Keeping Things Closer to Home
Damien Martin | BOSS Magazine
While some facilities in Mexico do transport goods by barge to Galveston, the vast majority move from Mexico by truck or train and nearshoring will provide relief to those ports of the West Coast that had weekslong logjams during the height of Covid-related shutdowns.
The move is one BlueGrace had been considering for years before the supply chain disruptions spurred by Covid made clear that nearshoring was the right move.
“We’re a service provider, and our customers were kind of driving us towards a solution, saying, ‘Hey, we’re going to take manufacturing out of Asia and put it into Mexico. How will you and can you support us?” Schara said. While some facilities in Mexico do transport goods by barge to Galveston, the vast majority move from Mexico by truck or train, and nearshoring will provide relief to those ports of the West Coast that had weeks long logjams during the height of Covid-related shutdowns. The increased volume in Laredo has led to long lines of trucks, which is why the city is expanding the World Trade Bridge to 16 lanes from eight, and rail line Canadian-Pacific- Kansas City is doubling the capacity of a rail bridge across the Rio Grande, the WSJ reported.
Tariffs on Chinese goods, the war in Ukraine, and of course, Covid all played roles in driving supply chains from global to regional. What makes nearshoring to Mexico so attractive is the duty-free provisions of the United States-Mexico-Canada Agreement and the fact that businesses don’t need to keep as much inventory on hand when they can replenish in two days rather than waiting anywhere from two to six weeks for shipments across the Pacific.
Hundreds of companies, including Chinese ones, are moving manufacturing bases from China to Mexico. That puts Laredo in a unique position along supply chains. “The total trade between Mexico and the U.S., 40% of that crosses through the port of Laredo,” Daniel Covarrubias, director of the Texas Center for Economic and Enterprise Development, told the WSJ. “If you see on a map where Laredo is situated between the United States, the biggest market in the world, and Mexico, one of the biggest producing markets in the world, well it’s right in the middle.” Over 15,000 trucks and $800 million worth of goods crossed the border at Laredo last year, and those figures will only grow with nearshoring. Mattel has moved its headquarters to Monterrey, where Lego operates its largest factory, and Tesla announced plans for a gigafactory. Any customers that were on the fence about nearshoring are off it now, Schara said. In addition to the duty and inventory considerations, shorter supply chains without emissions from trans- Pacific boats, nearshoring companies will more easily meet climate and ESG goals. “This is a really significant opportunity, not only for BlueGrace, but for the entire country,” Schara said. “… We saw this snowball effect happen from Covid, but it’s a viable solution. “In the border towns and states, there are going to be a lot of jobs created through this, and we’re happy to support and be part of that growth, and we really look forward to the opportunity.”
Laredo, other border areas, and a lot of companies turning to nearshoring do as well.
In the border towns and states, there are going to be a lot of jobs created through this, and we’re happy to support and be part of that growth, and we really look forward to the opportunity.