Nearshoring to Mexico is the hottest trend in supply chains.

With Mexico now the top trading partner of the U.S., two-way trade hit a whopping $68.5 billion, according to data from the Census Bureau. In the first quarter of 2024 alone, trade has grown two percent between the U.S. and Mexico year-over-year (YoY).

This growth in shipping to and from Mexico is truly just the tip of the iceberg as companies invest in nearshoring strategies. According to Mexico’s Secretary of the Economy, there have been 378 foreign direct investments within the last year, and private sector businesses from the U.S. account for nearly 40 percent of it.

This surge is driven by companies moving parts or all their supply chains to Mexico, thanks to geopolitical tensions and disruptions like the COVID-19 pandemic. These have shone light on the gaps and difficulties faced by globally distributed supply chains. Companies seek more stability and budget-friendly solutions, finding hope in Mexico. While nearshoring to Mexico offers such benefits, there are common cross border shipping snags you should aim to avoid. 

What are the Benefits of Nearshoring to Mexico?

Location, Location, Location!

One of the largest benefits of nearshoring to Mexico is its location. Mexico’s proximity to the U.S. means faster shipping times and lower costs. It also offers more reliability, making supply chains less susceptible to disruptions.

Potential for Savings

Labor costs in Mexico are currently among the lowest in North America, even cheaper than in China. This can be a major draw for companies looking to reduce operational expenses. Shorter lead times also offer the potential for enhanced productivity and further cost savings.

Positive Economic Impact

Cutting costs and sped-up deliveries mean smoother operations, happier customers, and a boost in productivity. This isn’t just good for your business but beneficial for the Mexican economy, too. Businesses established in Mexico create new jobs and economic growth. The U.S. benefits, too, with stronger, more resilient supply chains that are less vulnerable to global disruptions.

But There Can Be Cross Border Shipping Snags

Many business owners don’t realize the complexities that come with shipping across the U.S.- Mexico border. Working with the right provider can make all the difference in whether you’ll face these common challenges.

Here are four major cross border shipping challenges you should be aware of with your nearshoring strategy.

Security Concerns

Cargo theft is a major concern in Mexico, with hijackings being the primary tactic. In April 2024, Mexico averaged about five cargo thefts per day, according to the National Association of Vehicle Tracking and Protection Companies. Unfortunately, that’s trending up compared to the previous year, that’s a 7.7 percent rise in activity. Most hijackings involve some type of violence and often involve food and beverage goods, household items, electronics, and auto parts.

Another security obstacle is Mexico’s poor highway infrastructure. The quality of Mexico’s roadways is significantly lower than in the U.S. According to the 2019 Global Competitiveness Report, Mexico ranks 49^th out of 141 economies in its road quality. In comparison, the U.S. ranks 17^th.  Mexico’s lacking infrastructure increases the potential risk of delays and accidents, as well as cargo theft with any truck breakdowns.

Despite all this, Mexican carriers are not required by law to carry cargo insurance. Many choose to opt out of having it and this often results in inadequate coverage of freight. Because of this, it’s recommended to look into securing your own extra coverage and aim to work with carriers that are certified with the Customs Trade Partnership Against Terrorism (CTPAT).   

Lost in Translation?

When working with those in other countries, it’s important to know how they operate. This includes Mexico. Understanding the language and business culture is essential to achieving success.

This fact may be well-known, but not everyone in Mexico speaks English! Spanish is the official language, spoken by about 90 percent of its people. According to a 2023 report, only five percent of Mexicans speak English. While larger businesses may have more bilingual employees on hand, dealing with smaller ones can be challenging if you do not have someone who speaks Spanish. Also, much technical or industry-specific jargon doesn’t often translate accurately. Without bilingual representatives available, it can be easy to have miscommunication issues.

Unlike the U.S., where we often like to get straight to business, Mexicans often prioritize building personal relationships before even discussing any professional matters. Due to this, negotiations can often be more indirect. Working with Mexican businesses means you’ll need to invest time in building strong relationships to foster trust and rapport with your contacts.

Facing Cross Border Complexities

Getting your freight across the U.S.–Mexico border can be complex. Many parties are involved, including several carriers and the customs broker. There are also several touchpoints during the shipping process, and disruption can happen at any of them.

Another hurdle shippers must deal with in cross border shipping is the lengthy transit time. Due to inspections, typical wait times for trucks crossing the border, especially from Mexico to the U.S., can range anywhere from three to 10 hours on certain days. Choosing the right crossing point can greatly affect the transit time vastly, and there are 48 points to consider!

Paperwork Troubles

Freight most often gets detained at the border for incomplete documentation.

Shippers are required to fill out many, often repetitive documents. It’s common for this paperwork to get misplaced or for shippers to not even be aware of the exact procedures required by authorities. When any of this important paperwork is left blank or filled out incorrectly, the carrier gets detained at the border until it is resolved. This can add extra days or costs to your shipment.

Ensure all necessary documents are in order, including:

• Commercial invoice (in Spanish)
• Bill of lading
• USMCA certificate of origin (if needed)
• Packing list
• Sales contract
• Proforma commercial invoice
• AES filing
• Customs declaration
• Insurance policy

Having these documents in both Spanish and English can prevent delays and misunderstandings.

Trinity Logistics: The Perfect Partner for Your Nearshoring Strategy

Navigating the complexities of shipping to and from Mexico can be overwhelming! One simple mistake is all it takes to cause delays and additional costs. That’s where finding a reliable logistics provider comes in.

Sure, perhaps you can do it all on your own, but trust us, it’s easier with help. You can outright avoid these four common mistakes when shipping to and from Mexico when you’ve chosen to work with a reputable logistics provider like Trinity Logistics.

We’ve been navigating the waters of cross border shipping for over 45 years, so we understand all the nuances. Our bilingual Team Members and Authorized Agents (some even based in Mexico) get the business culture and fluently speak the language, so there won’t be any miscommunication concerns. Not to mention, our People-Centric service always puts relationships first, regardless of nationality.

We’re customs process experts and have trusted carrier relationships ready to roll. Whether it’s Laredo, El Paso, San Diego, or another major U.S.-Mexico border, we have a variety of transportation modes available.

If nearshoring is part of your supply chain strategy but you’re concerned about shipping to and from Mexico, worry no longer. Instead, consider Trinity Logistics as your cross border copilot. We’ll handle the logistics so you can meet your business goals.

How do we get supply chains back on track after years of constant disruption and setbacks? The supply chain backlogs came largely from the shock at the start of the pandemic, but even before then, there have been many supply chain vulnerabilities.

Supply Chain Resiliency: Alleviating Backlogs and Strengthening Long-Term Security

Recently, Congress met to discuss our national and global supply chains, current supply chain issues that we need to focus on now, and how to build supply chain resiliency for the long term. Congress invited individuals and organizations to come to testify, to present their views for inclusion on the topic. U.S. Senator for Delaware, Tom Carper, asked Doug Potvin, Chief Financial Officer (CFO) of Trinity Logistics to testify.

With 16 years of service at Trinity and over 30 years of industry experience, Doug sees first-hand the problems plaguing supply chains. Doug’s testimony gave the Members of this panel valuable insight into the continued problems in supply chains and how members of the Transportation Intermediary Association (TIA), like Trinity Logistics, continue to serve the nation amidst these difficult times.

Doug’s Testimony Before Congress

“ I want to introduce myself as the CFO, Chief Fun Officer at Trinity Logistics because we like to have fun when we’re working hard. Thank you for the opportunity to speak with you today regarding how policymakers and business leaders are addressing the existing backlogs in the supply chain in the short term and building more resilient supply chains in the long term. My name is Doug Potvin. I’m the CFO of Trinity, a third-party logistics company (3PL) headquartered in Seaford. I’m privileged, honored, and humbled here today representing Trinity, our association, Transportation Intermediary Association, and the entire third-party logistics industry that we serve.

We serve as an intermediary in solving the logistical needs of our shipper customers by sourcing capacity from motor carriers and vendor partners. We are proud to report today that this past year we’ve generated over 1 billion dollars in revenue, arranged over half a million shipments, and offered 350 individuals full and part-time jobs. We truly are a proud Delaware company.

From Charles Dickens, the novel, The Tale of Two Cities; It was the best of times, it was the worst of times. Season of light is the season of darkness, a spring of hope is a winter of despair. Over the last two years, the same could be said of the international supply chain and from our perspective, closer to home, the domestic transportation industry.

In March of 2020 as both domestic and international countries shut our businesses including the shutting of the port cities and operations in China and the fact most consumers were at home facing an uncertain future, freight volumes plummeted. Motor carrier capacity increased dramatically due to the steep drop in goods moving and the transportation market saw prices for motor carriers fall. In fact, Trinity Logistics was mentioned on a Facebook post that we were earning an average gross margin of 60 percent, which was simply wrong.

In addition, a small number of motor carriers came to Washington D.C. and demanded rate transparency. Interesting after the businesses, ports, and countries opened up freight volumes began to skyrocket, available motor carrier capacity tightened up, and rates paid to motor carriers increased due to reflecting the change in market conditions. Demand for rate transparency went silent.

The pricing in our industry is driven by market conditions, supply and demand. Large scale, no entity on either side of the equation has enough market share to drive rates. In addition, each shipment has its own variable considerations to take into account including everything from available to capacity in various regional markets, lead time for products, dwell time at shippers and consignees, commodities needing move, and type of equipment needed. All this happens in real-time to ensure goods get to market, keeping our economy moving forward.

Now more than ever, the role of third-party logistics professionals has become more valuable. Companies like Trinity and the other 28,000 licensed property brokers are working overtime to ensure that essential goods continue to be delivered in an efficient manner to meet our customer and consumer needs. Our industry along with motor carriers are the main component as the why during the crisis and disruption, the supply chain bent but never broke.

Trinity Logistics applauds the U.S. Senate and House of Representatives’ Bipartisan passage of the Infrastructure Investment and Job Act, a historic investment into transportation and infrastructure. We’re very pleased to see how quickly the Federal Motor Carrier Safety Administration (FMSCA) established the Safe Driver Apprenticeship Pilot Program. Trinity hopes this three-year pilot program will be successful and made permanent so individuals ages 18 to 20 will explore interstate transport careers. Trinity also believes that as the spending on the Investment Act ramps up in the near future it will provide enough support to the economy to keep the motor carriers employed as we are starting to see freight volumes pull back over the last 30 to 60 days.

Trinity would also like to thank Chairman Carper, John Cornyn, Senator Menendez, and Senator Tim Scott for the support in offering legislation and getting the Senate to act unanimously in passing the Custom Trade Partnership Against Terrorism Act (CTPAT).

Currently, the vaccine mandate for truck drivers coming to the country to deliver freight from Canada and Mexico continues, these professional drivers spend most of their professional time alone in the truck cab, presenting a zero percent risk of spreading Covid-19. This should be lifted immediately to open up capacity and shorten the amount of time it takes to move goods across borders.

Another issue that greatly impacts not only the efficient movement of goods, but highway safety, is the lack of a federal motor carrier safety selection standard. Currently, because of broken safety rating systems from the FMCSA, almost 90 percent of trucking companies are considered unrated. There are no requirements in place before selecting a trucking company, that drastically impacts the overall safety of our nation’s highways. The latest report from the national highway traffic safety administration noted that the number of accidents involving commercial motor vehicles increased 13 percent in 2021. The status quo is not working, and highway safety needs to be improved. Trinity Logistics and our trade association, TIA, fully support legislation to create a motor carrier safety selection and mend the safety rating process.

The U.S. trucking spot market conditions have reflected towards weaker and more normal conditions, though we still will see what the future holds and how that trend continues. Hopefully as a result of this meeting and coordinated actions taken by the United States, our trading partners, manufacturers, supply chain vendors, our nations become resilient when facing similar conditions and uncertainty.”

Trinity Logistics would like to thank Chairman Tom Carper and the TIA for inviting Doug to testify before the Committee. He is a very valuable leader in the industry and Trinity Logistics appreciates all he does for our company, our industry, and our nation.

If you would like to watch the full hearing:

https://www.finance.senate.gov/hearings/supply-chain-resiliency-alleviating-backlogs-and-strengthening-long-term-security