Trucking capacity in Mexico faces uncertainty with carriers ending, downsizing services (with video)

Roadrunner and Covenant both recently announced changes to their Mexico trucking operations

As two large companies in the freight industry announced they were eliminating or scaling back trucking services in Mexico last week, industry insiders say cross-border trade will continue to expand.

The key for shippers and carriers will be figuring out how they are going to tackle the market in the near future, said Jesus Alvarez, the head of carrier sales for Laredo-based Fr8Hub.

“Customers need to figure out who they are going to reach out to for assistance, whether it’s all going to be multinational companies, or whether it’s going to be marketplaces like Fr8Hub, or traditional brokerages but solutions are there,” Alvarez said.

Covenant Transport announced on September 26 it was ending its freight service in Mexico, citing dropping spot market pricing, increasing detention times and an inability to gain the freight density needed to balance costs.

Trucking firm Rich Logistics notified its truck drivers that the company will be closing five terminals, including facilities in Brownsville and Laredo.

Rich Logistics is owned by RoadRunner Transportation Systems, which announced September 30 that it will be downsizing its dry van division and laying off 450 truck drivers. However, Roadrunner officials have said they will continue operating in the Mexico market.

Alvarez said the impact of Covenant leaving the Mexico trucking market will be felt across the industry.

“Covenant is a pretty big company. It has had some really great relationships with a lot of customers – Fortune 500 companies in the United States that have manufacturing warehouses and facilities in Mexico. It’s going to create a bit of backing and a capacity crunch for the near future,” Alvarez said.

Outbound Laredo volumes rose steadily for most of September. (Image: SONAR OTVI.LRD)

Laredo’s outbound tender reject index (OTRI.LRD) indicates that spot market rates are currently low. This information comes from the FreightWaves SONAR platform.

The head haul index in Laredo (HAUL.LRD) measures capacity and the market is relatively balanced between inbound and outbound freight at the moment.

Ben Enriquez, senior vice president of Mexico Logistics at Transplace, said truck capacity usually loosens beginning in mid-September, after the peak harvest season for produce coming from Mexico to the U.S.

“Truckload capacity was hard to find in central Mexico and Laredo during peak season – April to July – but things are improving now,” Enriquez said. “In central Mexico, in places like Bajio and Queretaro, capacity is coming back.”

However, Enriquez said more companies are opening factories or expanding existing ones in central Mexico, such as BMW, Toyota and Michelin.

“There is capacity right now, but as more and more companies open factories in Mexico – like Michelin – there will be less and less capacity next year,” Enriquez said. 

Group Michelin recently opened a $510 million tire factory in Leon, Mexico. The facility will have an annual production capacity of between four million and five million tires, mostly in 18-inch-plus sizes for North American original equipment and replacement markets, according to a Michelin press release.

Alvarez said technology and the ability to adapt quickly will be one of the keys for surviving when capacity tightens again.

“We have analytics that help determine if the majority of the capacity volume is on the shipper side, or the carrier side,” Alvarez said. “We can make those immediate decisions or connections, compared to a traditional broker that relies on constant cold calling, or an asset-based company that relies on these outside sales reps to consistently reach out to customers to determine what kind of shipments and product can be offered. We can make those decisions in seconds.”

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Noi Mahoney

Noi Mahoney is the Cross-Border Freight Market Reporter for He graduated from the University of Texas at Austin with a degree in English in 1999. Mahoney has more than 20 years experience as a reporter and editor. He has worked for newspapers in Florida, Maryland and Texas.