10 Keys for Logistics in 2024

The year 2024 will undoubtedly be full of challenges for logistics chains, supply chains and/or value chains. Work continues on the collaboration between shippers and carriers, but this integration is progressing slowly: we are officially returning to a “Shipper’s Market.”

The 10 points mentioned below will provide guidelines for the country's national and international logistics market:

1. Nearshoring: 

In 2023, 180 companies established in Mexico and occupied 1.5 million square meters of industrial warehouse buildings. By 2024 and 2025, there are  plans to build around 9 million square meters of warehouses throughout the country.

These data position Mexico as a great player in the USMCA. We must not lose sight of the fact that for this growth to happen, we must align not only with the available spaces in Mexico but also with the availability of electrical and hydraulic energy.

We must turn to new logistics platforms like Mazatlán, which has a projected mobilization of 8 million containers per year and is considered the new floating port within the USMCA, becoming a fundamental player in the northern economic corridor.

2. Clustering: “If you want to change the world, join a group.”- Noah Harari.

The development of clusters worldwide is happening at an impressive speed. Solutions for the industry from the industry are among the great business hits to generate productivity within companies.

The Queretaro cluster network participated in the TCI Global Forum in Iceland, where logistics, energy and carbon footprint issues were the focus of the sessions.

To measure the performance of logistics chains, a new performance indicator has already been added: the carbon footprint. This is in addition to the level of customer service, optimal inventory levels, forecast accuracy and logistics cost. Let's measure our results.

3. The Automotive Industry is King: 

The automotive industry in Mexico will continue to be prioritized. It is important to remember that five (some statistics say 6 out of every 10) cars produced in Mexico are destined for the export market. Delivery times for automobiles have decreased from eight to three months (previously, it could take up to one year). However, a significant portion of delivery delays are caused by port logistics issues, the lack of ship vehicles for transportation and the successful introduction of Chinese automobile brands, such as Chan Gan, Chirrey, Jetour, Omoda, JAC, and BYD. Additionally, cargo transportation brands like Dongfeng, Dayun, Foton, Shacman, and Sitrak have generated major international customs operations, demanding greater speed from the country’s customs officials.

4. Digital Brokers: The “Transportation Buyer’s Dream.” Why?

As a transportation buyer, I deal with a single, state-of-the-art technology supplier instead of working with 25 transportation companies (to give an example). This logistics figure handles national and cross-border logistics, which, although it implies an extra cost in the negotiated rates, ensures a care-free outcome for the buyer regarding the placement of equipment in the plant or distribution centers.

The challenge here is negotiating the capacity between the digital broker and the carriers. Once this link is resolved to maturity, we can consider it an attractive solution for national transportation and USMCA.

Digital brokers, such as Uber Freight, FR8APP, Control Match and Mejor Opción de Carga MOC, to mention a few, are developing transportation technologies that will surprise Mexican logistics chains by early 2026. It should be clarified that in the United States, they are already entering their stage of maturity.

Let's be ready for the arrival of new US digital brokers.

5. Asian  Logistics Operators: 

Although we speak of nearshoring, the country’s capacity to receive companies has been questioned (return to Point 1). However, supply chains are alive, and must remain flexible and fast. Consequently, we can already observe the presence of companies, such as China International Marine Container (CIMC) of Chinese origin and Morrison Express of Taiwan origin, successfully operating in maritime freight, domestic FTL (full truckload), cross-border FTL, warehousing and  last-mile services.

While Asia-Mexico freight rates started below US$2,000 in 2023, the trend for FCL originating in Asia in 2024 is expected to reach US$3,000.

These logistics operators have quickly adapted to the Mexican market and currently handle 8% of the available square meters in the country, whether for direct sales or on site from Chinese companies established in Mexico.

6. E-Commerce: 

Companies, whether as shippers or carriers, that remain engaged in e-commerce will continue to experience growth. Technological transactions, marketplaces and last-mile deliveries are considered “secure investments” in Mexico's logistics chains.
In light of this, companies must continue to enhance their digitalization, telemetry, cybersecurity and blockchain processes, all of which should be integrated into their Sales and Operations Planning (S&OP) processes. The organic growth rate for these types of companies is estimated to be between 10% and 15%.

7. COVID:

It may seem that we have already moved on from this disease, but in the United States, it remains a trending topic and is being incorporated into the majority of global companies´ business continuity plans. Despite the medical control of the disease, the impact of work absenteeism still significantly affects business productivity.

Infections are still ongoing, not only from COVID but also from other highly contagious respiratory diseases. We must remain vigilant and not let our guard down, to avoid wearing masks again.

8. Road Safety: 

Unfortunately, this is an issue that we need to closely monitor in 2024. In 2023, we saw a significant increase in road robberies, with 25% of reported incidents compared to a maximum of 7% in the previous six-year period.

This directly impacts the logistics costs of transportation, as both shippers and carriers are forced to manage alternative routes, which often involve paying higher tolls, hiring high-end security measures, and obtaining insurance for both the transport unit and the cargo with greater coverage that obviously have a higher cost.

These additional expenses, not typically included in budgets, will end up being transferred to the final price of goods. And here again, the concept of collaboration fractures, when defining whether this should be included in the rate or whether it should be shouldered by the transportation provider.

9. Intermodal:

Incredibly, there is still a significant lack of knowledge about this means of transportation in the country. It is important to remember that intermodal transport is the combination of two or more means of transport, with the long-haul portion being done by rail. Railroads, such as CPKC and CN, American transportation lines like JB Hunt, Schneider and CFI Logistics, as well as Mexican carriers, such as V Modal of Grupo Traxión (the biggest logistics group in Mexico ) and EASO, offer this service with high standards of compliance with transit times and competitive rate levels. Given the scarcity and increasing costs of FTL transportation, it is crucial to consider this alternative mode of transportation.

10. World Economic Order: 

The economic war between the United States and China, the ongoing conflict between Russia and Ukraine, the hostilities between Israel and Palestine, and the aging population in Europe directly impact global logistics chains.

The most evident impact is seen in the rate levels, but it also affects the capabilities of teams and the lead times between continents. It is crucial for us to closely monitor the performance of different economic regions and understand their current and future impact on our logistics chains.

To further emphasize point 10, it is important to note that this year will see presidential elections in Mexico and the United States.

Typically, based on results, economies contract during this period until the government’s policies and direction are clear.

National and international investments slow down, production levels remain low, and consumer purchasing power decreases. Let’s be prepared for these potential challenges. 

Wishing everyone a successful Logistics 2024!

Carlos Canseco is the director of the Logistics Innovation Cluster of the State of Queretaro and the founder and CEO of Logistics and Transportation Professionals (PELT).