Former freight broker and Mexico trade expert Matt Silver discusses the surge in US imports from Mexico due to supply chain shifts. Topics include nearshoring trends, challenges in cross-border freight transportation, and the impact of USMCA and Covid on trade dynamics.
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Quick takeaways
US-Mexico trade surge due to friend-shoring post-Trump era and COVID disruptions.
Cross-border logistics complexity with customs, trucking, and delays emphasizes trade challenges.
Deep dives
U.S.-Mexico Trade Dynamics and the Concept of Friend-Shoring
The recent uptick in U.S.-Mexico trade has been attributed to the notion of friend-shoring, driven by the evolving trade landscape post-Trump administration and adapting supply chains due to COVID disruptions. Companies are exploring moving production away from China to Mexico or Southeast Asia. This shift has been facilitated by factors such as USMCA regulations and challenges faced with Chinese tariffs, emphasizing the significance of understanding the motives behind this trade upsurge.
Logistics Complexities in Cross-Border Shipping
The process of shipping goods from Mexico to the U.S. involves intricate logistics, spanning multiple stages and parties. Unlike domestic shipping, cross-border shipments require coordination among Mexican and U.S. trucking companies, customs brokers, and border crossing carriers. Customs clearance can range from one to three days, with potential delays up to 20 days, underscoring the complexities and time sensitivity of cross-border freight movement.
Growing Importance of Infrastructure in US-Mexico Trade
Infrastructure development in Mexico plays a crucial role in facilitating trade growth, alongside advancements in technology and regulations. While investments in highways and tollways have improved logistics, challenges like security issues and lack of standardized data on freight companies persist. Efforts to enhance regulation and security can streamline cross-border operations and mitigate risks like freight theft, ensuring smoother trade flows.
Envisioning Future Opportunities in US-Mexico Trade
The future of US-Mexico trade holds promising prospects, with the potential for sustained growth driven by evolving supply chains and increased manufacturing investments. Initiatives like the Tesla factory in Mexico signal a shift towards capital deepening and broader industrial expansion. As Mexico emerges as a key manufacturing hub, opportunities for market diversification and technological advancements are anticipated, highlighting a promising trajectory for the trade relationship.
US imports from Mexico are surging. Former President Trump's tariffs on China, as well as the renegotiated USMCA treaty, have encouraged supply chains to move to North America. Then Covid hit, and that re-energized interest in "nearshoring" or "friendshoring" as an alternative to China. So how much further can US-Mexico trade go? What kinds of goods are being imported from Mexico? And how does the trade boom interact with Mexico's shaky security situation? On this episode we speak with Matt Silver, the CEO and co-founder of Cargado, which is building technology to facilitate cross-border freight. Silver, a former freight broker with a long history of doing business in Mexico, talks to us about what he's seeing on the ground, who's investing, plus the extraordinarily complicated process of getting goods across the border.