U.S. supply chains with Mexico and Canada will continue to grow with effects of coronavirus subsiding and the USMCA trade pact
As the coronavirus pandemic continues and the July 1 start date for the United States-Mexico-Canada Agreement (USMCA) nears, logistics experts weighed in on how to strategize for the future during a recent webinar.
“The Impacts of COVID-19 on the United States, Mexico, and Canada Cross-border movements” webinar was presented by the Transportation Intermediaries Association on Thursday, with presenters from the U.S. and Mexico.
Jessie Essman, chief operating officer for Chicago-based Forager, said Mexico’s location next door to the U.S. makes it attractive as a growing trade partner.
“For some time now supply chains have been reevaluating the concept of nearshoring versus offshoring. Wages are rising in China, and we’ve seen that offshoring can really lead to supply chain inflexibility,” Essman said.
Unlike China, there are also no current tariffs hampering U.S.-Mexico trade, Essman said.
“Mexico’s cross-border infrastructure continues to grow, and Mexico also has more than 50 free trade agreements with other countries, which makes it an attractive country to source materials to,” Essman said.
Frederick Ottosen, sales manager at The ILS Co., agreed that more U.S. companies will look for trade and investment opportunities in Mexico.
“Manufacturing will start ramping up next week in Mexico and many auto parts plants will resume operations,” Ottosen said.
Ottosen noted that violence and cargo theft are on the rise in Mexico, something shippers and brokers have to consider when moving cross-border loads.
“We are expecting 1,300 robberies per month,” Ottosen said.
Some of the most dangerous trucking lanes include Mexico City to the Port of Veracruz, and a route from Monterrey, Mexico, to McAllen, Texas.
Nathaniel Saylor, a transportation attorney with the firm Scopelitis, Garvin, Light, Hanson & Ferry, said there are several things brokers should be aware of with cross-border carriers from Mexico.
“There are more limitations on what Mexico-based motor carriers are allowed to do in the U.S.,” Saylor said. “The issue that you’re going to run into when you start using carriers based in Mexico is they’re not going to be in compliance with many of the warranties and representations that you’re able to make with respect to a U.S.-based carrier because they might have different authorities and permit requirements.”
Carlos Sesma, a transportation and logistics lawyer in the Mexico City-based law firm Sesma and McNeese, said the economies of Mexico, Canada and the U.S. will eventually rebound.
“Sadly, some companies will fold that will not be able to adapt and they will fail,” Sesma said. “These companies will present certain challenges for us when we’re dealing with clients, as well as certain opportunities when the business landscape begins opening up.”