What to expect in US-MX trade for the rest of 2023?

In today's fast-paced and ever-evolving business landscape, the logistics industry plays a crucial role in ensuring smooth operations and efficient supply chains. As we look towards 2023 and beyond, it becomes important to stay ahead of the curve by keeping up with the latest trends and innovations shaping the cross-border logistics operation. One of the most important trends that we have seen is the rise of US-MX trade in 2023. Figures for Q1 2023 showed that total trade between the two countries (a combined total of imports and exports) was US $196.7 billion, an 8% increase over the same period in 2022. This is just the tip of the iceberg, so let’s explore the emerging logistics trends in the automotive, appliances, and the packaging industry, and how these trends are revolutionizing the way trade between the US and Mexico.

The logistics landscape in the automotive, appliances, and packaging industry is undergoing a remarkable transformation, fueled by these emerging trends and innovations. 2023 has brought new and exciting trends to cross-border trade. From nearshoring to Artificial intelligence, the market is ripe for disruption and innovation. These are our top predictions for the rest of the year that we are sure will continue to positively impact the automotive, appliances, and packaging industries.

1. Reshoring and nearshoring for manufacturers

Reshoring and nearshoring have increased over the past decade, mostly due to ongoing tension between the US and China, significant increases in shipping costs from China, the effects of the pandemic on global supply chains, and sustainability concerns. According to a Thomas Survey in April 2020, 64% of North American manufacturers interviewed said they were likely to bring manufacturing production back to the Americas. The impact of these circumstances has led manufacturers to hone in on their strategy. Many companies have relocated from Asia to Mexico or the US to lower transit times and reduce risk around potential challenges. There are various structural advantages to US-Mexico trade, such as proximity, same time zone, similarity of work cultures, and geopolitical advantages. Proximity allows goods to be transported over the road at competitive prices. US shippers that need to bring cargo from China quickly have to pay for air freight, which is expensive. Otherwise, they would have to move cargo via the ocean, which takes 20 to 30 days. Given the benefits of bringing manufacturing closer to home, this trend is expected to continue.

2. AI and Automation

Technology and automation in logistics operations have become very important to address pain points in the industry and manage shipments at lower costs and in a timely manner. According to the McKinsey Global Institute, the transportation and warehousing industry has the third-highest automation potential of any sector. AI, machine learning, computer vision, connected IoT networks, and blockchain can all be applied to simplify logistics operations, make them more efficient, and optimize resources. For that, the rise of automation is expected to keep trending in 2023.

3. President Biden’s supply chain resilience plan

This resilience plan was created to mitigate supply chain risk within four strategic sectors: 

• Semiconductor manufacturing and advanced packaging.
• High-capacity batteries
• Critical minerals and rare earth elements
• Pharmaceuticals and active pharmaceutical ingredients

Having the government actively involved in identifying and mitigating supply chain risks, and showing nearshoring as a direct solution, shows that it may have started as a trend, but it quickly has gained momentum, making it more and more important to consider nearshoring as a relevant next step for your companies strategy. 

4. Automotive industry is on the rise

Mexico is beginning to flex its exporting muscles again, specifically in the automotive industry, with a 20.4% increase year to year from June 2022 to June 2023. Even with the changes in labor costs due to new laws being accepted by the Mexican government, the increase in exports shows us that it is still a better situation than shipping overseas. 

By staying abreast of the latest developments and actively embracing these changes, companies operating within the automotive, appliances, and packaging industries can position themselves as leaders and gain a competitive edge. 

Definitely, reshoring and nearshoring, AI and automation, President Biden’s supply chain resilience plan, and the Automotive industry being on the rise are boosting the trade between the US and Mexico, and applying them successfully is something that will definitely help your supply chain and make your cross-border operations go smoothly. Feel free to share your thoughts, experiences, or any additional trends you believe are shaping the logistics landscape. If you want to benefit from these trends and apply them to your company, fill out the form and a Nuvo expert will reach out.

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