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Will the T-MEC Corridor Be the Future of Trade for North America?

By Alberto Villarreal - Nepanoa
Managing Director

STORY INLINE POST

By Alberto Villarreal | Managing Director - Mon, 10/17/2022 - 11:00

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North American trade has solidified over the last three  years, with the USMCA, or T-MEC, showcasing the most recent guidelines for North American business operations. It is clear that the logistical infrastructure supporting the current and expected increased trade between the three North American countries is, simply put, insufficient. Grupo Caxxor, led by Carlos Ortiz, is spearheading the development of the T-MEC Corridor, a new railroad system starting in Mazatlan, Sinaloa, in Mexico and ending in Winnipeg, Manitoba, in Canada, connecting all three countries.

Plans to develop the adequate infrastructure needed to connect the Pacific Ocean with the north of Mexico have been in the pipeline since the 1950s; however, a project of this dimension demanded major investments to be able to traverse the vertiginous terrain of the northern states. It was not until 2020 that Caxxor Group announced the project, which will be privately funded.

The T-MEC Corridor is a massive project, representing an estimated investment of US$3.3 billion, that will be constructed in four stages and promises consistent benefits for the manufacturing and industrial sectors across the region. Moreover, by providing an alternative to the Panama Canal and offering a direct line between North America and the Pacific, the T-MEC Corridor will unlock trade potential along Mexico’s northern border. 

Harbor Project in Mazatlan

The heart of this project is the harbor on the coast of Mazatlan, Sinaloa: a high-performance offshore sustainable maritime terminal. Although the northwest of Mexico had been previously overlooked as a site for maritime trade, its strategic location close to the US-Mexico border facilitates transportation to the US and Canada. In addition to the advantages of its cross-border trade, the port’s direct contact with the Pacific Ocean will open up new global routes between North America, Asia, and South America. With a privileged position for international trade and an increased capacity for over 8 million containers, the port is set to become one of Latin America's most critical trade hubs.

Cross-Country Railroad System

Another essential feature of the T-MEC Corridor is the transportation routes connecting the new port in Sinaloa with Durango and Coahuila. Although most of the ongoing construction will occur in Mexico, new railroads will also be built in the US. As a precaution, Mexico is exploring additional options for cross-border shipping routes to the US, given the recent tightening of border inspections in Texas that have caused significant bottlenecks, delivery delays, loss of merchandise and other damages estimated at US$4 billion. Although the existing routes through Dallas will remain in operation, there are ongoing negotiations to establish operations between Chihuahua and New Mexico. This would allow the project to take advantage of existing cross-border routes in San Jeronimo, Chihuahua, and avoid costly delays. Finally, these routes would join an already established segment of railroad tracks across Canada and connect to a final logistical center in Winnipeg, in the province of Manitoba. 

Logistical Centers and Industrial Parks

Initially, the T-MEC Corridor’s infrastructure will run through four logistical centers across Mexico’s northern states, Durango and Coahuila. Surely, more will follow. The industrial parks will provide trade support, boost local economies, and attract further investment in the region. By both building infrastructure and promoting entrepreneurship within the country, the T-MEC Corridor may become a tool to create long-lasting economic benefits for Mexico and its northern neighbors. 

The project not only boasts the creation of the most important harbor in Latin America, which will increase connectivity with the Asian market, but also four new logistics centers that will effectively enable foreign companies to strategically leverage these locations and set up operations in Mexico. This allows companies to greatly benefit from the workforce, resources, location, free trade agreements, and most importantly, the country’s promising infrastructure, which will cement a multilateral channel for Asian and North American trade.

What Does This Mean for the US-Mexico Trade Relationship?

The T-MEC corridor aims to take advantage of the long-standing trade relationship between the US and Mexico, further bolstered by the USMCA. Cross-border trade in North America has primarily flourished due to tariff reductions, tax exemptions, and more efficient routes between the US and Mexico. These advantages will only increase as the Mazatlan harbor will provide a steady flow of international merchandise, especially from Asian countries, into Mexico and the US at a reduced cost and with greater efficiencies. By gaining and facilitating access to global trade, especially from the East, Mexico can become a logistical axis of crucial importance for North America.

Furthermore, this project, in conjunction with new Mexican policy, aims to entice US companies established in Asia to return to the American continent thanks to the economic benefits of the USMCA trade agreement. This represents new opportunities for global trade, foreign investment, and cross-border operations among the US, Mexico, and Canada and much needed support for logistical infrastructure in North America.

Photo by:   Alberto Villarreal

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