Redwood MX Update: June, 2024

This Month: Rising Costs, Theft Rates Balanced by Growing Investments

Welcome to our new monthly blog, the Mexico Market Update! As a leader in cross-border logistics, Redwood knows many of our customers are heavily invested in Mexico — and they need to stay on top of key developments. Published at the beginning of every month, this report will look at key trends in Mexico, transportation news and challenges, and new investors in the market. 

As we kick off the second half of the year, Mexican fuel prices average MXN 24.72 per liter, or USD $5.13 per gallon. This is high compared to the national average price of diesel in the US, which was USD $3.84 per gallon as of last week. Redwood Mexico is actively working with its cross-border customers, as always, to optimize loads, capacities and routes to maximize fuel efficiency in the face of these rising costs. 

As we write this, the foreign exchange rate stands at $18.18 MXN/USD. Despite signs of economic resilience, political uncertainty continues to weaken the Mexican peso.  This is good news for Mexican exporters as their products will gain competitiveness and their net Peso incomes from these exports will increase.  A weakened Peso will also come as a relief to most Mexican truckers as prices are typically negotiated in US Dollars. 

In security news, overall cargo theft increased by 35% from May 2023 to May 2024 — and, unfortunately, theft is expected to keep growing. The days of the week most prone to theft are Tuesdays and Thursdays, which show increases of 26% and 25%, respectively. Most incidents occur during the night, representing 64% of all thefts.  The Mexican states with the most robberies are Puebla, Mexico State and Guanajuato — where 50% of stolen cargo is groceries. Redwood Mexico continues to watch these trends to help our customers minimize the risk of theft, protecting both inventory and drivers. 

Transportation News and Challenges 

US Restricts Certain Produce Imports 

Rising crime has led the United States to suspend imports of Mexican mangoes and avocadoes. On June 15, imports were restricted from Michoacan, following attacks on two US health inspectors in that state, resulting in financial losses exceeding $80 million USD.  

Sheinbaum Announces Infrastructure Improvements 

In more positive news, Claudia Sheinbaum, Mexico’s President-elect, has announced new investments in constructing and remodeling roads, aimed at enhancing merchandise transportation. This investment amounts to approximately $2 billion USD and will focus on the construction or renovation of the following roads: Baja California–Baja California Sur, Sinaloa–Chihuahua, Sonora–Chihuahua, San Luis Potosi–Coahuila, Hidalgo–San Luis Potosi, Estado de Mexico–Guerrero, Morelos–Puebla–Guerrero, Puebla–Amozoc, Oaxaca–Guerrero, Oaxaca-Tuxtepec, Tuxpan–Tantoyuca-Pánuco-Tampico, Veracruz–Tamaulipas, Tuxtla Gutierrez-Comalapa. Redwood will follow this construction closely and help customers capitalize on time and cost savings enabled by highway improvements.  

Eagle Pass Sees Rapid Growth 

The Port of Eagle Pass, Texas, has recently emerged as the fastest-growing border crossing in the US. It boasts the most rapid trade growth of any US-Mexico border crossing since the beginning of the year. Eagle Pass recorded more than $11.37 billion in trade from January through March 2024, a 22% year-over-year increase compared to the same period in 2023. Redwood Mexico is already helping customers exploit this growth and will continue to do so.  

New Carta Porte Document Released 

Mexico’s Tax Administration Service (SAT) has published version 3.1 of the Complemento Carta Porte (CCP), usually shortened to Carta Porte. This new version of the CCP — which is aimed at helping the Mexican government collect taxes accurately — includes updated filling instructions, FAQs and others information. The new version goes into effect on July 17.  Reach out to Redwood Mexico with any questions about the new requirements.

Investment Trends 

Foreign investments in Mexico continue to grow, according to MexicoNow. Doosan Bobcat, a Korean construction equipment manufacturer, will invest $300M USD in Monterrey for a new plant. US electric vehicle manufacturer Borgwarner will invest $48M USD in Coahuila for a new factory. ZF Foxconn Chassis Modules, an automotive supplier based in Taiwan, will invest $42.37M USD in Toluca for a new production facility. Schneider Electric, a technology company headquartered in France, will invest $29.4M USD in Nuevo Leon for a new plant. FengMei, a Chinese automotive technology company, will invest $15.6M USD in Aguascalientes for a new plant. As we post this, Google has just announced a new regional data center in Querétaro. This is Google’s first data center in Mexico, and its third in Latin America, the facility is expected to be operational by 2025.

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