Last Thursday, I attended a morning session on the NAFTA trade with Mexico put on by several organizations including the Council of Supply Chain Management Professionals (CSCMP). Here some of the things I learned at that event.
US-Mexico trade has grown in an astonishing way since the implementation of NAFTA in 1994, from total import/export trade in 1993 of $32.7 billion to $506.6 billion in 2013. Exports in 2013, $226.2 billion, increased 4.7% from 2012. Imports increased 1% to $280.4 billion. Mexico is the 2nd largest export market for US Goods after Canada. It is third on the list of exports. At the conference, a figure was used by several speakers saying that 40% of the content imported from Mexico back to the US was US content. One of the vendors at the event, Scarborough, a Kansas City based 3PL reported its business is up 1000% with Mexico in the last 3 years.
Despite all of this growth, there is great potential for future growth, as Asia is getting priced out of the market with higher wages and higher transportation costs, and the Latin America and Mexico market is growing. Viewed with my recent blog on the expansion of the Panama Canal, http://lnkd.in/bihCB5T, there is a growing future of inter-Western Hemisphere trade.
There are several steps which ease this process:
- President Obama has committed with Mexico’s President to allow electronic clearance of freight by 2016. Today’s paper process causes numerous delays as minor errors stop freight sometimes for days. Electronic processes can have edits and responses to errors can be handled quicker.
- Changes in Mexico law will end the requirement that custom brokers clear freight only at the border
- Investments in infrastructure on both sides of the border, will improve transportation flow.
Even with these changes, it will take expertise to ship to and from Mexico, to meet the export-import documentation requirements. A skilled Custom House Broker and 3PL is essential to avoid costly delays.