Border Towns Benefit As Manufacturers Adopt This Practice To Solve Supply Chain Issues

Many U.S. businesses that felt the effects of supply chain issues during the COVID-19 pandemic have begun nearshoring to Mexico as a solution, according to a recent YardiMatrix report.

That’s benefitting border towns such as Laredo, Texas, which is the busiest gateway for goods shipments, according to YardiMatrix’s June National Industrial Report. In 2021, Laredo accounted for 37% of truck container border crossings and 46% of all rail containers.

The trend is partially a result of China’s COVID policies that periodically shut down parts of the country and fueled many of the shipping backlogs and supply chain bottlenecks in 2021 and 2022. Tensions between the U.S. and China, Trump administration tariffs and the need to get products faster also are fueling the increase in nearshoring.

More than $153 billion worth of goods were imported from Mexico through April, while $133 billion in goods were imported from China, making it the third-largest importer behind Canada with $139 billion.

The U.S. also partners with Canada for nearshoring, but most multinational corporations prefer Mexico because of its low labor costs, plentiful land and proximity to major U.S. population centers.

Last year, imports from China totaled $536 billion, ahead of Mexico with $455 billion and Canada with $437 billion.

Border Towns Benefit 

The amount of goods moving through the Laredo border port, along with other entry points in southeastern Texas, drove demand for industrial space along the central Texas corridor that runs through San Antonio, Austin and Dallas. Demand for industrial properties also is spiking in El Paso, which is just across the border from Juarez.

The amount of industrial space under construction represents more than 10% of the stock, including multiple large logistics parks and a 2.2 million-square-foot distribution center for T.J. Maxx.

“We anticipate the nearshoring movement to continue apace as firms look for ways to mitigate the fragility in supply chains that exposed in the last few years,” the report states.

Auto manufacturing has accounted for a major share of Mexico’s exports. An estimated nine out of 10 cars built in Mexico are exported, and many U.S.-assembled cars rely on parts made in Mexico.

“But in the coming years, the type of manufacturers in Northern Mexico will become more

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