Cross-border commerce is robust however could possibly be affected by every thing from driver shortages to the freight imbalance to the Mexican peso in 2021.
FreightWaves not too long ago caught up with Troy Ryley and Jordan Dewart from Redwood Mexico, a part of Redwood Logistics, a logistics platform firm headquartered in Chicago.
Redwood Logistics’ portfolio contains digital freight brokerage, freight administration and platform providers that goal to simplify provide chain expertise.
Ryley is president of Redwood Mexico, based mostly in Austin, Texas, and Dewart is a supervisor director based mostly in Laredo, Texas.
Ryley and Dewart provided up their observations on a number of matters, together with elevated manufacturing in Mexico, the imbalance of cross-border freight, lack of truck drivers and the way the Mexican economic system may have an effect on freight actions in 2021.
FreightWaves: What’s occurring proper now on the U.S.-Mexico border?
Dewart: Proper now in Laredo we’re seeing as much as 5,000 vans a day crossing the border on the market. In order that’s far forward of 2020 and 2019. Freight has come roaring again.
FreightWaves: Are we seeing manufacturing ranges rising at Mexican factories? Is that the rationale for the rise in vans and freight?
Dewart: It’s one thing that we sometimes see, , manufacturing ramping up instantly after the yr ends after factories shut down in December in Mexico. However clearly, it’s greater than that. It’s only a continued excessive stage of demand from U.S. employers in all sectors — retail, well being care, shopper electronics, automotive.
Ryley: One factor you’re nonetheless not seeing is a drastic improve in [Mexico] consumption. With southbound visitors to Mexico, there was a light uptick in southbound visitors throughout December within the Christmas month, which is normally the spotlight of the yr so far as southbound. Now that’s dropped off. We’re nonetheless seeing that heavy imbalance of northbound versus southbound hundreds. There’s much more manufacturing and sourcing from Mexico into the U.S., however not a return for the consumption.
FreightWaves: What’s the warehouse state of affairs like in Laredo proper now? Is there sufficient area for items coming throughout the border?
Ryley: It has improved barely, solely as a result of there’s new buildings coming onto the market. The industrial occupancy fee in Laredo remains to be within the excessive 90s. We don’t count on that to alter within the close to future as a result of commerce remains to be sturdy. We’re going to see once more an incredible quantity of freight being transloaded.
FreightWaves: What’s the state of affairs like for obtainable tractors and trailers on the border?
Ryley: There’s a lot much less U.S. tools going into Mexico now, the place the standard mannequin was any person wished to load a U.S. trailer so that they didn’t must transload on the border. There’s simply not the quantity of apparatus going into Mexico anymore as a result of the return on funding on a trailer for U.S. carriers is way stronger within the U.S. than it’s having it going to Mexico for 3 weeks. Mexican carriers have been very conservative about their funding in tools as a result of they’re unsure of what the markets appear like. They haven’t modified their tractors and trailers. The web-net is that there’s simply much less tools normally obtainable.
FreightWaves: Is there a scarcity in linehaul drivers that has resulted in greater premium shipping prices?
Dewart: We’re positively seeing that on either side of the U.S.-Mexico border. There’s a scarcity of drivers on either side. We’re additionally seeing, and that is associated to the cross-border commerce, that U.S. carriers should not permitting their vans to enter Mexico or trailers to cross into Mexico. For the easy incontrovertible fact that since transportation charges are so excessive domestically within the U.S., we are able to proceed to make an excellent wage right here while not having to ship their trailers into Mexico and that exacerbates the state of affairs for drivers.
Ryley: We are literally seeing extra Mexican drivers having the choice of being B-1 visa drivers within the U.S. Subsequently, they’re leaving the Mexican transport corporations and looking for work with U.S. corporations to earn the next wage fee, higher charges, higher advantages. (A B-1 visa may be issued for a truck driver residing in Mexico and delivering freight within the U.S. B-1 visas are issued by the U.S. authorities.)
FreightWaves: How will the Mexican economic system have an effect on cross-border commerce in 2021? The Mexican peso is at 20.17 pesos per U.S. greenback as of Thursday.
Ryley: The Mexican peso has really revalued from earlier [in 2020]. In March  the peso hit a excessive of like 24 pesos to the greenback. It was devalued in opposition to the greenback pretty sharply. After which it’s revalued since then, which is sort of uncommon. I believe the peso has revalued due to a few of the lackluster stability within the U.S. or uncertainties within the U.S. The peso was in a position to revalue from $24 at one level to round $19. You’re nonetheless effectively above what the peso was in 2019. That clearly, once more, impacts shoppers as items are nonetheless costlier than they had been coming in from wherever on the planet — and particularly the U.S.
Extra articles by Noi Mahoney