Q&A: Mike Burkhart on the Recent Nearshoring Push Into Mexico

With 2023 marking the first time in two decades that the United States imported more goods from Mexico than China, up 4.4% annually, to $480 billion, coupled with U.S.-bound imports from China off 20% annually, according to U.S. Census Bureau data, it stands to reason that cross-border logistics and trade activity continues to heat up. And this continues to drive home the fact that nearshoring is alive and well, and is very well-positioned for future growth, to be sure.

LM Group News Editor Jeff Berman recently spoke with Mike Burkhart, VP of Mexico, for Minneapolis-based global logistics services provider and freight forwarder C.H. Robinson, about the ongoing nearshoring push into Mexico and what shippers need to know and be prepared for to establish cross-border supply chain and logistics operations south of the border. Their conversation follows below.

LM: Do you think that this is the new normal in the sense that Mexico will continue to be the primary trade partner for the United States, for the foreseeable future?

Mike Burkhart: I really do. Last year, we talked a lot about nearshoring and what it is—and we said it's coming. And I think we can finally say that it's arrived and more is on the way. We still expect this trend to play out more fully in the next five years. But we see clear signs that it has arrived. Mexico's direct foreign investment is up 24% since 2020, setting a new record in 2023, at $36.1 billion and it marked the first time in two decades that the U.S. brought more goods from Mexico than China. Imports from Mexico were up while imports from China actually dropped 20%. Last year also set a record for truckload freight crossing the United States to Mexico, which was up 25% in just one year. When I saw that number, I was amazed. I thought it was going to be double-digits. But I didn't think it was going to be 25%.

LM: What do you think are the biggest advantages of Mexico-focused nearshoring for shippers? What are the things that stand out to you?

Burkhart: It absolutely is the proximity to the customer and the proximity to where the marketplace is. But Mexico also offers incentives and advantages for shippers to nearshore into Mexico. So, when a shipper becomes a Mexican entity, they also get to take advantage of the free trade agreements. Mexico has more free trade agreements than any other country in the world. So, not only is it about being close to the customer in North America, but it's also about leveraging other free trade agreements that that are helpful to any shipper in Mexico.

And looking ahead, we think 2024 might be the year we also see a shift in ocean freight volumes because of nearshoring. Imports from Asia to Mexico already increased 8.7% in 2023. Mexico's current industrial parks expect to receive 453 new companies by mid-2025. And 20% of those companies are Chinese. Fifty new industrial parks are slated to open in Mexico this year or next year. This does not mean that the U.S. and the NAFTA, or USMCA countries, have stopped expanding operations. With North American trade agreements providing stability and cost savings through to 2046, we have customers, especially in the automotive sector, that treat the whole continent as one integrated supply chain.

To read the rest of the interview, visit Logistics Management.