Redwood MX Update: September, 2024

This Month: Celebrating the Benefits of US-Mexico Trade

Welcome to Redwood’s Mexico Market Update for September 2024! Each month, we use this report to look back at important news and trends from the previous month. From key data and cross-border transportation news to new investments in Mexico, the goal of this monthly report is to keep you informed.  

As we conclude Hispanic Heritage Month in the US, it’s a fitting time to celebrate our 150 bilingual associates at Redwood Mexico — and also to celebrate the benefits of cross-border trade between the US and Mexico. As we mentioned in our last Mexico Market Update, Mexico-US trade totaled USD $415.4 billion from January through June 2024 — the highest total ever recorded for this six-month timeframe. That’s certainly worth celebrating! 

In economic news, the Mexican peso continues to weaken, losing another 3.1% against the US dollar in September — driven by the dollar’s growing strength and geopolitical uncertainty overseas. The MXN/USD foreign exchange rate averaged MXN 19.62 last month.

Fuel prices in Mexico have climbed slightly, to MXN $96.28 per gallon, or USD $4.99 per gallon. This is significantly higher than the national average price of diesel in the US, which is USD $3.58 per gallon as we write this.  

What do these economic trends mean for your business? The weakening peso clearly favors Mexico Exporters and is spurring investment (keep reading for more details). High fuel prices, however, mean that companies investing in near-shoring in Mexico need to operate with strategy and accuracy — optimizing routes, consolidating loads, and taking other measures to minimize road miles and fuel usage.  

While near-shoring opportunities are growing, unfortunately so are crime rates. Cargo theft increased 35% from August 2023 to August 2024, and it’s expected to continue growing. The days most prone to theft in September were Tuesdays and Thursdays, accounting for 31% and 26% of weekly crimes, respectively. Most robberies occur at night, totaling 52%. The states with the most thefts in September were Puebla, State of Mexico, and Hidalgo, where 48% of the stolen cargo consisted of food. The security of our customers’ drivers and cargo are of utmost importance to Redwood. We routinely work with customers to minimize their risks in light of rising theft rates.  

Transportation News and Challenges 

Free Trade Zone #62 Ranked Third in the Nation 
FTZ #62 is one of the largest Free Trade Zones (FTZs) in the US, and the largest in Texas. In September, the Port of Brownsville saw FTZ #62 ranked 3rd in the nation, with $7 billion dollars of exports. This is now a 12-year consecutive streak for FTZ #62. And, for the first time, FTZ #62 also joined the Top 20 list for the value of its exports. It ranked 14th in the nation, with more than $3.2 billion of products imported.  

Port Laredo Remains Main US Border Port 
In the first six months of 2024, the Port of Laredo increased its commercial exchange by 5.07%, compared to the same cycle in 2023. The exchange was $194.47 billion (mdd). Imports to the US from Mexico accounted for most of the commercial exchange, at $119.97 billion. This volume of exchanges makes Port Laredo the main border port in the United States — accounting for 6.2% of total trade in the US, and second only to Los Angeles in overall volume. 

Container Movement Exceeds 6 Million TEUs for 2024 
As the holiday season quickly approaches, US-Mexico border ports have already seen a significant increase in container movement for 2024, as measured by the number of twenty-foot equivalent units (TEUs). In Mexican ports, the movement of containers reached more than 6 million TEUs between January and August. This is an increase of 14.8% compared to last year.  

Longshoremen’s Strike in the US Is Quickly Resolved 
October 1 marked the start of a labor strike by the International Longshoremen Association (ILA) that threatened to paralyze major ports on the East Coast of the United States and extend to the Gulf of Mexico. While the strike was quickly resolved, it brought attention to the negative impact of disruptions, which can significantly disrupt the fluidity of trade between Mexico and the United States — generating delays, additional costs, and pressure on port infrastructure.  

Investment Trends 

Foreign investments in Mexico continue to grow, as more companies recognize the benefits of near-shoring and cross-border trade. The newest investments are described below. 

Inventec Electronic, an electronic products manufacturer in Taiwan, will invest USD $350 million in Chihuahua to build a new plant. US automaker Ford will invest more than $273 million in Guanajuato for its newest plant. Rivulus — an Israeli irrigation systems manufacturer — is investing $190 million in Baja, California, for a new plant. WEG is planning to invest more than $60 million in Hidalgo for a new plant to manufacture motors. Chinese industrial automation manufacturer Intretech will invest $60 million in Nuevo León to build a new plant.  

Planning to build your own facility in Mexico? Or simply looking to move products across the border faster, more cost-effectively, and more securely? Redwood is your partner in logistics optimization. Explore Redwood’s cross-border and international capabilities, or schedule a one-on-one meeting to discuss your unique situation.