Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Border trucking capacity remains tight; Schneider Electric expanding in Tijuana; new highway in Mexico to boost cross-border trade; Ceva Logistics expands in Latin America.
Border trucking capacity remains tight
The imbalance between northbound and southbound trucks across the United States-Mexico border is causing one of the toughest capacity shortages in decades.
Officials at Redwood Mexico said they continue to see a crunch in northbound capacity because of the imbalance in Mexico’s northbound and southbound volumes. Redwood Mexico is a division of Chicago-based Redwood Logistics.
“It’s been 20 years since I think we’ve seen this level of severity of an imbalance this severe past what would be a traditional peak season, May to early July,” said Troy Ryley, president of Redwood Mexico. “The only things I think that have affected capacity more were the China tariffs and the devaluation of the Mexican peso that happened back in the early 1990s.”
Jordan Dewart, a manager director at Redwood Mexico based in Laredo, Texas, said he doesn’t foresee the capacity crunch disappearing anytime soon.
“The factors that are causing this are not going to go away like a hurricane,” Dewart said. “A hurricane comes in, does damage and then you see the result. We’re really projecting this to be a prolonged situation.”
In recent weeks, there have been days where only five or six trucks were available and 800 loads needed to be shipped in markets like Laredo, Ryley said.
He said the capacity crunch starts with a lack of available trucks in Mexico, which affects border cities such as Laredo and El Paso, Texas.
“You see a lot of equipment waiting in Laredo to go northbound,” Ryley said. “Markets such as Dallas, Houston and San Antonio are affected most because they’re short runs and then you end up with a higher premium in order to attract carriers to carry that type of trade.”
The U.S. domestic trucking market has been extremely tight, with shippers paying higher freight charges for domestic moves.
“Demand is simply outstripping capacity right now and nothing points to that changing anytime soon. Accepted tenders remain at a historically high level, and carriers are exercising their options in searching for the highest rates and best loads,” according to FreightWaves research analyst Andrew Cox.
Spot rates increased almost 10% this week on a national level to $2.89 per mile, according to Truckstop.com. Of the 100 lane pairings in FreightWaves’ SONAR platform, spot rates increased in all but 13 lanes this past week.
“One of the comments that was made to me is that the spot rate levels are so high right now, that it’s hard for a driver not to be on the road and take advantage of this money-making opportunity that’s out there based on lack of trucks on the road,” Ryley said.
Ryley said shippers need to look at logistics companies as partners during this capacity crunch.
“This is a bad time to treat your logistics company as a vendor,” Ryley said. “This is a time to be partnering with a company that’s going to be looking at, not just your interest short term, but a long-term partnership with you, because that’s what’s going to keep you out of just being dictated by the spot rate market, which today we’ve seen is quite high.”
Schneider Electric expands in Tijuana
Schneider Electric will invest $5.7 million to expand its manufacturing plant in Tijuana, Mexico.
Once the expansion is complete, the plant will add 1,200 new jobs, for a total of 3,780 jobs in Tijuana.
Schneider Electric manufactures switchgears at its Tijuana plant, which are used in electric power systems that function as circuit breakers, according to the company’s website.
Schneider produces around 40 million switchgears per year at the plant. Most of the parts manufactured in Tijuana are used in Mexico, the U.S. and Canada. Walmart is one of the company’s largest customers in the U.S.
Schneider Electric, founded in 1836, is based in Paris. The company employs 135,000 people worldwide.
Ceva Logistics expands in Latin America
Global freight forwarder Ceva Logistics recently opened offices in Ecuador and Uruguay.
The new offices are part of the company’s strategic expansion across the Latin American markets, according to a release.
Ceva Logistics will establish air, ocean and ground transportation operations in Guayaquil, Ecuador. The company said it has already established multimodal operations in Ecuador’s capital city of Quito.
Ceva Logistics’ teams in Ecuador will serve existing customers and develop business solutions for the perishables, consumer, and oil and gas sectors. Ecuador also offers access to key export markets in Colombia and Peru.
In Uruguay, Ceva’s head office will be in Montevideo. The company will serve customers in agriculture and livestock farming, while focusing on exports such as rice, citrus fruits, wood, leather, meat and dairy products.
Uruguay is a logistics hub and a main point of departure for ocean traffic, especially for shipments to and from Brazil and Paraguay, the company said in a release.
New highway will boost Mexico’s automotive industry
Mexican officials recently inaugurated a new stretch of highway aimed at boosting connectivity of the country’s central region to other parts of Mexico.
The new highway starting in the Mexican city of San Luis Potosí will connect to Mexican Highway 80 San Luis-Arriaga. The new route is aimed at improving the connectivity of the Mexican states of Jalisco, San Luis Potosí and Guanajuato. The area is known as the Bajío region in central Mexico.
The region is one of Mexico’s largest automotive production clusters, with more than 326 automotive-related companies generating around 446,000 jobs, according to the Mexican Institute of Social Security (IMSS).
Construction of the new stretch of highway cost $22.8 million, according to officials.
More articles by Noi Mahoney