Cross-border 🇺🇸🇲🇽Market Update 

February 2024, Vol. VII

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

Happy Shipping!

February has come and gone, bringing the second-largest month for avocado exports from Mexico to the U.S. since last year's Super Bowl, just in time for this year's game, which also signaled the start of the produce season. In this market update, we start with an overview of the produce season's kickoff, followed by a comprehensive analysis by Nuvocargo's data team on the International Trade Statistics 2023. We also feature a couple of Boston Consulting Group reports highlighting the significant growth projected in the US-MX trade relationship in the upcoming years. Luis Garcia, our Head of Marketplace, provides insights into the dynamics that rule this trade corridor. Finally, we’ll share a conversation between our CEO, Deepak Chhugani, and  Eric Johnson, from the Journal of Commerce, about the lessons he’s learned from building Nuvocargo and NuvoOS, a cutting-edge TMS, into a top freight intermediary.

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. Read on for some of the top trends and insights on cross-border trade, curated and analyzed by Nuvocargo’s team of experts.

Enjoy!

Highlight Trend of the Month

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Cross- Border 

Market Updates

Unofficially, the produce season and the domestic shipping of such products in the U.S. typically starts in mid-March. However, with the ongoing expansion of U.S.-MX trade relations and the increasing popularity of avocados in the U.S., especially on crucial consumption days like the Superbowl and Cinco de Mayo, the produce season effectively kicks off in mid-February.

Armando López Orduña, General Director of APEAM (Association of Avocado Producers and Packers Exporters of Mexico), notes that avocados have become a tradition during the Big Game, highlighted by the fact that this was the second-best year in terms of shipments for the Super Bowl in the last 26 years. He says shipments will continue after the Super Bowl until the week before Cinco de Mayo, and according to their projections, avocado exports will grow by 5% year-over-year.

• According to the Energy Information Administration (EIA), diesel prices dipped .105 cents per gallon on average nationwide in February compared to last year.
• At $1.59/mile, linehaul rates are $0.15/mile lower than last year. Based on the volume of loads moved DAT's Top 50 lanes averaged $1.84/mile the previous week, $0.25/mile higher than the national average.
• Back in the growth column for the 5th time in 6 months, the Logistics Manager’s Index rose to 55.6 in January, an increase of 5.0 points, the first time since September 2019 that every metric in the LMI is expanding. The most significant expansion was transportation prices (+12.7), which haven’t appeared on the positive side of the ledger since June of 2022 at the start of the freight recession.
• According to the Bureau of Transportation Statistics, the value of goods traded between the U.S. and Mexico increased 5.2% in December 2023 compared to the previous year, a seven-month continuous growth streak.

The release of the International Trade Statistics 2023 report provides a comprehensive overview, enabling a detailed comparison of monthly export and import volumes between the U.S. and two of its significant trading partners, Mexico and China. This data allows us to evaluate their performance throughout previous years, conduct a side-by-side analysis, and anticipate trends for the upcoming months and years.

NOTE: All figures are reported in millions of U.S. dollars on a nominal basis, not seasonally adjusted unless otherwise specified.

Facts and Figures

International Trade Statistics Analysis

The Future of North American Trade

The Boston Consulting Group's article, "Jobs, National Security, and the Future of Trade," outlines how the United States, Canada, and Mexico stand to gain from the U.S.-Mexico-Canada Agreement (USMCA). It is projected that North America will see a growth in trade of $466 billion over the next decade, with trade between the U.S. and Mexico contributing $300 billion to this surge. This growth is primarily attributed to the Biden administration's new emphasis on industrial policies aimed at protection, spurred by national security concerns and economic pressures. Key initiatives such as the Infrastructure Investment and Jobs Act (IIJA), the CHIPS Act, and the Inflation Reduction Act (IRA) are expected to bolster regional manufacturing and direct investment in strategic industries, enhancing the area's manufacturing footprint.

Furthering its analysis, the Boston Consulting Group conducted a survey revealing that over 90% of North American manufacturing executives intend to relocate some of their production and sourcing to other countries, like Mexico, India, Morocco, Turkey, etc., within the next five years. This underscores companies' need to secure reliable and local component sources to improve lead times and reduce costs per unit, which are crucial considerations for those contemplating relocation.

Read the full article here.

Our CEO, Deepak Chhugani, sat down with Eric Johnson, Director at S&P Global and Senior Technology Editor at JOC.com, to talk about the lessons he’s learned from building Nuvocargo and NuvoOS, a cutting-edge TMS, into a top freight intermediary.

Logistics Insights with Eric Johnson

Editors Picks

Expert’s Take

The U.S. and Mexico, as neighboring nations, have ascended to become the largest trading partners in exports and imports for the first time in two decades. Each year, over 9 million trucks cross through the border between these two countries, and with +450 nearshoring investments announced to be up and running by 2025, that amount will only increase.

Despite the heightened level of interconnectivity, one might simply believe that rules every process related to getting cargo from one country to the other, but it doesn’t; in fact, there can be anywhere from 10 to 15 parties involved in every cross-border transaction.

“One of the main challenges in logistics is ensuring that each party has complete and correct information whenever needed. Technology allows us to consolidate the relevant data points for all parties; this not only helps us improve coordination between all incumbents and reduce idle times, but it also opens the way for data insights and task automation, which drive efficiencies that allow for faster transit times at a lower cost, which translates into competitive rates for our customers.” 

— Luis Garcia, Head of Marketplace at Nuvocargo. 

Luis Garcia also provides a comprehensive, in-depth analysis of the various forces and dynamics that rule the U.S.-MX marketplace and the driving forces for shippers and carriers when making decisions in cross-border freight. You can read the rest of the story here. 

Super Bowl “kickstarts” Produce Season

Marketplace Dynamics

Nuvocargo’s opinion

Nuvocargo’s Journey with Deepak Chhugani

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. 

The figure above visually compares U.S. trade in goods with Mexico and China throughout 2023, depicted in green and gray, respectively. The illustration indicates that U.S. exports to Mexico consistently surpassed those to China in each month of 2023, often by a margin of two-fold or greater. Conversely, U.S. imports from Mexico exceeded those from China for most of the year, except for May and December, when imports from China slightly overtook those from Mexico.

Negative balance values signify a trade deficit, wherein U.S. imports from Mexico and China surpass exports to these countries. The deficit with China is more significant than with Mexico, reflecting a more pronounced trade imbalance.
Moreover, the stability of the deficit lines reveals that the U.S. trade deficits with Mexico are comparatively steady, suggesting a more stable trade partnership, in contrast to the variable deficits with China.

In 2023, the goods imported from Mexico (475,606.7 million USD) accounted for 15.4% of U.S. total imports, while Chinese goods (427,229.2 million USD) accounted for 13.9%. When examining U.S. exports to other countries, Mexico accounted for 16.0% of the total, significantly surpassing China's share of 7.3%.

Similarly, China and the Rest of the World saw declines in the U.S. importing goods from them in 2023 compared to 2022, with China experiencing a particularly marked reduction of 20.34% from the previous year. In contrast, imports from Mexico saw an uptick, with the U.S. importing goods valued at $475.6 billion, a 4.58% increase from 2022. This rise underscores a growing reliance on U.S. trade with Mexico. Notably, this year marks a historic shift as Mexico surpasses China as the leading exporter of goods to the U.S. for the first time in two decades.

Diminished imports from China to the U.S. may reflect a realignment of manufacturers' supply chains and the political and economic strains between the world's two largest economies.

Meanwhile, the surge in imports from Mexico to the U.S. indicates a deepening reliance on trade with Mexico, which is likely attributed to geographical advantages and recent changes in trade policies, such as the United States-Mexico-Canada Agreement (USMCA), which fosters reciprocal trade and economic expansion across North America.

The 2023 U.S. international trade data presents a compelling picture of Mexico's robust position in its trade relations with the U.S., underscoring the potential for Mexico to solidify its role as a foremost trading partner. Businesses and investors, equipped with this knowledge, are well-positioned to refine their strategic planning and inventory management.
Moreover, these insights are instrumental in anticipating the demand for imports/exports and adjusting logistical strategies accordingly.

Nuvocargo is at the forefront of this opportunity, offering comprehensive solutions tailored to U.S.-Mexico cross-border trade and logistics complexities.

Cross border Complexity by Matt Silver

Delays at the border due to a system glitch by Loadstar

Figure 1: Monthly U.S. Trade in Goods with Mexico and China in 2023