New York’s hottest club is nearshoring to Mexico. Well, it’s not a club but it is something everyone is talking about. Just about every industry has projects started across the border in Mexico, so much so that Mexico registered a record $36 billion in foreign direct investment last year, a 2% year-over-year increase compared to 2022, according to the country’s Economy Ministry.
FreightWaves’ Noi Mahoney quotes Mike Burkhart, C.H. Robinson’s vice president of North America surface transportation: “We’re transitioning to a new era now, where we can say the nearshoring boom has officially arrived. The beauty of this is that more is on the way; we still expect this trend to play out more fully over the next five years.”
Just about every transportation company or freight broker has a solution for cross-border freight. No more is it just for the large brokers and mega shippers. Whether it’s setting up an office in Mexico, building a customs brokerage facility or working with rail freight coming from Mexico into the U.S., the ripple of nearshoring will affect everyone.
Georg Roesch, vice president of direct procurement strategy at Jaggaer, told Mahoney: “I see a spike in companies trying to find new sources. Companies are actively trying to find different suppliers. It’s not that companies don’t look into China anymore. They still do. They are still trying to find suppliers in China, but the number is stagnant. We are seeing an uptick in other regions and other areas as supply chains shift. Resilience doesn’t mean risk avoidance, it means to be able to cope with the risks that are out there.”
As for what the impacts of nearshoring looks like, Mexico came out of the gate swinging in regard to cross-border freight volumes. After being the top trading partner with the U.S. for 11 out of 12 months last year, it’s looking like Mexico may try to go 12 for 12 in 2024 as January brought in more than $64.5 billion. Canada came in with $59.7 billion, which is a 3% decrease compared to the same time last year.
Port Laredo, Texas, continues to be the top location for cross-border traffic. As businesses get new facilities established in Mexico, South Texas looks to become the newest hot spot for anyone looking for freight.
Market Check. This week’s market is one of the top freight markets in the country: Atlanta. Atlanta saw a massive jump in outbound tender rejections, rising from 2.71% to 3.53% in the past week. The sharp uptick with no significant change in outbound tender volume can typically create a strain on capacity. However, the fact that there is an oversupply of capacity in the market had little impact on spot rates during the uptick. Outbound tender lead times have settled in at around three days, wait times are up to just over an hour and a half, and the Outbound Tender Volume Index dropped half a percent. Atlanta is proving to be a stable market for the moment, meaning freight coming out of it doesn’t need to be top priority for coverage.
Who’s with Whom? There’s a new partnership in town. Transfix, a digital freight marketplace, has partnered with Rocket Shipping, a less-than-truckload carrier. LTL loads are a little different from dry van loads in the fact that there still tends to be a manual process around booking loads, especially for small to midsize brokers and shippers. Not everyone has the volume or the funds to have a full-fledged API or electronic data interchange connection. The manual process is something that the partnership hopes to solve. Along with the removal of most manual processes, this tech can help shippers get stronger pricing on their freight, even with smaller volumes.
In an article by FreightWaves’ Grace Sharkey, Jonathan Salama, co-founder and CEO of Transfix, said: “Our partnership with Rocket Shipping leverages their deep expertise in LTL and final-mile services, integrating this knowledge directly into Transfix’s Shipper App and combining it with our decade of experience in full truckload. This collaboration brings efficiency and effectiveness to the freight operations of small and midsize businesses and midmarket shippers that we believe have been underserved.”
The more you know
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