Borderlands: Nearshoring creates booming demand for border logistics facilities

Borderlands is a weekly rundown of developments in the world of U.S.-Mexico cross-border trucking and trade. This week: Nearshoring creates booming demand for border logistics facilities; Ascend reserves capacity in Volvo’s autonomous lane in Texas; ZF Group announces $250M expansion in Mexico; and Port of Brownsville posts record cargo volumes in 2022.

Nearshoring creates booming demand for border logistics facilities

Business is good at the Otay Mesa port of entry, California’s largest commercial land border crossing, which tallied $62.4 billion in trade in 2022, a 12.7% year-over-year (y/y) increase compared to 2021.

The Otay Mesa port of entry is just south of San Diego along the border across from Tijuana, Mexico.

The growth of trade at Otay Mesa has been spurred by the nearshoring of manufacturing and supply chains from Asia into Mexico, which is creating a surge in demand for industrial space in cities and communities along the border, according to trade operators.

“The cross-border market is growing mostly due to the effects of nearshoring and e-commerce fulfillment centers coming to Mexico to take advantage of the 321 program, which allows duty-free entry of goods,” Eduardo Acosta, vice president of R.L. Jones Customhouse Brokers, told FreightWaves.

San Diego-based R.L. Jones is a freight brokerage that specializes in imports from Mexico. The company recently signed a full-building, prelease agreement with Majestic Realty Co. for a 240,975-square-foot building at the Landmark at Otay industrial complex. The building, scheduled for completion in May, will serve as R.L. Jones’ corporate headquarters.

R.L. Jones is already operating in a 150,000-square-foot building at the Landmark at Otay.

Acosta said growing trade between Mexico and the U.S. necessitated getting more industrial space near the border.

“The main reason we moved to the Landmark at Otay business park was to prepare our business for expansion due to the growth of business at the border related to the growth of existing clients and a boom in e-commerce fulfillment in Mexico,” Acosta said.

R.L. Jones serves clients in industries such as aerospace, fresh produce, medical devices, automotive, textile and apparel, electronics, and furniture manufacturing.

“Basically, for these industries, it’s raw materials going south and finished goods coming north, and most of these goods are staged at our warehouses in Otay Mesa,” Acosta said.

According to FreightWaves’ SONAR platform, freight volumes in San Diego (OTVI.SAN), which includes the Otay Mesa port of entry, are up about 3% week over week and 12% since Jan. 3.

To learn more about FreightWaves SONAR, click here.

Officials for Majestic Realty said the deal with R.L. Jones is one of the largest industrial non-Amazon related lease agreements in the past decade in Otay Mesa and San Diego County.

“It speaks to the demand for industrial space in the area,” Majestic Realty Co. Vice President Tom Simmons said. “R.L. Jones is a customs broker, so obviously they need a larger footprint right now because they’re handling more freight across the border.”

The Landmark at Otay, a partnership between Majestic Realty and Sunroad Enterprises, began in 2021. The industrial park was initially four buildings on a 50-acre site but has recently added 17 acres of adjoining property. The Landmark at Otay will have more than 1.1 million square feet of industrial space upon build-out in early 2024.

Simmons said industrial space is in high demand all along the U.S.-Mexico border. In 2021, Majestic Realty began the development of Port Grande in Laredo, Texas. The 2,000-acre master planned logistics hub aims to accommodate growing trade flows between Mexico and Texas.

“We’re seeing demand in all sorts of cross-border markets, whether it be Laredo or El Paso, Texas, or Otay Mesa here in California; there’s just more and more velocity at these cross-border towns, because there’s just more and more manufacturing that is going to Mexico,” Simmons said.

Ascend reserves capacity in Volvo’s autonomous lane in Texas

Atlanta-based truckload carrier Ascend recently reserved capacity with Volvo Autonomous Systems’ (VAS) new hub-to-hub autonomous transportation operation in Texas.

Ascend Dedicated, the carrier’s newest division, will pick up customer loads and transport them to VAS hubs in Dallas and Houston. From there, VAS will complete the middle-mile movement to its destination hub. Ascend drivers will then transport loads from the hub to their final destinations.

Ascend Dedicated has two facilities in Houston and four in the Dallas-Fort Worth area. (Photo: Ascend)

“Innovating to serve the exacting requirements of our customers’ increasingly sophisticated supply chains while providing our drivers with desirable jobs is one of the inspirations behind the formation of Ascend,” Michael McLary, CEO of Ascend, said in a news release. “Exploring the use of autonomous linehaul transportation is just one example of how we are seeking to achieve our goals.”

Ascend Dedicated has two facilities in Houston and four in the Dallas-Fort Worth area. The carrier will start out transporting about 10 loads per week through its partnership with VAS, and could progress to up to 100 “as the solutions and capacity prove out,” company officials said.

VAS, a Volvo Group company, offers its hub-to-hub autonomous transport solution to shippers, carriers, logistics service providers and freight brokers.

ZF Group announces $250M expansion in Mexico

Germany-based ZF Group, the world’s largest automotive and commercial vehicle supplier, recently announced plans to expand its operations in the Mexican city of Queretaro.

The $253 million investment includes expanding two existing factories in Queretaro, along with the construction of a new distribution center. The expansion and distribution center will add 861,112 square feet to the company’s operation and create 1,300 jobs.

The distribution center will receive and export products to customers across North America. ZF Group produces brake control systems and electric power assisted steering systems in Queretaro, where it currently employs 3,450 workers.

The company did not disclose when the expansion and new distribution center are scheduled to be completed.

ZF Group is based in Friedrichshafen, Germany. The company has 157,500 global employees across 188 locations in 31 countries.

Port of Brownsville posts record cargo volumes in 2022

The Port of Brownsville in South Texas set a new record in fiscal year 2022 by moving 15.2 million tons of cargo, a 10% increase compared to 2021.

Break bulk commodities such as steel and wind energy components saw a 10% y/y increase in 2022 with more than 4.7 million tons of cargo.

Rail car movements at the port also increased 10% y/y for a record 72,616 movements in 2022. The Port of Brownsville reported 438,000 truck movements and 1,757 vessel calls last year as well.

The port is 277 miles south of San Antonio at the southernmost tip of Texas along the Gulf of Mexico. It is the only deepwater seaport along the border, making it a major trade channel between the U.S. and Mexico.