Cross-Border Logistics: The Key to Optimize Nearshoring Impact

The nearshoring trend, along with the implementation of USMCA, has fueled increased cross-border logistics activity between Mexico and the US in recent years. This trend is expected to continue as more companies and industries seek proximity to final consumer markets. As a result, Mexico has the potential to become North America’s most significant supplier.

Cross-border operations are critical to such trade, and digitalization is going to play a significant role in the further development of this critical step in the supply chain. Several stages throughout the process are entirely independent of relations between countries and their trade agreements, and they must be improved significantly to unleash the full potential and generate the most benefits for all parties involved, from the manufacturer to the final consumer. It is imperative that cross-border logistics evolve technologically to ensure that growth and expansion are profitable and sustainable over the long term.

According to a paper by the Atlantic Council, reducing the wait time at the Mexico-US border by 10 minutes would lead to additional inventories of both intermediate and finished goods that would represent almost 7,000 additional containers, over US$300 million of additional trade per annum between countries, and the creation of approximately 19,000 additional direct and indirect jobs. That is the impact of just a reduction in wait times. The potential for improvement is even more significant if capacity in land ports of entry is expanded and technology is enhanced.

The main current challenges of US-Mexico cross-border logistics are outdated technologies, excessive wait times, manual processes, lack of proper representation, reliance on middlemen, and the flow of unwanted goods, among others. These challenges need to be addressed swiftly to have much more efficient progress at land ports. Growth in infrastructure must be coupled with adequate technologies, efficient processes, and enhanced communications for such expansions to render the most value in the supply chain.

Efficient cross-border operations require alignment on both sides of the line: shippers, carriers, customs agents, transfer parties, and 3PL operators. This is a very sensitive stage of the supply chain since it is estimated that some 68% of trade between the US and Mexico is conducted by truck, and this trend is expected to increase.

TRAXIÓN is well-positioned to continue to capture expansion opportunities in this specific market. First, TRAXIÓN is one of the most important carriers in Mexico, with one of the largest trucking fleets and the broadest service offering in the industry, with almost 70% of its cargo operations being cross-border.

Second, the company has a comprehensive cross-border infrastructure, especially at the Laredo-Nuevo Laredo bridge, where 34% of border crossings take place between Mexico and the US, and where the most growth and expansion are expected. In this market, TRAXIÓN is among the carriers with the most volume, footprint, reputation, and prestige, with more than 45 years of expertise and leadership.

Third, TRAXIÓN is the second-largest 3PL operator in Mexico, with more than 8.5 million square feet under management and a strong footprint in the most dynamic economic corridors of the country and the best access to highways, ports, rail, and border crossings. The sheer size of TRAXIÓN’s operating infrastructure, coupled with state-of-the-art technology, are the most significant competitive advantages and the highest barriers to entry in the sector.

The company collaborates with over 1,000 clients, predominantly comprising large, multinational corporations with a significant presence in Mexico, who demand sophisticated supply chain solutions, particularly for cross-border operations. In addition, TRAXIÓN maintains robust partnerships with American carriers and is actively pursuing additional alliances on the other side of the border to ensure the provision of exceptional door-to-door services. For TRAXIÓN, expanding its cross-border operations is among its most promising areas for growth.

Expanding its cross-border capabilities is crucial for TRAXIÓN to increase its market share and profitability. To this end, the company is working on achieving synergies within its subsidiaries to increase communication, which is one of the most common challenges. TRAXIÓN also aims to ensure that all certifications are in place to guarantee seamless and continuous operations on both sides of the border.

The company views technology as playing a fundamental role in achieving its expansion goals. TRAXIÓN has always prioritized operating with the most advanced platforms, which has allowed it to stay ahead of both clients' needs and competitors. Management is convinced that continuous technological advancement in cross-border processes will be a key factor in gaining market share, creating further value, and optimizing the positive impact of existing trade.

While there are several short-term challenges that need to be addressed to improve trade between Mexico and the rest of North America, technology and digitalization are among the most effective ways to strengthen the weak links in the cross-border stage of the supply chain.