Cross-border 🇺🇸🇲🇽Market Updates 

September 2023, Vol. II

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

Happy Shipping!

Imports from Mexico to the US surpass China

The Mexican Alliance of Carrier Organizations (AMOTAC) and federal and state authorities reached an agreement to postpone a nationwide strike originally planned for August 29-30. The agreement involves setting up monthly meetings to address safety issues on the country's highways. The decision to postpone the strike for three months reflects the willingness of authorities to work with AMOTAC to address concerns related to highway safety, emergency ramps, fines, and other industry-related matters.

As we approach the last quarter of the year, we delve into key trends shaping the US-MX freight landscape. Notably, imports from Mexico have overtaken those from China for the first time in nearly two decades, influenced by geopolitical tensions and diversification efforts by US companies. We also explore Mexico's rising prominence in global manufacturing, provide insights into the potential impact of union strikes in cross-border operations, and touch upon the complexity of duty drawbacks.

An increased focus on Mexico as an alternative to China continues to bring in new investment, innovation, and growth opportunities for companies on both sides of the border. At Nuvocargo, we are focused on simplifying US/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. Enjoy!

Highlight trend of the month

For the first half of the year, Auto Parts took the lead as the most imported product by customs entries, comprising almost 5.71% of the total. The remaining products in the top 5 include Plastics/Packaging, Plastics (Others), Wires, cables, and conductors, as well as Electrical components.

Duty drawbacks are incentives to spur trade that were introduced by CBP in 2018. When companies import products into the US that are subsequently exported (either in the same state or incorporated/transformed into something else) that import is potentially eligible to recoup 99% of the duty paid upon the original import.

However, many industry experts estimate several billion dollars in drawbacks go unclaimed annually, as the window to recoup closes out after 5 years.

When you import merchandise into the US, depending on the commodity or origin, there may be customs duties associated with those imports. Drawback is a program that allows importers/exporters/producers, among other parties involved in an international shipment, to recoup 99% of that customs duty.

It is a complex process and can be recouped in other ways as well, such as if that imported product is destroyed. There are many different types of Drawbacks available, and each type carries a complex set of rules and regulations that dictate how you can apply and what you need in order to recoup.

For companies trading between Mexico, the US, and Canada, there is actually a specific Drawback related to the USMCA (United States-Mexico-Canada Agreement) that many companies moving goods across the border may be eligible for but often fail to take advantage of.

Jay Gerard, Head of Customs at Nuvocargo, comments on the reason why this happens:

“There are two main reasons for this, and very often it is a mix of both: First, a lack of knowledge related to duty drawback programs and eligibility, and second, a daunting and complex process to go through even for companies that are eligible and aware.”

Carrier Spotlight

To learn more on our offering please click here. 

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.

News from the border

Duty Drawbacks

Taking Action

“The strike is being used as a wake-up call for the Mexican government by the truck drivers who continuously drive the lanes in the center of Mexico (Queretaro-Mexico City, Matehuala-San Luis Potosi). Their main concerns focus on the lack of security measures to reduce incidents on the road.”

Cross- Border 

Market Updates

*Values have been rounded

Nearshoring continues to be at the forefront of industry news and a key driver for US-MX cross-border freight. Gordon Lee, Head of Research at BTG Pactual Mexico, provided a unique take on this matter for the Primer Click podcast (in Spanish). He talks about Mexico's evolving role in the global economy, particularly in comparison to China, its ascent to one of the most prominent manufacturing and production destinations in the world, as well as the country’s strong economic performance, driven by increased exports and a robust domestic economy. Here are some of the main data points highlighted below:

The Nearshoring Beat

• 65% of the world's GDP trades with Mexico duty-free
• If you take all manufacturing exports in Latin America, including Brazil, and multiply them by 3, they still wouldn't match Mexico's
• +70% of Mexico's trade is with the U.S. and Canada
• 40-45% of all foreign investment in Mexico comes from the U.S.
• If you remove NASDAQ, Mexico is the highest-yielding market in the world in dollars this year, rising more than 20%

Listen to the full podcast (in Spanish) here.

Big news coming out of the automotive industry this month, as thousands of members of the United Auto Workers went on strike at three major U.S. assembly plants (General Motors, Ford Motor, and Stellantis). Despite ongoing talks, the union and the automakers were unable to reach an agreement on a new labor contract as of September 15th. This strike is expected to trigger a ripple effect in the auto industry, as more plants may need to cease production due to a lack of parts. As one of the largest sectors served by trucking, the strike is likely to continue impacting volumes of loads inbound to Detroit or Northern Ohio in the coming weeks.

An Expert's take

AMOTAC Carrier Strike Postponed

United Auto Workers Go on Strike

From Craig Fuller. Founder/CEO of FreightWaves.

A new analysis by consulting firm Anderson Economic Group (AEG) estimates that the strike could result in a total economic loss of more than $5 billion after 10 full days.