Wednesday, April 24, 2013

North of the Border

Increased Mexican economic activity is turning Mexico–U.S. freight into one-way traffic.

More than 5 million commercial trucks crossed the U.S.-Mexican border in 2012, a 4.8 percent increase from 2011 that set a new record. Unfortunately, too many tractor-trailers were headed in one direction — north.

The imbalance in north-south truck traffic threatens to create a severe capacity shortage in Mexico as cross-border trade enters its peak season, which runs roughly from April through July, reported the Journal of Commerce. The imbalance can be as high as four northbound loads for every one southbound load.

That’s making it much more difficult and expensive to source northbound capacity in Mexico, and the shift of international production to Mexico will make finding trucks even harder. Along Mexico’s long border with Texas, the produce season sucks up available truck capacity from now into the summer.

That poses a challenge for U.S. shippers and motor carriers. U.S.-Mexico surface transportation trade jumped 10 percent in 2012, with the value of goods transported across the border by tractor-trailer increasing 9.5 percent last year to $323 billion, according to the U.S. Bureau of Transportation Statistics.

Increased foreign investment in Mexico is spurring domestic industrial growth, and that will consume even more capacity. For example, Bloomberg reports steel manufacturers in Mexico are spending $3 billion on new factories.

Right now, U.S. motor carriers often send empty trailers into Mexico to meet northbound demand, and those empty miles are reflected in higher freight rates. Shippers need to consider other possibilities such as intermodal, use southbound freight as leverage with carriers, and try to secure capacity through early commitments.

Kirk Shearer
800-989-0054 x103

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