Commentary from Glenn Koepke, GM Network Collaboration FourKites:
What are you seeing/hearing from customers regarding their manufacturing/production in Mexico and cross-border shippers?
Companies are continuing to invest in nearshoring and taking a long-term investment approach to it, as moving thousands of global suppliers into Mexico isn’t feasible in the short term. When deciding whether to invest more in Mexico or any other region, companies will evaluate the critical products to manufacturing, scarcity, labor availability and talent.
While manufacturing and sourcing from Mexico has been an option for companies for decades, evolving global competition and factors such as infrastructure, talent, duties, freight costs and raw material supplier locations continually influence the decision of where to produce products.
How will the recent rail deals impact/improve intermodal moves and trade across North America? Any other factors/considerations?
Rail is the backbone of many agricultural, chemical, automotive and paper products in the US. With only seven class-one railroad providers, investments and infrastructure improvements often take time to really see the entire network improvement for capacity and throughput.
What role has Mexico historically played in the F&B and automotive industries? How is that growing/changing?
Mexico has long been a source of perishable products that are shipped northbound, such as limes, avocados, tomatoes, and many other food goods. Often, dry food production remains in the US as shorter lead times, skilled labor, and R&D are important factors as companies grow with their retail outlets in the US. There are still several large Mexican F&B companies that offer a global presence – companies such as Grupo Bimbo, the largest bakery company in the world, Arca Continental, Goya, and several others.
For automotive, several OEMs produce cars in Mexico and ship via rail northbound to the US. The automotive OEMs have major production operations and a significant scale that draws from the labor pools in each city and attracts other suppliers around them. Tier 1 suppliers will often have large networks in the US that ship southbound to the OEM production facilities while the products are built and then shipped northbound via rail to be sold in the US auto market.