Borderlands: Cross-Border Trucking Still Strong Despite Violence In Mexico; Nuevo León Becomes No. 1 In Manufacturing

Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: Cross-border trucking remains strong despite ongoing violence in Mexico; Freight tech firm GuruCargo is acquired by regional company; FIBRA Prologis expands in Mexico; and Nuevo León becomes the No. 1 state in Mexico for manufacturing.

Cross-Border Trucking Remains Strong Despite Ongoing Violence In Mexico  

Violence in Mexico from organized cartels has been surging in recent weeks, with the latest incident involving a 13-year-old American boy killed Jan. 3 near Nuevo Laredo.

The boy was traveling with his family back to the United States after spending the holidays in Mexico. Their vehicle was ambushed by armed gunmen who opened fire on them. Law enforcement in Mexico has said cartel members might have mistaken the family's vehicle for a rival gang.

The attack took place days after the U.S. State Department issued another security alert for the state of Tamaulipas and the city of Nuevo Laredo, which is located directly across the U.S.-Mexico border from Laredo, Texas.

Around 12,000 to 13,000 trucks pass between Nuevo Laredo and Laredo every day. 

According to data from FreightWaves SONAR, the Laredo market has been trending upward since Jan. 1, with an outbound tender volume (OTVI.LRD) gain of 43% between Jan. 2 to Jan. 8.

(Chart: FreightWaves SONAR)

Outbound tender rejections in Laredo (OTRI.LRD) are also trending upward as we near Super Bowl Sunday Feb. 2. In recent years, rejection rates have doubled with demand for avocados and beverages from Mexico during the Super Bowl.

While the increased violence has not slowed down the flow of trucks and freight passing through the U.S.-Mexico border, it has affected business, according to cross-border operators.

"The cost of insurance for trucking companies for the U.S. side alone is currently at an all-time high and forcing asset-based groups to close their doors," Mark Vickers, CEO of Borderless Coverage, told FreightWaves. "It is an even harder insurance market for trucking companies that have B-1 CDL drivers who can cross the border." 

Vickers said companies and drivers with Mexico freight service have to contend with "hijackings and pilferage of truck/trailers and the violence associated with these thefts." 

During the last year, there has been an exodus of large U.S. asset-based trucking companies offering freight service from Mexico and which carried a large percentage of cross-border freight. 

"This has forced U.S./Canadian shippers to rely on brokers to move their freight or utilize less-vetted carriers in Mexico, which increases the probability of a claim," Vickers said.

Vickers also said most of the claims Borderless Coverage is receiving from clients are taking place right at the border or just into the Mexican side, near Nuevo Laredo.

"This violence has aggressively challenged our business model at Borderless Coverage," Vickers said. "However, due to the sheer volume of shipments that cross the border, we are able to maintain our core offering of All-Risk Shipper's Interest Cross-Border Cargo Insurance to approved trucking companies and brokers who move freight across the border on behalf of their shipper clients."  

Freight Tech Firm Gurucargo Acquired By Regional Company

The Uruguayan-Brazilian logistics startup Gurucargo has been sold to a regional player, according to one of its founders, Alejandro Esperanza. 

The 6-year-old company is an online platform that aggregates cargo shipping costs, aiming to enable freight companies to cross-reference price quotes quickly and efficiently.

"Our services were focused on ocean freight from the Far East to Latin America, but we had shipments to/from the United States and Latin America as we wanted to be the one-stop shop of our customers," Esperanza told FreightWaves. "We reached 7,500 users during our six years of operations, with customers coming from eight different markets, among them Mexico and Brazil."

Esperanza founded Gurucargo along with Eric Waizman and Andrés Israel in 2014 in Montevideo, Uruguay. The three friends are shipping industry veterans.

Esperanza said he could not share details of the acquisition until the deal is finalized in March. He said it is not clear if he will remain with the company or move on to another freight tech venture

"We are committed with the buyer until March, as they are developing an implementation program prior to public release," he said.

FIBRA Prologis Expands In Mexico With Investment Property

FIBRA Prologis FIBRAPL14, an owner and operator of industrial real estate in Mexico, said it has acquired 41,779 square feet of urban "infill" logistics space in the affluent Santa Maria section of Mexico City for $53 million.

The property has a moderate coverage ratio providing an efficient maneuvering patio as well as parking spaces, according to company.

"This acquisition is in one of the most desirable locations in Mexico City for distribution purposes," said Luis Gutierrez, CEO of Prologis Mexico, in a release. "This property has access to a substantial workforce as well as public transportation and importantly, when leased, should command one of the highest per-square-foot rents in our portfolio."

FIBRA Prologis is the Mexican affiliate of San Francisco-based Prologis, a multinational logistics real estate investment trust.

Nuevo León No. 1 State In Mexico For Manufacturing

With production of everything from vehicles and auto parts, food and beverages to metal manufacturing, Nuevo León recently displaced Mexico state to become the largest manufacturing state in Mexico, statistics show.

According to data from Mexico's National Institute of Statistics and Geography (INEGI), in the first 10 months of 2019, manufacturing in Nuevo León was worth just more than $44.9 billion.

The state of Nuevo León is located in northern Mexico and borders Texas. Monterrey, a sprawling industrial city of 1.3 million people, is the capital of Nuevo León. 

Foreign companies with facilities near Monterrey include Kia, Daimler, Caterpillar, Navistar and John Deere. Heineken beer and Topo Chico beverages also have plants around Monterrey.

Exports of food, beverages and tobacco from companies in Nuevo León totaled around $50 million last year and were mostly destined for the large U.S. market, according to Mexico's Ministry of Economy.

Coming in second behind Nuevo León was the state of Coahuila at $43.3 billion. Coahuila is bordered by the U.S. to the north and Nuevo León to the west. General Motors has a large manufacturing facility in the city of Ramos Arizpe, Coahuila.

Nuevo León displaced Mexico state ($43.1 billion), which finished first in 2018 as the country's largest manufacturer.

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