New USMCA Trade Deal Could Increase Demand For Near-Shoring
COVID-19 and the new United States-Mexico-Canada Agreement (USMCA) have caused U.S. shippers to rethink their supply chain strategies. The new USMCA is intended to support mutually beneficial trade, leading to freer markets, fairer trade, and robust economic growth in North America. However, grappling with a new trade agreement and a global pandemic simultaneously has challenged cross-border shippers while emphasizing the role Mexico plays in the U.S. economy. The combination of these two disruptions has enticed some U.S. shippers to nearshore their supply chains.
In this new article in The Loadstar, David Henry, GlobalTranz’s Regional Manager, Mexico, shares insights on the growing trend of near-shoring for U.S. shippers, particularly U.S. automakers, and how both COVID-19 and the new USMCA played a role in the recent shift to near-shoring for U.S. shippers. “For U.S. Shippers, Mexico is attractive from a cost point of view, but also in terms of control of supply chains. The automotive industry initially suffered a lack of spare parts out of Asia, and near-shoring a greater percentage of those supply chains to Mexico brings a lot of opportunity,” commented Henry. “The ability to expedite a truckload shipment, compared with having to put goods on a container ship and then wait a month for them, or use much more expensive air freight, which has its own capacity issues, the advantage is pretty clear and a lot of organizations are looking to take advantage of it.”
While the new USMCA incentivizes North American manufacturers to near-shore their supply chains, there are challenges suppliers may face when investing in Mexico due to security and congestion. Still, David Henry does not project these challenges being a mainstay in cross-border trade. “We see that change balancing out over the coming months and beyond the short- and medium-term, the outlook is very positive,” David Henry said.
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