Much cited as the beneficiary of near-sourcing, Mexico is struggling with congestion along its border with the US. Growing NAFTA trade is exacerbating this problem. The latest data highlights this issue as US NAFTA trade with Mexico picked up in July with total value of goods traded increasing 7.9% to $43bn.
Trucking remains the dominant mode of transport, comprising over 65% of the total value. As a result of this, the border between the two countries remains problematic for transport providers and shippers.
In fact, a US Government Accountability Office report concluded that long lines at border entry points could deter economic trade. The report suggests infrastructure improvements and proper allocation of personnel are necessary to help reduce the congestion. Among its recommendations are:
An interesting pilot program getting set to begin is a public-private scheme that could address staffing allocation. According to the Journal of Commerce, the US Customs Border and Patrol is finalizing talks with five entities to allow some US-Mexico shippers to fund additional Customs and Border Protection staffing during busy times or for extended hours as part of a pilot project. These five entities are Dallas/ Fort Worth International Airport, the City of El Paso, South Texas Assets Consortium, Houston Airport System and Miami-Dade County, Florida.
How the pilot program will operate is unknown. Perhaps a modal shift is needed? However, Mexico’s infrastructure issues may be among the reasons why trucking is the overwhelming modal choice. One option though, may be intermodal. Kansas City Southern Railway has built a strong network linking the Mexican port of Lazaro Cardenas to logistics hubs within Mexico and ultimately to locations within central US. Combined with trucking, this intermodal solution could prove beneficial for shippers and perhaps reduce time at cross-border entry points.
Upgrades and expansions within Mexico’s infrastructure are needed in order for it to effectively compete for international manufacturing. In fact, Mexico’s infrastructure issues were addressed by the new Mexican government when it was announced in July a plan to invest $300bn over the next five years in new highways, rail lines, port and regional airport upgrades and to fund a plan to relieve congestion at the Mexico City International airport.
For additional information on NAFTA trade, please refer to our Trade: Imports and Trade: Exports charts on Ti’s Dashboard. Ti’s Dashboard is a unique service offering which provides over 80 charts and tables of the most important macro and industry specific indicators from around the world.