Redwood MX Update: August, 2024

This Month: Despite Volatility, Count on Redwood to Optimize Your Outcomes

Welcome to Redwood’s Mexico Market Update for August 2024! We publish this report at the beginning of every month to look back at what happened during the previous month. Keep reading to learn about key trends in Mexico, cross-border transportation news and challenges, and new investors in Mexico.  

While US fuel prices are falling, Mexican fuel costs continue to rise. Diesel fuel prices for August averaged MXN $102.32 per gallon, or USD $5.13 per gallon. The US average price for diesel in August was USD $3.70 per gallon. Redwood is actively helping its cross-border customers minimize fuel usage in the face of this disparity by optimizing routes, consolidating loads, and otherwise reducing highway miles. 

The MXN/USD foreign exchange rate averaged $19.64 in August. The peso continues to weaken, down nearly 12% since Mexico’s June 2 presidential election. Business leaders fear a constitutional shakeup in the last days of Andrés Manuel López Obrador’s presidency, potentially affecting the country’s trade agreements. While the current exchange rate favors US-based Mexican exporters, Redwood Mexico’s more than 150 experts are continuing to watch this situation carefully — and position our customers for positive outcomes. 

Security is another concern that Redwood Mexico continues to monitor for our cross-border customers. Cargo theft increased 19% from July 2023 to July 2024, and unfortunately it’s expected to keep growing. The days most prone to theft were Tuesdays and Thursdays, which showed 25% and 24% growth, respectively. Most burglaries incidents occur during the morning, accounting for 79% of all incidents. Mexican states with the most robberies were Puebla, EdoMex, and Queretaro — where 45% of stolen cargo was groceries. See more on the topic of cargo theft below. 

Transportation News and Challenges 

US-Mexico Trade Hits Record $415B for First Half of 2024 
Mexico´s trade with the United States totaled USD $415.4 billion from January through June 2024 — the highest total ever recorded for this six-month timeframe. For the month of June, Mexico´s trade with America totaled USD $69.96 billion, a 2.1% increase from June 2023. June marked the sixth consecutive month and the 16th time in the past 17 months that Mexico has been ranked #1 in trade with the US. This is exciting news for Redwood’s many cross-border customers who are part of this international success story!  

New Border Lanes Support Speed Improvements 
US Customs and Border Protection officers can now inspect more inbound trucks from Mexico at a border crossing into Pharr. This project adds two inbound trucking lanes and two inspection booths. It’s expected to significantly boost commercial traffic speed at this Texas-Mexico border crossing. Each day, 2000 trucks pass over the Pharr Bridge, and that number is expected to increase with the new infrastructure. 

Cargo Theft Increases as Thieves Become Bolder 
According to Freightwaves, cargo theft is on the rise in both Mexico and the US as thieves discover how lucrative it can be. From January to June 2024, cargo thefts in the US increased by 49% year-over-year. There were 787 total incidents, and the average loss value was $115,230 — a stunning 83% higher than the average loss in the first half of 2023. During the same period, there were 5,140 cargo thefts in Mexico, for an average of about 57 a day. The publication notes that across North America, thieves are becoming more aggressive and bolder — and in Mexico, more violent. In fact, 84% of thefts in Mexico are violent, perhaps due to a difference in legal penalties. Redwood Mexico works closely with its customers to safeguard both drivers and cargo in these concerning conditions. 

Mexico's Exports Grow 14.7% in July  
The National Institute of Statistics and Geography (Inegi) announced that July 2024 Mexican exports grew to USD $52.3 M, reflecting an annual growth rate of 14.7%, compared to July 2023. The organization reported that exports to the United States increased by 18% on an annualized basis. 

Investment Trends  

Foreign companies continue to invest in Mexico as they witness other businesses achieving impressive results from cross-border trade. Here are some of the newest investments. 

Swedish carmaker Volvo will invest USD $700 million to build a new plant in Nuevo Leon. American company Gulfstream will build a new plant in Mexicali, at an investment of $370 million, to support the manufacture of its executive jets. German appliance manufacturer Bosch has announced plans to invest $260 million in a new production facility in Nuevo Leon. Sinoboom — a Chinese manufacturer of elevating platforms — will spend $150 million on a new plant in Guanajuato. And US-based Harman will invest $115 million to build a new plant in Queretaro that supports audio electronics production.  

Whether you’re building a Mexican facility or moving products across the border, Redwood is uniquely qualified to help maximize your financial results. Learn more about our cross-border and international capabilities, or schedule a one-on-one meeting with Redwood today.