Cross-border interplay humming
DHL Global Forwarding and UPS are investing at the border between the USA and Mexico. This shows that the region is moving ever closer together, economically-speaking – despite political turbulence.
The border between the United States of America and Mexico is one of the most highly-frequented international boundaries in the world. Since the Nafta free-trade agreement between Canada, the USA and Mexico came into force in 1994, goods transport has multiplied on this trade route. Nowadays, nearly 6 million lorries travel north from Mexico every year. Free trade has given rise to the development of numerous industry clusters close to the border in Mexico, in particular in the automobile segment.
Despite the benefits that free trade with the United States has offered Mexico, the economy of the Central American country has most recently begun to splutter again. Although the first six months of 2017 still saw growth of 2.3% – which was higher than the experts had predicted – the growth figure for the second half of the year slowed to 1.8%. Inflation weighed on the mood for consumption and various reforms in the field of energy and telecommunications have not yet had the hoped-for effect. The Mexican presidential elections, scheduled for July, have also had a largely dampening impact on the economic performance.
Border towns at the heart of the issue
In the medium term, however, the region either side of the border will increasingly be considered as an interconnected economic area. This becomes clear from the recent announcements of the logistics service providers DHL Global Forwarding and UPS. The German logistics group plans to expand its presence strongly in the six US border towns of San Diego CA, Tucson AZ, Nogales AZ, El Paso TX, Laredo TX and McAllen TX. At these branches, with around 300 employees, DHL plans to offer services for airfreight and seafreight, customs handling and storage. David Goldberg, DHL Global Forwarding’s CEO for the USA, says that “our presence on site helps us to maintain relationships with existing customers, but also to win new ones.” The cities named above are all characterised by strong export-driven growth in recent years, and they channel trade flows from and to Mexico. El Paso, for instance, is now the USA’s tenth-largest export location.
The piston in the economic engine
UPS has also identified the value of El Paso and its Mexican opposite number, Ciudad Juárez. By the end of the year, UPS plans to bring a new logistics centre in El Paso on stream. The facility near the airport cover approximately 14,000 sqm and cost USD 41 million to build. “El Paso is the key gateway to one of the most important industrial corridors in the US–Mexico trade lane, and UPS is one of the pistons helping drive the economic growth engine in this community,” according to Craig Wiltz, president of UPS Texas-Oklahoma. The new logistics centre is intended, in particular, for companies operating in the car industry, as well as electronics and household appliance enterprises, which are based in this region. They should benefit from faster deliveries and improved sorting solutions.
The optimism, however, cannot conceal the fact that the Nafta deal has been under pressure since US president Donald Trump announced a fresh negotiation of the agreement. Whether this would be to the detriment of Mexico remains to be seen. A survey conducted in the country by the logistics firm Agility has shown that 50% of respondents expect fresh negotiations will have no effects, or positive ones, for Mexico. A mere 22% fear that a revised Nafta treaty might damage trade with Mexico’s two northern partners.