New Presidents in US and Mexico Set the Stage for Enhanced Cross-Border Commerce

Historic Elections in Mexico and the United States

Following the historic election in Mexico in June 2024, which saw the country elect its first female president amid a backdrop of unprecedented violence, both Mexico and the United States are poised to shift their focus toward cross-border commerce. As nearshoring gains traction, the strategic partnership between the two nations is becoming more critical than ever.

Peso Devaluation: A Double-Edged Sword for Mexico

The devaluation of the peso, which dropped from 16-to-1 against the dollar before the election to 18-to-1 afterward, has sparked significant changes in the Mexican economy. According to Jordan Dewart, President of Redwood Mexico, this devaluation has had mixed effects: while it has made Mexican goods more competitive in the U.S. market, boosting export potential, it also presents challenges for foreign direct investment.

Resilient Trade Through Laredo

Despite economic fluctuations, Mexican carrier rates have remained resilient, with trade volumes through Laredo, Texas, continuing to rise. For 15 out of the last 16 months, Laredo has surpassed the traditionally dominant Port of LA/Long Beach in throughput, showcasing Mexico's growing importance in North American trade.

Nearshoring and Mexico’s Strategic Advantage

Mexico's strategic location and skilled workforce make it an increasingly attractive option for businesses looking to diversify their supply chains. With rising labor costs in Asia and ongoing trade disputes, many companies are turning to Mexico as a hub for manufacturing and commerce. Maquiladoras along the border continue to expand as foreign countries leverage Mexico's manufacturing capabilities to maintain trade with the U.S.

Security Concerns and the New Administration’s Response

President-elect Claudia Sheinbaum has pledged to address long-standing security concerns on Mexican highways, a move that is expected to positively impact future trade volumes and safety. As Mexico continues to grow as a critical hub for global trade, security enhancements are crucial for sustaining this growth.

Industry-Specific Challenges and Opportunities

While the grocery industry has faced a 36% increase in cargo theft, particularly during the Mexican produce season, the automotive sector has shown remarkable resilience. In May 2024, automotive exports from Mexico to the U.S. reached nearly $11 billion, accounting for 25% of all exports to the U.S.

Conclusion: The Path Forward for Cross-Border Commerce

As nearshoring in Mexico gains momentum, Redwood Logistics and Redwood Mexico remain dedicated to providing cross-border capacity solutions, warehousing and distribution, customs and clearance services, and innovative technology solutions. With the right 4PL partner, businesses can navigate the complex dynamics of nearshoring and cross-border logistics, achieving their goals in this evolving landscape.

For more information on navigating cross-border logistics, Redwood Logistics offers a range of resources, including an infographic on maximizing nearshoring investments and a recap video from the first annual Redwood Cross-Border Logistics Summit.