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Importers Continue Shift to Mexico Amid Political Changes and Altering Market Dynamics, States Redwood’s Cross-Border Index

CHICAGO and MONTERREY, Mexico, Aug. 14, 2024 (GLOBE NEWSWIRE) -- Redwood Mexico, a part of Redwood Logistics, one of North America's fastest-growing fourth party logistics (4PL) providers, today released its Q3 Cross-Border Index, highlighting significant developments in the US-Mexico trade landscape following Mexico's historic election in June 2024. This election, which saw the country elect its first female president amid unprecedented levels of violence, has led to notable shifts, including the peso's devaluation, shifting market dynamics and an increased call for security.

"The peso's devaluation post-election has been a double-edged sword for the Mexican economy," said Jordan Dewart, President, Redwood Mexico. "While it has provided relief for Mexican truckers and boosted export competitiveness, it also introduces new challenges for foreign direct investment."

The peso, which had strengthened to 16-to-1 against the dollar before the election, devalued to 18-to-1 post-election. This shift has made Mexican goods more competitive in the US market, potentially leading to an uptick in exports through the remainder of Q3 and all of Q4 as peak seasons between the two countries continue to overlap. Despite these economic fluctuations, Mexican carrier rates have continued to show remarkable resilience, sustaining ongoing increases.

The competitiveness of Mexican commerce is on display as trade volumes through Laredo, Texas have been on a consistent rise, surpassing traditionally dominant international ports. Laredo has seen a higher throughput for 15 out of the last 16 months than the Port of LA/Long Beach, an entry point that once processed nearly 50% of all foreign imports.

"Growth is abundant in Mexico right now," added Dewart. "With its strategic location and skilled workforce, virtually anything currently made in China can also be manufactured in Mexico, making it an attractive option for businesses looking to diversify their supply chains and shorten cash-to-cash cycles. Everything that we can measure shows that importers are shifting to Mexico."

Spurred by rising labor costs in Asia and ongoing trade disputes, Mexico continues to grow as a hub for manufacturing and commerce, and not just with the United States. Maquiladoras, or assembly locations, from foreign countries like China, have continued to pop up along the border as more countries are leveraging Mexico for manufacturing to continue trade with the US.

Imports from Asia into Mexico have also risen, pointing to the growth in Mexican ports as a way to work around American tariffs on Asian goods.

"Mexico is increasingly being recognized not just as a trade partner for the United States, but as a critical hub for all countries looking to access North America," added Dewart. "The value of Mexico as a gateway for commerce is starting to gain global attention, with businesses from various parts of the world now viewing it as an essential foothold in the North American market. This transition reflects the broader changes in global supply chains, where Mexico's strategic positioning, skilled labor force and established manufacturing infrastructure provide a significant advantage."

The new administration under President-elect Claudia Sheinbaum steps into this growth and has vowed to improve security on Mexican highways, responding to long-standing concerns from the logistics sector. This includes increased law enforcement presence, which should have positive impacts on future trade volumes and safety.

While challenges remain, the optimism around nearshoring in Mexico is strong. Redwood Logistics and Redwood Mexico remain committed to providing cross-border capacity solutions, warehousing and distribution, customs and clearance services and innovative technology solutions to help businesses navigate these complex dynamics.

Looking at specific industries, Mexico experienced a significant surge in cargo theft, with incidents escalating by 36%. This rise has notably impacted the grocery industry, which accounted for 38% of all new cases. The increase in grocery cargo thefts has coincided with the Mexican produce season, exacerbating concerns for suppliers, manufacturers and distributors who rely on timely deliveries to meet heightened consumer demand.

Meanwhile, the automotive sector has demonstrated resilience and growth. Auto exports (cars, auto parts, and commercial vehicles) from Mexico to the US totaled nearly $11 billion ($10.57 billion, according to available data) in May 2024, accounting for roughly 25% of all exports to the United States ($44 billion) and 15% of total commerce ($73 billion). This robust performance suggests that automotive manufacturers have adapted effectively to the evolving nearshoring and cross-border landscape by diversifying transportation routes and enhancing security protocols for their shipments.

"No matter where you manufacture and move freight from, you're going to encounter disruption," concluded Dewart. "Partnering with the right 4PL solution, like Redwood, can help you to overcome the growing pains that uprooting manufacturing efforts can cause and achieve your nearshoring and cross-border logistics goals."

For more information on how to best move loads across the US-Mexico border:

About Redwood

Redwood Logistics, a leading logistics platform company and modern 4PL headquartered in Chicago, has provided solutions for moving and managing freight for more than 21 years. The company’s diverse portfolio includes digital freight brokerage and flexible freight management all wrapped into a revolutionary logistics and technology strategy, a modern 4PL. Redwood’s 4PL strategy utilizes an open platform for digital logistics that empowers shippers to seamlessly mix-and-match partners, technologies and solutions into their own unique digital supply chain fingerprint. Redwood connects a wide range of customers to the power of supply chain management, technology and the industry’s brightest minds. For more information, visit www.redwoodlogistics.com. 

Media Contact
Tyler Thornton
LeadCoverage
tyler@leadcoverage.com


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