How Nearshoring is Creating Waves in Transportation and Mexico Cross-Border Services

If there’s one thing that the past few years brought home to manufacturers, retailers and other critical industries, it’s that the supply chain for inventory, manufacturing and product transportation handled in the U.S. and around the world needs to shift. Many are changing their business practices to create more efficient, resilient production and supply chains through nearshoring – which at its simplest means bringing production much closer to home. With more than three decades of experience already under its tires, Landstar was ahead of the curve, by actively “shoring up” its ability to meet North America’s rapidly growing need for cross-border services.

Nearshoring is almost, but not quite, the opposite of offshoring. Offshoring is the practice of moving manufacturing and production facilities to another country, usually quite far from the goods’ final destination. This has been the way businesses have managed their production and supply chains for decades. But that’s rapidly changing. Nearshoring promises the ability to minimize the effects of supply chain disruptions, reduce the distance goods have to travel from manufacture to market, and make the entire process easier to oversee and control.

It’s not the same as re-shoring, either. Re-shoring is where companies bring their manufacturing completely back to their home country. While nearshoring is more of a Mister-Rogers-Won't-You-Be-My-Neighbor model, where businesses bring their production to a nearby country, where they can still maintain lower production costs and remove many of the issues that come with having manufacturing thousands of miles away.

According to a recent article in Transport Topics, reduction in transportation time and costs may be among the most significant benefits of nearshoring. Goods travel shorter distances, and most often trucks instead of cargo ships transport goods, exponentially decreasing time between manufacture and delivery. 

“The nearshoring trend is a positive for the Landstar network centered on doing business between the U.S. and Mexico,” says Landstar Transportation Logistics Executive Vice President of Operations Eric Meyer.

The Pandemic Effect

The challenges of doing business through the pandemic affected us all – including manufacturing and transportation. Sickness and shutdowns sent shockwaves through both industries’ ability to deliver goods. This doubled and sometimes tripled (or more) usual delivery times, while magnifying port congestion and inland transportation issues. It was a tough lesson for companies used to the status quo of keeping the manufacturing and delivery of goods streamlined and just-in-time to go to market.

“The world learned the hard way that when you face a pandemic and the supply chain is disrupted, and your goods are several thousands of miles away, you can’t meet consumer demand once inventory is exhausted,” says Steve Wisnieski, Landstar vice president of Mexico operations. “As manufacturing facilities had compounding issues with production, and no stockpiles of goods in their warehouses, the COVID situation almost put many companies – including major players – out of business. They are telling us they never want to be caught in a situation like that again.”

The Landstar Advantage

Landstar currently operates one of the largest transloading facilities on the U.S.- Mexico border. Strategically situated on I-35 between Texas’ large logistics and manufacturing centers, and Mexico’s industrial powerhouses, Landstar’s state-of-the-art
facility has been busy and growing since it opened in 2017. Landstar’s presence as a provider of Mexico cross-border services goes back to 1999.

“Landstar already has in place the infrastructure, expertise and personnel to move freight from the U.S.
to Mexico and Mexico to the U.S. quickly and efficiently,” Wisnieski says.

Particularly since the pandemic, according to the U.S. Department of Commerce, Port Laredo is a crucial part of the growth in nearshoring, managing more trade in valuation than all other land ports from Brownsville, Texas, to the state of Arizona combined, doing tens of billions of dollars more than the Port of Houston.

More positive numbers: According to Port Laredo, the total transportation market in Mexico is $84 billion, with nearly 64% of that being truck mode. “The volume resulting from the growth in nearshoring may be a new trend for some, but Landstar has been more than ready for it,” Wisnieski explains. “Capacity, location, a state-of-the-art facility, a team with years of experience and well-developed processes makes our customers comfortable in expanding their transportation services past the border, as the practice of nearshoring booms. Now’s the time.” 

What’s the Catch?

There is some expertise needed to make cross-border business successful. That’s especially true for heavy/specialized loads which require access to oversized cranes necessary for oversized freight and mitigating the risk of possible freight damage. (Every time a shipment transfers from one location to another, there is some chance of cargo damage, but professionals like those at Landstar’s Laredo facility have experience and processes in place to minimize risk).

There’s also the not-so-insignificant issue of who takes freight over the border. Current regulations state Mexican carriers can drive into the U.S., but that’s not reciprocal. “Unfortunately, you can’t just drive into Mexico with a truckload of something,” Wisnieski noted. “You have to give it to a Mexican carrier at the border to take it the rest of the way.”

Last but not least, there’s an abundance of international rules, regulations and paperwork to contend with – which is no small matter. It’s also another part of the process the team at Landstar is more than capable of handling. “When goods are ready to go across the border, Landstar’s team of experts are working behind the scenes to make sure every i is dotted and every t is crossed, so agents and owner-operators can put their energy into growing their business, not dealing with the complexities of international paperwork,” Wisnieski says.

The Good News

Wisnieski says Port Laredo and other industry contacts agree that nearshoring is expected to provide tremendous growth in the Mexican manufacturing market and transportation industry, prompted by a variety of forces, but mainly energized by the hard lessons of the pandemic and the wave of companies nearshoring there. 

Wisnieski points to a January 2023 article in The New York Times, “Laredo is predicted to become the Port of Long Beach of the future.”  All in all, there will be a lot more freight that’s going to need to be moved.

In fact, both the Mexican and U.S. governments are moving toward new infrastructure to facilitate trade. U.S. federal funding is in the process of being secured to build another bridge from Laredo to Mexico.

It seems, at least for some time to come, it’s a “shore thing” many manufacturers will be running south to the border.

The Landstar U.S./Mexico Logistics Service Center