Borderlands: Experts see strong cross-border flatbed demand this year

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Experts see strong cross-border flatbed demand this year; Tesla breaks ground on Texas lithium refinery; DHL invests $120 million to expand operations in Mexico; and Mediterranean Shipping Co. opens Arizona office.

Experts see strong cross-border flatbed demand this year

Cross-border flatbed trucking could prove to be the most durable segment of the trucking market in 2023, according to experts.

Patty Hinojosa, vice president of Mexico sales and operations for CargoQuotes, said while domestic U.S. trucking rates have been experiencing declines over the past several quarters, cross-border trucking remains steady.

“You probably see spot rates going down on the domestic side in the U.S., but not for cross-border trucking, which is usually the same case for flatbed,” Hinojosa told FreightWaves. “When it comes to cross-border, rates usually don’t react the same way compared to other parts of the trucking industry.”

In recent months, construction activity has risen both in Mexico and the U.S., spurred by demand for everything from new factories in Mexico to new apartments and homes in the U.S., Hinojosa said.

CargoQuotes, based in Lee’s Summit, Missouri, is a full-service freight brokerage specializing in cross-border shipments.

“Right now, we are in what we call flatbed season, because construction is happening,” Hinojosa said. “Even though the market for residential real estate is not as strong as before, we are still seeing demand for a lot of metal structures, roofing materials, anything that has to do with new apartment complexes, neighborhoods. We have noticed that our job sites have mainly been apartment complexes, and this is raw material from Mexico to the U.S.”

Some of the latest news about flatbed trends came in a recent FreightWaves report that indicated flatbed tender rejection rates (FOTRI) have not declined as dramatically as demand for dry van and reefer capacity.

Tender rejection rates, the percentage of loads that carriers are unable to cover for their customers, have moved below 3% for van (VOTRI) and refrigerated or reefer (ROTRI) loads, while flatbed rejection rates are around 11% this past week, according to the FreightWaves SONAR platform.

A look at FreightWaves’ Outbound Tender Reject Index for dry van, refrigerated and flatbed trucks across the U.S. To learn more about FreightWaves SONAR, click here.

PGT Trucking is a multiservice transportation firm offering flatbed, dedicated and specialized transportation services. The company, based in Pennsylvania, has 30 terminals across the U.S. and operates more than 1,000 power units and over 1,500 trailers.

Officials for PGT Trucking also said they are seeing a lot of flatbed demand to transport raw materials between Mexico and the U.S.

“Recently, we have seen an uptick in steel imports for the automotive industry,” Bob Hoelke, PGT Trucking’s senior vice president of commercial, told FreightWaves.

PGT, which moves around 5,000 loads annually through its facility in Laredo, Texas, transports everything from steel coils and sheets to building structures, pipes, concrete slabs and other construction materials.

On Thursday, PGT Trucking broke ground on a new trucking terminal in Laredo. The facility will be on a 7.7-acre site and feature an operations centers, driver amenities and a truck maintenance shop, providing a regional base for over 70 local drivers.

The new facility, which will be operational by the first quarter of 2024, aims to serve the increasing demand for cross-border freight, Hoelke said.

“As our customers make decisions to relocate facilities in Mexico and the U.S., it is imperative that PGT continues to expand our network, adjusting to the increased demand in these geographic areas,” Hoelke said. “PGT’s new terminal in Laredo is a direct response to the forecasted demands in the Southwest, and we are focusing our driver recruiting efforts in that area to meet that demand and exceed our customers’ expectations.”

Hinojosa said the outlook for the cross-border flatbed market looks to remain solid the rest of the year.

“Everyone is preparing for nearshoring. Just this week we had three calls with companies that are really looking for maquiladoras [factories] in Mexico,” Hinojosa said. “That tells me that the third quarter will see a good increase in freight.”

Tesla breaks ground on Texas lithium refinery

Automaker Tesla Inc. broke ground Monday on a $375 million lithium refinery it plans to build in Corpus Christi, Texas.

CEO Elon Musk said the refinery could produce enough lithium to build about 1 million electric vehicles when it is scheduled to open in 2025.

“As we look ahead a few years, a fundamental chokepoint in the advancement of electric vehicles is the availability of battery-grade lithium,” Musk said at the groundbreaking, according to Reuters.

Tesla recently began construction of a lithium refinery near Corpus Christi, Texas, that will open in 2025. (Artist rendering: Tesla)

The refinery will make Tesla the only major automaker in North America refining its own lithium. China currently dominates processing and global distribution of lithium.

The refinery is the latest Tesla facility in Texas after the company moved its headquarters from Fremont, California, to Austin in 2021. Tesla also opened its Gigafactory Texas in Austin that same year, where the company produces its Model Y electric vehicle. Musk’s other companies, SpaceX and The Boring Co., are also based in Texas.

DHL invests $120M to expand operations in Mexico

Logistics giant DHL says it is expanding and automating its logistics operation at Queretaro Intercontinental Airport (AIQ) in the Mexican city of Queretaro.

The $120 million investment will double the facility’s cargo capacity to 322,917 square feet, which includes a 118,400-square-foot warehouse. The project is scheduled to be completed in 2024.

Antonio Arranz Lara, CEO of DHL Express Mexico, said the goal of the expansion is to have the capacity to process 41,000 packages per hour, which will be delivered by air to destinations across the country. The Queretaro hub will be DHL’s largest in Mexico.

Queretaro is in central Mexico, about 218 miles north of Mexico City.

Mediterranean Shipping Co. opens Arizona office

Mediterranean Shipping Co. (MSC) announced plans for an office in Tempe, Arizona, aimed at expanding the firm’s customer base in the West Coast and Gulf Coast regions.

MSC’s new facility will be on the Arizona State University campus, with construction of the 28,302-square-foot space expected to be completed in spring 2024. It will house 170 employees.

“The opening of this new location is a significant step towards establishing a more robust presence in the rapidly expanding West Coast and Gulf regions,” Fabio Santucci, president of MSC USA, said in a news release. “As we seek to grow our presence in the area, this presents us with an excellent opportunity to strengthen our existing ties with customers in the region.”

MSC, based in Geneva, is the largest container shipping line in the world.

The Tempe office will be MSC’s 10th location in the U.S. MSC has more than 150,000 employees across 675 offices around the world. The company offers a global network of road, rail and sea transportation solutions.