A pretty staggering statistic don’t you think. Here are some more courtesy of the Woodrow Wilson international Center for scholars report – “Economic Ties Between the United States and Mexico.”
- 6 million US jobs depend on trade with Mexico.
- Mexico is the seventh largest car manufacturer in the world and the second largest exporter to the United States.
- On average, auto parts built in North America will cross the U.S. border eight times, traveling into Mexico and Canada – and back again – before a car leaves the assembly line.
Mexico – A Manufacturing Powerhouse
Mexico’s evolution into a manufacturing powerhouse results from two key factors. Nearshoring by global manufacturers and Mexican president Peña Nieto’s vision for a complete transformation of Mexico’s infrastructure.
In recent years China has lost its competitive edge as a location for cheap outsourced manufacturing. Rising labor costs, on average 15% to 20% a year, have priced the Chinese manufacturers out of the market.
Mexico has become a more attractive solution with its direct access to the North American market and added benefit of a much shorter supply chain. Mexico can reach US customers in one week or less compared to 20 to 30 days from Asia.
The Mexican government’s investment in education programs has produced high quality and skilled labor whose costs remain relatively stable. Manufacturers have invested in lean manufacturing principles and automation resulting in higher productivity. A short supply chain means transport costs are down, speed to market is increased and inventory costs are reduced.
For their part the government has enacted 12 free trade agreements with 44 countries, and in July 2013 they announced a massive National Infrastructure Program that allocates $42 billion for transportation investment, including railway infrastructure, airport projects and the expansion of the port of Veracruz.
In combination these factors represent perfect conditions for manufacturing. Speaking from a panel at the last 3PL Summit held in Chicago in June 2015, XPO Logistics CEO and Chairman Brad Jacobs simply stated “Mexico is on fire right now, with nearshoring there a very real phenomenon.”
Rail Is the Way to Go
Traditionally one of the biggest problems of US-Mexico trade has been customs delays at the border causing massive congestion. This is not an issue when shipping by rail. According to Jim Commiskey, vice president, automotive and Mexico at Dublin, Ohio-based Pacer International, a northbound Ferromex train operator would simply hand over the controls to their BNSF counterpart at the border and off it would go.
This is possible because customs import and export paperwork is pre-filed with US and Mexican customs authorities before freight is loaded. Final customs clearance in the US would be at an inland port, and not the border. Hence no delays or congestion!
New Mexico Transloading as a Rail Freight Terminal and Distribution Hub
New Mexico Transloading (NMT) is perfectly situated to take full advantage of this US – Mexico cross-border trade on behalf of shippers. The NMT railyard is connected to the main north-south BNSF railroad providing direct access to Mexico. NMT can transload goods from truck to rail or rail to truck for import/export to Mexico. Customs clearance can also be obtained.
If you have never considered shipping by rail into or out of Mexico now is the time. Call Ted Keener at (505) 908 – 1911 and he will provide you with all the information you need to benefit from the average 20% cost savings from shipping by rail.