causing delays or disruptions. For example, in 2023, winter storms in Texas led to widespread road closures, impacting key trade corridors and delaying shipments across the region. Sensitive cargo like produce might face added risks, and road closures could create congestion at major ports of entry such as Laredo, which handles over 5 million trucks annually. To stay ahead of possible challenges, businesses can plan proactively and work with trusted partners like Nuvocargo to navigate seasonal uncertainties.
Spot Rate Increases
Spot rates across modes, including dry van and reefer, tend to rise in the lead-up to the holidays. Recently, reefer rates climbed to $2.45 per mile—a $0.20 increase over six weeks—driven by strong demand for goods like food and holiday merchandise.
Cross-Border Impact
Cross-border freight volumes from Mexico remain stable but are closely linked to industrial production and U.S. consumer demand. Laredo, the largest U.S.-Mexico port of entry, consistently experiences a Q4 surge. In 2023, truckloads through Laredo rose by 15% in November and December compared to the annual average, largely fueled by automotive and electronics shipments.
Capacity Tightening
Seasonal demand for produce and holiday inventory puts additional strain on capacity. Key regions like the Midwest (for turkey and potatoes) and the Pacific Northwest (for Christmas trees) face intensified competition for limited resources, leading to rate spikes.
Operational Challenges
Border protocols, weather disruptions, and infrastructure limitations—such as strikes or delays—add complexity to cross-border logistics. Historically, hurricanes and labor strikes have caused localized freight flow disruptions during this period.
Market Trends
In October, truckload rates rose by 2.2% month-over-month, signaling an upward trend after a prolonged period of stagnation. Year-over-year, inflationary pressures continue to shape the market, with total rates up by 13.0%. Specific modes have experienced notable increases: dry van rates rose by 14.0%, reefer rates by 10.0%, and flatbed rates by 11.3%. These trends highlight the ongoing impact of demand and capacity challenges on freight costs.
