Cross-border 🇺🇸🇲🇽Market Update
October 2023, Vol. III
Monthly cross-border updates curated with insights from our experts.
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Starting in late September, the Texas Department of Public Safety (DPS) launched mandatory safety inspections for all commercial trucks entering the U.S. from Mexico, fueled in part by the on-going migrant and refugee crisis impacting the border, specifically at the Juarez - El Paso crossing.
These inspections have resulted in significant delays and disruptions, with cargo truck wait times reaching up to 16 hours at crossings like El Paso, affecting trade and various sectors of the Texas economy. These moves, purportedly aimed at deterring criminal group activities, have caused significant disruptions, stranded 19,000 trucks carrying goods destined for the U.S., and resulted in at least $1.9 billion worth of goods being severely delayed. Though these measures, which faced heavy backlash from politicians and businesses on both sides of the border, have started to ease off, it is expected to take weeks for cross-border traffic to return to normal.
Nuvocargo can comment that there was a surge in traffic reported at World Trade Bridge in Laredo during the month of October, 2023, mainly due to traffic being re-routed from other crossings.
Texas' Mandatory Inspections lead to cross-border disruptions
With Q4 now well on its way, it's time to take a look at some of the trending news and key insights impacting cross-border freight. This month, we highlight the significant disruptions caused by Texas' mandatory safety inspections at the border, affecting cross-border trade to the tune of billions of dollars. We also explore Mexico's new enticing tax breaks aimed at attracting nearshoring investments and share expert insights on carrier vetting in the cross-border freight landscape. Plus, there's a warning about potential duties threatening aluminum imports and a glimpse into how AI is revolutionizing logistics, as discussed by industry leaders.
At Nuvocargo, we are focused on simplifying U.S./MX cross-border trade with a specific emphasis on shining a light into the black box at the border. 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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Highlight Trend of the Month
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We are also happy to meet with you in Laredo and explain how we are bringing a new standard of service at the border.
Keep an eye out for more Nuvocargo cross-border market updates, coming soon.
Cross- Border
Market Updates
Nearshoring Beat
(Photo: U.S. Customs and Border Protection)
• After a two-month surge, fuel prices have leveled off in the U.S., with diesel prices averaging below $4.60 per gallon. Compared to 2022, diesel pump prices are still down.
• Available capacity loosened in the Top 5 spot freight-producing states (California, Georgia, Illinois, New Jersey, and Texas) last week, with spot rates decreasing by $0.03/mile to an average of $1.72/mile – just $0.05/mile higher than in 2019.
• For the second month consecutively, the logistics industry is expanding, after three straight months of decline. The LMI (Logistics Managers’ Index) is up 1.2 points, staying at 52.4, at the end of Q3.
• There was a 7.5% increase in the value of goods traded between the U.S. and Mexico in August 2023 compared to the same time last year, according to the Bureau of Transportation Statistics.
New Tax Breaks Aim to Attract Investors
Expert’s Take
The U.S.-Mexico cross-border freight landscape demands a deep understanding of both countries' unique legal and operational frameworks. With the continued boom of U.S./MX cross-border trade, businesses are faced with the challenge of ensuring their shipments are both secure and efficient. This involves navigating through regional variations, differing standards, and understanding the importance of thorough carrier vetting. We’ve put together a guide with insights from Josie Blanco, Nuvocargo's Head of Legal & Compliance, from her recent presentation at the "More Freight, More Problems" event hosted by Carrier Assure in Chicago. She delves into the key challenges and advantages of vetting Mexican carriers, underscoring the importance of standards like the Customs Trade Partnership Against Terrorism (CTPAT).
Carrier Vetting 101
News from the Border
Potential increase in duties threatens aluminum imports
A coalition of 14 U.S. aluminum extruders and the United Steelworkers have filed antidumping duty (AD) and countervailing duty (CVD) petitions on aluminum extrusions from 15 countries, including China, India, Mexico, and Vietnam. These investigations could potentially lead to increased prices and reduced supply of extruded aluminum products. The timeline for these investigations extends into late 2024.
Innovation Hub
Prologis and Home Depot on AI for Logistics
Artificial intelligence has been on everyone’s radar for a while now, but what does it actually take to implement it effectively in logistics? The annual Groundbreakers thought leadership forum, hosted by Prologis, focused on just that. Ted Decker, Chair, President and CEO of The Home Depot, shared how the company is taking advantage of what he considers “an evolution rather than an overblown trend”. For Decker, it all comes down to making data accessible in order to take advantage of AI to improve efficiency, reduce costs, enhance decision-making, and better demand forecasting.
He discussed how The Home Depot has transitioned from collecting and managing data to leveraging AI for multiple use cases “...we're using it for search. We're using it for customer care operations. We're using it to power interactions with customer queries. We're using it for marketing and marketing personalization and one-on-one contacts with email in text. We're using it in our inventory forecasting and replenishment systems. The opportunities are endless in the power and the magnification of what you can do with that data… The deployment of these technologies over the next three, five, ten years are just going to be extraordinary.”
Editor’s Picks
Mexico revives century-old railway in $2.8bn bid to rival Panama Canal (Financial Times)
Chinese manufacturer investing $5B to expand production in Mexico (Freightwaves)
A (Relatively) Bullish Case for Latin America (Americas Quarterly)
The 4 Billion Pieces of Paper Keeping Global Trade Afloat (Bloomberg)
Freight Procurement strategies keep changing for the better (Supply Chain Quarterly)
“Mexico's transportation landscape can be enigmatic to some, but for Nuvo - it's a realm of opportunities. Carrier vetting is not just about risk mitigation; it's about capitalizing on the unique attributes of this market. Through rigorous vetting, we ensure that our carrier partners provide the expertise and reliability required to thrive in Mexico.”
Josie Blanco, Nuvocargo's Head of Legal & Compliance
Facts & Figures
If AD/CVD duties are imposed, importers may be liable, and the broader impact could result in price increases and supply challenges for aluminum extrusions from the countries under scrutiny.
In the case of Mexico, tariffs could potentially go up as much as 110%, making it paramount for companies to start preparing and planning with ample time to mitigate the impact and risk of this possible change.
Companies thinking about nearshoring to Mexico now have one more reason to double-down on their efforts. In a bid to attract nearshoring investments, the Mexican government has introduced additional tax benefits. This new policy, effective from October 12, 2023, and lasting until the end of 2024, offers incentives like accelerated depreciation of investments in new assets (increasing from 56% to 89%) and extra deductions for training expenses (25% deduction). It's part of Mexico's strategy to bolster competitiveness and innovation while attracting foreign investment (which in the first six months of 2023 was up almost 2x vs. the first six months of 2021). These benefits target specific sectors and products, focusing on those with high productivity, export orientation, economic impact, and increased demand, such as:
• Semiconductors
• Medical Devices
• Pharmaceuticals
• Agroindustry
• Electronic Components
• Batteries
• Motors, and more.
These incentives will be accessible in all
Mexican states and municipalities.
Read the full story, including
requirements to apply, here.