America’s border crisis is a hurdle to nearshoring
Laredo, on America’s southern border, does not look like a crown jewel. The Texan city of 250,000 people appears more like a dusty trading outpost in the middle of nowhere. Sure, it has a quaint centre. Laredo dates back to 1755, making it older than the United States—though for part of its history it was almost as poor (and not nearly as much fun) as Nuevo Laredo, the Mexican town just across the Rio Grande. Yet since the covid-19 pandemic, it has become a shining symbol of American commerce. This is expected to be the first year when the value of goods passing through Laredo eclipses that of any other port in America—even that of mighty Los Angeles, where stuff is shipped in from China.
Laredo’s trade is lubricated by axle grease. Every day about 20,000 lorries trundle back and forth across its two trade bridges, transporting everything from cars to chewing gum. Commerce is booming. The value of imports and exports passing through the inland port rose by 8% between January and October, year on year. That bucks the trend in other ports, such as LA, where trade has declined. Because of bilateral trucking restrictions, all that cargo has to be transferred between American and Mexican drivers, requiring 43m square feet (4m square metres) of warehousing—an area bigger than Manhattan’s Central Park. Investment is pouring in. Over the next two years, the city is expected to add another 10m square feet of warehouse space. It is daunting to think about. The number of lorries is already so large that tailbacks can stretch almost ten miles (16km) into Mexico.
The explanation for the buzz is nearshoring, which posits that, given the risks from overstretched supply chains and the trade war with China, manufacturers should move to North America. Although the potential is huge, so far it is more visible in truck traffic than investment flows. This year Mexico once again became America’s biggest trading…
2023-12-14 09:06:18
Original from www.economist.com
rnrn