Why Nearshoring in Mexico Presents Strategic Advantage for US Companies

Resiliency is a key factor in the success of businesses today. For those within the supply chain industry, the skillset has been refined in recent years as business leaders and their teams have navigated various disruptions including a global health pandemic, geopolitical unrest, environmental impacts and changes in consumer demands.

Amid all these disruptions, we’ve seen leaders display creativity as they work to find ways to secure and stabilize their supply chains and ultimately their businesses.

One trend that has emerged is the push for nearshoring, with Mexico taking center stage.
Nearshoring is the practice of relocating business operations or manufacturing closer to a company’s main customer base or home country. The goal is to reduce the physical distance in the supply chain, enabling faster delivery times, easier communication, cost savings, and greater adaptability in responding to market changes.

Mexico is playing a strong role in the nearshoring efforts of many businesses across industries and there’s no signs this trend will slow down anytime soon. In fact, the 2024 State of Manufacturing Report curated by Fictiv, stated that 47 percent of study respondents were looking to Mexico and Latin America for their regionalization strategy.

According to a study by KPMG, 76 percent of U.S. executives are prioritizing nearshoring activities immediately. Trailer Bridge Chief Commercial Officer Jeff Vaughn says this comes as no surprise, “nearshoring became such a play in the marketplace during and after COVID as shippers really looked to diversify their supply chains and be more flexible. It’s a been a big topic of conversation, and I think it’s the future.”

Moving production to Mexico is no small undertaking, some industry experts say it takes anywhere from 6-12 months to fully switch over a shipper’s full supply chain. However, with the right plan and with strong relationships in place, it could be a game changer.

In this piece we offer a critical look at the logistical advantages of Mexico including insights from supply chain experts who have been working with shippers to build and manage cross-border transportation solutions.

Breaking down the benefits of nearshoring in Mexico

Mexico is an attractive option for businesses looking to shift their manufacturing or distribution model.

What makes it appealing? Let’s start with some of the basics.

Geographic proximity results in reduced shipping times

One of the most significant advantages of nearshoring in Mexico is its geographic closeness to the United States.

By moving manufacturing facilities to Mexico, companies can dramatically reduce shipping times and lower the risk of delays due to long-haul ocean transport. Shipping from Mexico to the U.S. typically takes days rather than weeks or months, ensuring products reach their destination quickly, a significant benefit for those businesses looking to meet the demands of today’s consumer expectations.

“Historically, Mexico has been a very strong partner in cross-border trade,” says Robert Trevino, Director of Mexico sales for Trailer Bridge. “Foreign investment by new businesses to establish themselves in Mexico is gaining traction. The pandemic accelerated that because of the need for quickness and lower transportation costs.”

Truckload and intermodal are two widely used methods to transfer freight across borders in North America. Shippers can choose one or a combination of both to deliver their freight from the facility in Mexico to its final destination.

Faster decision-making based on inventories

Bringing the product closer to its final destination supports stronger inventory management. The aftereffects of COVID left many businesses choosing to bring in large quantities of product to warehouses in the U.S. to ensure it would be readily available.

Finding and maintaining warehousing solutions to store inventories can be a giant headache, not to mention expensive, especially with many other companies looking to do the same.

“Real estate is not cheap, labor’s not cheap in the United States and inventories are not cheap to keep,” Vaughn adds. “So really taking control and developing a just in time inventory management process versus just bringing in large quantities of goods at once is key.”

It also provides a great deal of flexibility.

Vaughn added, “getting away from the 45-65-day ocean movements to more of 7-to-10-day windows, allows you to reduce your inventories in the U.S. an incredible amount. It gives those businesses space to make quicker decisions based on inventory levels and respond to the market accordingly.”

Help the environment by reducing emissions

Shipping products from nearby Mexico rather than countries in Asia can significantly lower a company’s carbon footprint.

By choosing nearshoring, U.S. businesses contribute to reduced fuel consumption, minimized emissions and a smaller environmental impact.

With more regulations focused on reducing overall carbon emissions, this is going to be something to watch closely in the coming years.

Making nearshoring in Mexico work for you

While nearshoring offers considerable advantages, navigating a foreign country’s logistics and regulatory landscape presents its own slate of challenges. Partnering with an established provider with expertise in the market can help the process run more smoothly.

When the Trailer Bridge team began seeing customers move cargo from Asia to Mexico, they recognized the opportunity and began making several moves to accommodate this shift.

One of the first moves was expanding operations and ensuring a strong physical footprint.

“We have three offices in Mexico through our agent partner located in Guadalajara, Mexico City and Monterrey,” says Vaughn. “This strong partnership is paired with our own employees at the border in Laredo, which is where we manage a great deal of our cross-border transportation transactions.”

Having employees and collaborators on the ground to maintain communication between all parties is critical. Especially in high volume border crossing locations. This vital communication helps protect your freight throughout its cross-border transit.

“At the end of the day, people matter, right? I think having people with experience in these markets, such as Mexico, Dominic Republic or Latin America, Honduras, Costa Rica, is critical,” adds Vaughn. “Their experience and understanding of the nuances within the market support their customer’s overall business operations.”

When it comes to nearshoring, the Trailer Bridge team has had many customers be successful by taking smaller, more practical steps first.

“We’ve seen BCOs or shippers start the transition to nearshoring with a smaller SKU, that makes sense,” said Vaughn. “Then as these provide the model, they continue to invest and build a more robust operation in the new market – that’s what we’re seeing from our customer base.”

This approach can allow business to get a feel for what working within Mexico regulations looks like. One of the biggest regulations to be mindful of are the tariffs and Customs clearance.

Navigating the costs associated with ensuring compliance can present its own challenges, which is why finding a logistics partner can go a long way to providing you peace of mind.

“Many customers have a lot of questions regarding Customs and our team guides them through the options and recommends the best way to import from Mexico,” says Trevino.

With a team of experts in the space, Trailer Bridge offers custom solutions to make sure all your logistics needs are taken care of on both sides of the U.S. border. In the past decade there have been key changes to trade agreements and tariffs, most recently in 2020 with the United States-Mexico-Canada Agreement (USMCA).

These types of agreements can the landscape of shipping international. If your business is new to operating within a country, like Mexico, its important to have a partner who has a clear understanding. 

“We have a knowledgeable group on both sides of the border that can really service shipments from point A to point B,” says Trevino. “They’re bilingual, have expertise in Customs and between the team in Mexico and the team and the U.S., we can give more attention and care to every single load and every single customer as opposed to somebody bigger.”

In terms of trends, nearshoring in Mexico has staying power. It presents as a viable option for those organizations who can relocate operations, as its geographic location allows them to have a closer relationship with production and more easily transport goods into the U.S.

However, the supply chain industry is constantly changing. The good news is, you’re not alone. If you’re considering nearshoring, Trailer Bridge can help. Connect with a member of the Trailer Bridge Mexico team for a personalized supply chain solution to match your freight’s needs. Trailer Bridge’s secure carrier network dedicated cross-dock and transfer facilities, and bilingual agents are ready to help you navigate the complicated process of shipping to/from Mexico.