Cross-border trade: Uncertainty and fluctuations
U.S.–Mexico
Mexico’s role in U.S. foreign trade
Mexico continues to solidify its position as the United States’ top trading partner. From January to September 2024, the country accounted for 15.9% of U.S. foreign trade, up from 10.3% in the same period last year. This surge represents an 18.8% growth in bilateral trade.
Mexican exports in October 2024 surged 11.2%, achieving a record monthly value. Automotive exports, a key sector, grew 6.1%, while non-automotive manufacturing exports expanded by 17.6%.
Despite fluctuations earlier in the year, cumulative exports from January to October 2024 rose 4% year-to-date, outpacing GDP growth in the same period. These figures underscore the nature of Mexico's export-driven economy, especially for goods such as automotive and manufacturing products.
This performance stands out against the backdrop of a slowing Mexican economy, which grew by 1.8% in Q3 2024 compared to 3.6% in the same period of 2023. Employment creation in Q3 2024 was the weakest in a decade, with slowed hiring linked to economic deceleration and cautious business investment.
Mexico's Ministry of Finance (SHCP) forecasts the country’s 2025 economic growth will be fueled by various factors, including the domestic market, social programs, investments in infrastructure from the federal government, nearshoring, new housing policies, lower interest rates, and the export market.
Key factors for future export performance include the new U.S. administration’s trade policies and potential interest rate adjustments, considering a possible pause in monetary easing.
Nearshoring and investment trends
Mexico continues to be optimistic for capitalizing on nearshoring, particularly in industrial regions such as the northern border, Bajío, and central Mexico. From January to July 2024, 209 investment announcements totaling $64.7 billion were made, primarily targeting the automotive and manufacturing sectors. However, political uncertainties have slowed the pace of investments executed, it is estimated that 20% of those announcements have been executed.
Industrial parks in Mexico faced a cautious 2024 due to the same political, economic, and regulatory uncertainties. Activity slowed compared to the boom years of 2021–2023. There is hope from the sector that USMCA negotiations in 2025 will help mitigate stagnation.
Development times have doubled due to bureaucratic hurdles, though president Claudia Sheinbaum and economy secretary Marcelo Ebrard have pledged to streamline processes. Sheinbaum’s plan to create 128 industrial parks in 2025 appears feasible. Additionally, a new energy generation program could enable manufacturing plants to produce their own electricity, boosting capacity for industrial growth.
Cross-border capacity opportunities
Given the current market conditions outlined above, cross-border capacity remains available, presenting opportunities for shippers. However, carriers are approaching new opportunities cautiously, prioritizing opportunities that align closely with their business strategies.
This caution is driven by anticipated cost increases in 2025 including inflation, highway tolls, maintenance expenses, and fuel prices, as well as uncertain North American trade policy shifts. These factors are adding layers of complexity to the market environment. If you’re planning a North America cross-border project, connect with your C.H. Robinson representative for help developing a resilient strategy for success.
Investment at the Port of Manzanillo
The new Mexican president announced the construction of the new Port of Manzanillo highlighting Mexico’s focus on enhancing logistics infrastructure. The expectation is that this project will triple the port's capacity, positioning it among the top 15 ports globally by 2030.
U.S.–Canada
There has been no significant change in the freight market activity from last month. It is still generally a soft market except for tightness seen from the West Coast to western Canada due to seasonal freight moves. The lack of outbound loads from the United States into these regions makes it more impactful.
Also, congestion that occurred in the western corridors due to the short week in the United States because of Thanksgiving has been mostly resolved through the first week of December. To finish the year, anticipate a slowdown as the market winds down for the year.
Potential impact of regulatory changes
President-elect Trump’s public mention of potential tariffs on products from Canada as a tactic to improve border security has shippers considering how to mitigate this new risk. One potential strategy may be to pull forward inventory for industries that do not operate in a just in time environment.
Additionally, concerns about immigration policies in Canada, which heavily relies on immigration for its driver supply, could further exacerbate these challenges. Be sure to watch for updates closely.