In response to painful lessons learned during the COVID-19 pandemic, manufacturers are looking to nearshoring / reshoring to diversify their supply chains, shorten lead times and reduce costs.

Average Compensation for Manufacturing Workers in U.S. Dollars per Hour⁽¹⁾

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Mexico Uniquely Positioned to Support Nearshoring

The U.S.’ 2018 decision to place tariffs on Chinese imports, disruption from the global pandemic and the 2020 USMCA free trade agreement (NAFTA 2.0) (U.S.-Mexico-China represent ~30% of global GDP) are proving to be a windfall for Mexican business and industry.

As global manufacturing and trade shift to Mexico, the country’s robust, multimodal infrastructure including 15 federal seaports, 11 main U.S. truck gateways and eight U.S. rail gateways are uniquely positioned to support this growth and will be bolstered by tens of billions of committed capital from the Mexican government to improve and expand its logistics infrastructure⁽²⁾⁽³⁾.

Mexico’s Value Proposition

In addition to well-established logistics infrastructure, the country’s geographic proximity to the U.S. and labor, land and power cost advantages have spurred significant foreign direct investment (FDI). According to the World Investment Report, FDI in Mexico increased to over $35 billion⁽⁴⁾ in 2023, spearheaded by U.S. companies expanding their existing footprint (e.g., Honeywell’s accelerating Mexico plant expansion / automobile manufacturers doubling down on the region including Nissan, Volkswagen, GM, etc.) and greenfield investments (e.g., Tesla’s planned gigafactory in Monterrey, Mexico).

Substantial investments are also being made by the private and public sectors in Mexico to expand the quantity and scale of industrial parks, concentrated on manufacturing hubs along the U.S.-Mexico border, driving accelerating output of finished goods and components exported to the U.S.

Most Industrial Parks are Concentrated Near the US Border⁽⁵⁾:

Logistics Providers Along the U.S.-Mexico Border Poised for Outsized Growth

For the first time in decades, Mexico has replaced Canada and China as the U.S.’ largest trading partner. As Mexico’s industrial and manufacturing infrastructure expands, U.S. logistics providers have a unique opportunity to support substantial growth in cross-border freight from a neighbor where nearly 80% of exports are consumed in the U.S.⁽⁶⁾

Total value of Export/Import by Country ($ in billions)⁽⁷⁾:

U.S.-Mexico Border Land-Freight Gateways: Number of Incoming Truck or Rail Container Crossings (Crossings in Millions)⁽⁷⁾:

According to a recent survey from CH Robinson, 40% of shippers indicated exploring nearshoring to Mexico. As a result, many U.S.-based logistics companies are actively looking to stand up or expand their operations and capabilities in Mexico and the border states (Texas, Arizona, New Mexico and Southern California). Recent examples include:

• Ryder (2024) – opened a new 228k sq. ft. warehouse in Laredo, Texas, approximately 3 miles from the World Trade Bride on the U.S.-Mexico border and expanded their yard in Nuevo Laredo, Mexico to increase capacity / parking for tractors and trailers by approximately 40%
• H. Robinson (2023) – launched new 400k sq. ft. facility in Laredo, Texas expanding the company’s cross-border footprint to ~1.5M sq. ft.
• Redwood Logistics (2023) – established new offices in Monterrey, Mexico in anticipation of ~50% growth in Mexico team
• Blue Grace Logistics (2023) – expanded into Mexico with first offices in Guadalajara
• Arrive Logistics (2023) – opened new 18k sq. ft. facility in Guadalajara for business development and carrier-focused teams in response to growing demand for local resources

(1) Supply Chain Dive / PwC
(2) Kearney
(3) SICT Mexico, World Highways
(4) UNCTAD
(5) Bloomberg
(6) World Bank
(7) U.S. Department of Transportation – Bureau of Transportation Statistics