Trade boom tests Laredo’s border

More trucks are crossing through what’s already the busiest port for trade along the U.S.-Mexico border, business leaders in Laredo told Dallas Fed President Lorie Logan during a visit in July as part of her tour of the Eleventh District.

Almost half of U.S.–Mexico land-based trade goes through the Gateway City, Census Bureau data show. Port of Laredo trade increased nearly 40 percent (inflation adjusted) over the last decade. The number of trucks crossing the border into the U.S. typically increases about 4 percent per year.

But in 2023 so far, trucking traffic is up 6 percent.

Business leaders said the heavier traffic is evidence that more companies are moving operations or suppliers from overseas to Mexico and nearby countries, a trend known as nearshoring. Meanwhile, economists are waiting for more data to confirm whether and how nearshoring is affecting Mexico factory production and US-Mexico trade.

When a truck passes through the port’s inspection stations to be X-rayed, the driver can now stay in the cab and drive through the process, rather than taking time to stop, exit the cab and wait for inspectors to arrive. A safe, lower frequency X-ray is used to sweep the cab. The scan then intensifies for the cargo being hauled.

The upgrade has eased congestion by speeding up truck inspections, a process that can result in long lines at peak times, leaving truckers waiting hours to cross the border. Authorities have implemented other changes too, such as adding four new Free and Secure Trade (FAST) lanes on the World Trade Bridge to expedite processing for trusted shippers participating in the Customs Trade Partnership Against Terrorism program with cargo in sealed containers. An effort to expand operational hours around the clock was not successful, as Mexican trucks rarely circulate at night for safety reasons, port authorities said.

Other wholesale efficiency changes are on hold. For example, the NAFTA provision to allow Mexican long-haul trucks to pass into the U.S. and avoid the drayage system of loading cargo onto smaller trucks to be taken across the border has never been fully implemented over objections by US trucking groups.

About 2.8 million cargo trucks crossed from Mexico into the U.S. last year over Laredo’s two international bridges that support commercial trade.

To further ease congestion, local leaders have plans to expand Laredo’s bridges and have appealed to the federal government for help on issues like expediting the permit process. The World Trade Bridge could grow by 10 lanes. More traffic is already being directed to the Colombia Solidarity International Bridge. Plus, a fifth international bridge is planned for south Webb County, outside of Laredo city limits.

Business leaders and port operators are also seeking more funding from state and federal sources to improve and expand local infrastructure to keep up with heavier traffic and growing US-Mexico trade.

Trade doesn’t just move over ground in Laredo. The city’s busy airport is an important gateway for air cargo flying between the U.S. and Mexico. Laredo International Airport is also home to the only dual U.S.–Mexico customs facilities, where Mexican and U.S. officials inspect merchandise in the same location, simplifying procedures and cutting down on time and transactions costs.

Southbound air freight from the Laredo airport can avoid additional screening in Mexico if it is prescreened by Mexico’s National Customs Agency through the dual inspection program. Imports to the Laredo airport exceeded 819 million pounds last year, according to airport authorities. Industries using the airport include automotive, electric/electronics and aerospace.

Nearshoring could generate more economic activity over the next few years, but business leaders said the growth is already bringing along new investments.

Increased demand for trade and transportation services has sent warehousing developments booming, business leaders said. In addition, a large state-of-the-art cold storage facility is being built at the port and is expected to draw more agricultural trade of perishable goods.