Cross-border capacity tightens as regulatory enforcement increases

U.S.–Mexico

Enforcement-driven capacity tightening reshapes cross-border markets

The primary development for June is a pronounced contraction in cross-border driver availability, caused by intensified U.S. enforcement of B‑1 visa rules, English language requirements, and rules restricting Mexico carriers from transporting goods within the United States. While these measures are not new, stricter and more consistent application of the existing regulations has materially impacted the available driver pool.

The effects are already visible in the market. Thousands of drivers across key border regions have reportedly been taken out of action in recent weeks, a disruption compounded by the timing of Roadcheck Week in the United States. Together, these factors accelerated a tightening of available capacity across U.S.–Mexico lanes.

Other drivers are reluctant to accept cross-border loads or enter the United States, opting to avoid the risk of inspection or visa revocation by only carrying intra-Mexico freight. This behavioral shift has further reduced capacity and suggests that the disruption may become structural rather than temporary.

In the near term, freight has been building up at the border. Load-to-truck ratios in certain lanes have moved into double-digit ranges, northbound and border-region pricing has become volatile, and tender rejections are rising. Some carriers that previously relied on team drivers have been reverting to single-driver configurations to work through the backlogged volumes.

While the backlog is expected to gradually clear through June, capacity is likely to remain constrained as the carrier base adjusts to a smaller and more compliance-sensitive driver pool.

Cost pressures and currency dynamics reinforce tighter conditions

Carrier economics are compounding the market’s supply-side constraints. Diesel prices have remained elevated, holding in the range of 28 to 29 pesos per liter. Despite government stimulus efforts, fuel continues to represent a primary source of pressure on carrier operating costs.

At the same time, currency effects are further compressing margins. The Mexican peso has remained strong, trading near 17.3 to the U.S. dollar compared to approximately 19.2 a year ago. For carriers pricing in U.S. dollars, this nearly 9% appreciation reduces effective revenue when converted back to pesos, directly impacting profitability.

These combined expense and currency dynamics are driving carriers to pursue rate increases, primarily to recover expenses rather than expand margins. When layered on top of enforcement-related supply reductions, the result is a market characterized by firmer pricing and limited capacity availability that is likely to persist through the summer months.

Trade growth continues, with shifting composition driving freight flows

Trade activity remains a relative bright spot. Mexican exports increased 32.6% year over year in April—the latest figures available. This marked the fastest pace since mid-2021, while imports rose 24.1%. Manufacturing exports led this expansion, increasing 34%.

Within manufacturing, the composition of exports continues to evolve. Non-automotive segments remain the primary growth driver, particularly electrical and electronic equipment, which rose 15.9% and extended a multi-month trend. These sectors, including computers and advanced electronics, are increasingly anchoring cross-border freight demand.

Automotive exports are showing signs of recovery, posting another consecutive month of growth with an 8.2% increase in April. Shipments to the United States rose 5.8%, while exports to other markets increased 22.5%. Production metrics also stabilized, with light vehicle output up modestly and overall vehicle exports increasing 4.7%, with the United States still accounting for the majority of demand.

On the import side, intermediate goods rose 29.8%, reinforcing the strength of production-oriented trade flows. These inputs, which are critical to export manufacturing, typically serve as a leading indicator for future outbound freight. The surge in intermediate goods suggests continued manufacturing activity that could translate into higher northbound export volumes in the coming months.

By contrast, capital goods imports increased only 1.3%, signaling continued caution in new investment and expansion of manufacturing capacity.

For freight markets, the implication is continued strength in northbound demand, led by electronics and advanced manufacturing, with automotive flows stabilizing relative to prior months. Strong intermediate goods volumes also support steady southbound demand, maintaining better balance across key corridors.

Investment trends support production, but signal limited near-term expansion

Foreign direct investment increased 10.4% year over year in the first quarter, with growth concentrated in sectors tied to export production. Automotive manufacturing investment rose 20.4%, while computing equipment and electronic components surged nearly 60%.

However, the composition of that investment is notable. New investment grew only modestly, while reinvested earnings accounted for the majority of inflows, increasing more than 30%. This pattern mirrors the prior year, where headline growth masked a reliance on reinvestment rather than new greenfield projects.

For freight, this suggests continued support for current production volumes, particularly in electronics and automotive sectors. However, the limited pace of new investment, combined with subdued capital goods imports, indicates that a broader expansion in manufacturing capacity has yet to materialize. As a result, any meaningful increase in freight demand driven by new facilities remains a longer-term prospect.

Trade policy developments introduce new variables

Mexico continues to take steps to reshape its trade environment. A recent decree introduced new tariffs ranging from 5% to 35% across a targeted set of industrial imports, including steel components, automotive parts, specialized polymers, clean energy equipment, and certain textiles.

These measures are primarily aimed at imports from countries that don’t have free trade agreements with Mexico, most notably China, while preserving duty-free access for inputs tied to export manufacturing. The intent is to protect domestic industry without disrupting Mexico’s role as a global manufacturing hub.

At the same time, a modernized trade agreement with the European Union was signed in May. Once ratified, it will expand market access for certain exports and support diversification beyond the United States. Over time, this could lead to shifts in trade flows and freight patterns, depending on how supply chains adapt to the new framework.

Mandatory enforcement of the Manifestación de Valor Electrónica (MVE) was extended from June 1st to July 31, 2026. While the extension gives importers additional preparation time, the message hasn't changed: the MVE remains a key compliance shift for every shipment into Mexico, and shippers who treat this window as preparation, not pause, will be the ones moving freight without disruption once enforcement begins. 

U.S.–Canada

Receivership and carrier exits continue to shape capacity

Carrier financial pressure remains a defining factor for the trucking market. Elevated operating costs, particularly fuel, as well as regulatory compliance, insurance, and maintenance continue to weigh disproportionately on small and mid-sized carriers. As a result, carriers reducing fleet size or going out of business continues. Trucking employment in Canada has also declined for multiple months in a row, indicating a gradual but measurable erosion in available drivers.

While these changes have not yet resulted in broad-based capacity constraints, they are steadily tightening the underlying base of trucking supply.

The more important implication is the reduced elasticity of the market. With fewer small carriers and a thinner driver pool, the system is becoming less able to absorb demand shocks or operational disruptions. This creates a more fragile equilibrium, where an incremental demand increase, seasonal surge, or external disruption can lead to faster and more pronounced tightening than in prior market cycles. As a result, capacity conditions may appear stable on the surface but are increasingly sensitive to change.

Cross-border demand returns to seasonal norms

Following the freight acceleration tied to Memorial Day shipping and the temporary tightening associated with Roadcheck Week, cross-border freight activity between the United States and Canada has moderated. Volumes have eased back toward typical seasonal patterns, rather than continuing on a sustained upward trajectory.

This normalization reflects a lack of strong underlying demand growth in cross-border lanes, particularly as broader industrial and manufacturing signals remain mixed. June is following a similar trend, with relatively muted activity and limited signs of incremental volume buildup.

While this softer demand environment is helping prevent immediate capacity tightening in cross-border markets, it does not fully offset the structural constraints developing on the supply side. Instead, it reinforces a more balanced but still vulnerable market, where conditions can shift quickly if demand strengthens or disruptions emerge in key corridors.

For insights on the negotiations over the U.S.-Mexico-Canada Agreement, see the Trade Policy & Customs section of this report.

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