Navigating investment, export growth, and labor disruptions
U.S.–Mexico
Despite $156 billion in announced investments in the first half of 2024, actual foreign direct investment (FDI) inflows into Mexico have slowed due to concerns over newly approved judicial reforms, regulatory uncertainty, and potential U.S. policy changes from the upcoming election. This cautious investment climate contrasts sharply with Mexico’s robust export performance, which is growing over six times faster than the broader economy.
Since December 2019, exports have increased by an average of 8.3% annually, while overall economic activity has grown by just 1.3%. Key sectors like automotive and agri-food continue to drive this trade growth, underscoring Mexico’s critical role in North American supply chains, even as FDI figures stall.
In the third quarter of 2024, Mexico’s economy showed unexpected resilience, growing 1.5% and reversing a seven-quarter slowdown, largely due to a 3.8% year-over-year increase in agricultural production. However, challenges remain, including political uncertainty, high inflation, high interest rates, and low job creation.
The Mexican peso recently weakened to 20.1980 against the dollar, a level not seen since September 2022, falling by 2% amid election-driven uncertainty in the United States. Despite strong exports, Mexico’s total export value declined by 0.97% in September, primarily due to a 4.5% drop in automotive exports.
The automotive industry remains pivotal to Mexico’s economy, contributing 4.7% to GDP and generating nearly 30% more revenue than the combined inflows from remittances and tourism in 2023.
U.S.–Canada
Overall, the Canadian freight market remained balanced through October. The freight supply for both inbound and outbound moves has been very soft, and even more so for intra-Canada moves. The freight surge from the rail strike in August, which spilled over into September, dried up fast as the market normalized for a larger part of the month.
Things began to slow down from there on, except for pockets of tightness from seasonal freight moves from time to time but nothing significant. Carriers have continued shutting their doors and selling off their assets as the cost of operation becomes unbearable.
Diwali, a major holiday amongst the South Asian community, took place over October 31–November 1. This resulted in some slight tightness in southbound freight shipments to the United States to close out October as the South Asian drivers, which make up a significant portion of drivers in Canada, took time off for the celebration. The impact was felt further due to the timing aligning with the typical month-end push.
Another event to monitor is the labor situation at the port of Montreal where dock workers have had multiple strikes since September, including the most recent strike starting October 31.