Borderlands is a weekly rundown of developments in the world of United States-Mexico cross-border trucking and trade. This week: 6,550 manufacturing jobs headed for Mexico as border freight capacity tightens; Aeronet Worldwide expands in Texas; FedEx Ground leases distribution center in Houston; and Bullfrog Logistics files for Chapter 11 bankruptcy.
More factories announced or opening as border freight capacity tightens
Eight foreign companies recently announced they were expanding or building export factories in Mexico.
The projects are expected to generate more than $408 million in investment and add up to 6,550 jobs. The companies include Unilever, Dana Inc., NYX LLC, Continental AG, Davico MFG, Kuka Home, Perennials and Sutherland LLC, and Denso Corp.
The addition of more manufacturing and jobs in Mexico comes at a time when trucking capacity has been tight for cross-border freight.
“Cross-border is booming, booming, booming,” Ermilo Richer III, executive director of Laredo, Texas-based customs broker Richer, told FreightWaves. “It’s mostly northbound loads in most of the industries. I think there is still an off balance between southbound, with not enough to get all northbound out of Mexico.”
Port Laredo is the No. 1 U.S. port for trade with Mexico, totaling $19.7 billion in trade with the country in May, according to U.S. Census Bureau data analyzed by WorldCity.
After a dip during the July Fourth weekend, outbound tender volumes in Laredo (OTVI.LRD) are up around 10.8% since July 6, according to FreightWaves’ SONAR platform.
Laredo’s outbound tender volume — a measure of shipper requests for truckload capacity — is up 28% year-over-year.
(Chart: FreightWaves SONAR OTVI.LRD. To learn more about FreightWaves SONAR, click here.)
Troy Ryley, president of Redwood Mexico at Redwood Logistics, said “it is extremely difficult right now to find capacity.”
“It is a bad time to be out shopping for rates,” Ryley said. “[Carriers] are getting bombarded by requests daily of people that can’t get freight moved. If you’re $300, $500, $800 or $1,000 lower than what the market rate is — what’s that carrier going to do at the end of the deal? They may still honor some of their capacity commitments, but not all of them. They’re going to move that extra spot capacity to make money, a lot more money than they’re particularly making margin with you.”
Ryley said he’s not surprised more factories are heading to Mexico, because companies want to be closer to their markets.
“The relocation is absolutely occurring. Everybody that had extended, long supply chains got clobbered during the pandemic, and one of the solutions is move your location closer to market; it solves a lot of ills,” Ryley said. “You’ve got such a shorter lead time and you’re closer to the market, where you can react quickly to changing conditions.”
Maumee, Ohio-based Dana Inc. announced Friday that it will build a $40 million factory in Escobedo, Mexico. The factory, which will produce automotive axles and drive shafts, will create 350 jobs.
Japan-based tier 1 auto supplier Denso announced Friday it has begun construction on a $10 million expansion project at its plant in Silao, Mexico. The company did not disclose how many jobs will be added.
New Bedford, Massachusetts-based Davico Inc., a maker of automotive catalytic converter and exhaust products, announced Wednesday it has opened a second manufacturing facility near Saltillo, Mexico. The company did not say how much the factory cost nor how many people it employs.
NYX Inc., a producer of automotive interior parts, announced Tuesday it will build a $25 million factory in Arteaga, Mexico. The Livonia, Michigan-based company’s new plant will generate 1,200 jobs.
Dallas-based Perennials and Sutherland, a luxury furniture and high-end rug manufacturer, announced June 25 it is doubling the size of an existing plant in San Luis Potosí, Mexico, and adding 100 full-time jobs. The company did not specify how much it invested in the facility.
Unilever announced July 2 it would invest $275.2 million to expand the production capacity of its four manufacturing facilities in Mexico over the next three years. Unilever, a London-based household goods maker, has factories in Lerma, Tultitlan, Morelos and Mexico City. The expansion will create 3,000 jobs.
Chinese upholstery maker Kuka Home completed a major expansion of its upholstery factory on June 18 in Monterrey, Mexico. The expansion doubles the size of the facility, which opened a year ago, adding around 400 workers. The company did not specify how much it invested in the facility.
Tire maker Continental AG is nearing completion of its new $58 million factory in Aguascalientes, Mexico. The facility, which is scheduled to open in October, will create 1,000 jobs. Continental AG is based in Hanover, Germany.
With the addition of more cross-border freight, Ryley said shippers should plan as far ahead as possible to get rates locked in with carriers, but also look to reward some carriers beyond that.
“We’ve actually come with a few strategic clients — talked to them and said, ‘Let’s give the carrier a little bump, so they know we’re serious about the partnership. Strategically, that’s just a healthy move,” Ryley said.
Aeronet Worldwide expands in Texas
Aeronet Worldwide, a global logistics solutions provider, recently opened facilities in Houston and Austin, Texas.
The two facilities are part of an initiative to grow the company’s presence across the Lone Star State, according to Anthony N. Pereira, chairman and CEO. The company has existing operations in Dallas.
With the new locations, the Irvine, California-based company now has 21 facilities across the U.S. Aeronet Worldwide is a third-party logistics provider that works with clients in the medical, industrial, automotive and retail industries.
FedEx Ground leases distribution center in Houston
FedEx Ground recently leased a 534,000-square-foot cross-dock distribution center at Park 505 in north Houston.
Park 505 is a recently completed development by Investment & Development Ventures. The 40-acre facility includes 133 9-by-10-foot dock doors, four ramps and 118 parking spaces for trailers.
The site is just south of Sam Houston Parkway between Interstate 45 and the Hardy Toll Road.
Bullfrog Logistics files for Chapter 11 bankruptcy
Bullfrog Logistics, a third-party logistics provider, filed for Chapter 11 bankruptcy with the U.S. Bankruptcy Court for the District of New Mexico on June 26.
The Carlsbad, New Mexico-based company listed total assets at $2.8 million, with total liabilities of $6.1 million.
Bullfrog Logistics performs general freight trucking and transports oil field equipment.
The company has 15 drivers and 23 power units, according to the Federal Motor Carrier Safety Administration.
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Click for more FreightWaves articles by Noi Mahoney.
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