Why This Town Is at the Center of a China-to-Mexico Manufacturing Shift
China-to-Mexico Manufacturing Shift These trucks stretching to the horizon are only a fraction of the 5.5 million that
entered Laredo, Texas, in 2022. It’s one sign of a broader shift in the global economy as hundreds of companies around the world
move their manufacturing from China to here in Mexico, and as a border town,
That makes Laredo the hub at the centre of
China-to-Mexico Manufacturing Shift
that’s changing global markets. If you are manufacturing in Mexico, you can get that product to the US consumer in
under 24 hours in a truck. If you are manufacturing in Asia, it’s going to take you two to six weeks.Amid an explosion of trade between Mexico and the
rest of North America, here’s a look at why
Laredo
is primed to become one of the world’s most important
land ports and their role in transforming global supply chains. On this bridge dividing
from Mexico, trucks often wait hours for a chance to cross into Laredo. In 2022, more than $800
Millions of dollars’ worth of products, from auto parts to carpets to avocados, passed through the city each day, according to
US Census data: The total trade between
Mexico and the United States, 40% of which crosses
through the port of Laredo.Daniel Covarrubias has spent years studying Laredo’s role in international trade at Texas A&M International University. – If you see it on a map
Laredo is situated between the United States and the
biggest market in the world, and Mexico is the
biggest producing markets in the world, well, it’s
right in the middle of it. -Laredo is uniquely positioned to handle all this trade, as more and more companies
reduce their dependence on Chinese factories and
shift production to Mexico. It’s part of a larger
the strategy called nearshoring.
globalization to regionalization. Economists and executives
say soaring
shipping rates, a trade war between China and the US, and geopolitical uncertainty
caused by Russia’s invasion of Ukraine helped fuel
the nearshoring trend. Plus, Mexico’s free trade
Deals mean companies that make their products
Mexico can ship them duty-free to the rest of North America. – You’re seeing Chinese companies.
to get out of the tariffs and post on them, well, they
can
come and take advantage of the US-Mexico-Canada trade agreement if they manufacture in Mexico. – In 2022, goods will be traded between the US and Mexico.
reached almost $780 billion, an increase of nearly 18%.
from the previous year While Laredo isn’t the only
A US border town capitalising on the expansion of nearshoring is receiving the most activity. In October 2022, about $27 billion
worth of freight moved through Laredo alone. That month, it overtook the trade volume from each of the ocean ports of Los Angeles and Long Beach. Executives say part of Laredo’s
appeal is its location. The city is the closest US land port to some of Mexico’s largest
manufacturing centres, like the Nuevo Leon region, which includes the massive
industrial city of Monterrey.
From loading up on a truck in Monterrey, you have a two and a half hour drive north from Monterrey until you
hit the Laredo border. -Tom Simmons
is the vice president of Majestic Realty, a privately owned industrial
real estate developer. Over the last 10 years, Majestic has invested in warehouses.
properties across Laredo. That product will get unpacked.
in a Laredo warehouse like
we’re sitting in right now. Will get repacked into
outbound trucks and tractors and will get distributed.
throughout the United States, and you’ll have all of the roadway networks that
will spread east and west. -The expansion
Trade in Laredo is fueled by the surge of foreign direct investment in Mexico over the last two decades. Mattel
expanded its Monterrey plant into its largest manufacturing
facility worldwide. LEGO also operates its
largest factory in Nuevo Leon with plans to expand, and
Tesla recently announced plans to build out a massive gigafactory.
in the Monterrey region. And those are just a
small sample of companies relocating their operations. The Mexican government said
More than 400 companies have shown interest in moving production from Asia.
to Mexico. That translates into a surge of products funnelled into
logistics hubs like Laredo. If you take a 35-mile radius and place it here on this
cross-border region of Laredo and Nuevo Laredo, you’re
will find upwards of 500 US custom brokers and
Mexican customs broker firms You’re going to find more than
500 transportation companies and more than 350 logistics companiesThat
concentration
of logistics companies means trucks,
(truck rumbling) and lots of them. – More than 15,000 trucks cross daily by the port of Laredo, and this is between two
bridges: the World Trade Bridge and the Colombia Bridge. -The number of trucks passing through Laredo has seen a steady increase over the last 10 years. To keep up, large infrastructure
build-outs are
underway. The city has already committed to expanding the World Trade Centre.
Bridge from eight lanes to 16, and the rail company,
Canadian Pacific Kansas City broke ground on a project.
More trade is passing through.
Laredo also means greater demand for warehouse space. In this warehouse, thousands of auto parts
are transported in
and out by truck each day. Just one lot over, trucks flatten the ground to make room for even more facilities. – We’re adjusting to the supply and demand imbalance right now with the simple answer of just build. -This site is just one example of the more than 3.8 million square feet of warehouse space under
construction in
