can often lower transportation costs and shorten lead times, while gaining the exibility to pivot quickly if market conditions change,” he adds. It’s dif cult to know how the tariffs proposed by the U.S. Administration will play out. They may cut the range of goods that move across borders, particularly for products that are “on the margin,” says Jason Miller, interim chair of the Department of Supply Chain Management at Michigan State University. These are products that, absent a tariff, earn enough pro t that it makes sense to trade them across borders. “Slap a 25% tariff on them, and it no longer makes sense to bring them in,” he says. OVERCOMING COMPLEXITIES AND CHALLENGES To bene t from cross-border operations, most companies need to tackle several challenges. These include complex customs regulations and fragmented service providers, says Jose Minarro, director of cross-border operations with Sunset Transportation. “For U.S. shippers, understanding the nuances of cross-border logistics, including cultural, operational, and regulatory differences, is vital for success,” he adds. The continuously evolving regulatory landscape of cross-border transportation also creates complexity. “Knowing how to navigate customs requirements and transportation laws across multiple countries is crucial,” Garza says. Another challenge can arise when companies move production to North America to avoid the tariffs levied on goods coming from China, yet still need to source the raw materials from China, says Ken Cochran, managing director in the consumer and retail group of Alvarez & Marsal, a global professional services rm. Because these materials still travel from other parts of the world, some bene ts of nearshoring are minimized. In addition, the capability to create some raw materials is not yet present in the Americas to the extent needed to shift manufacturing operations from other regions of the world, he says.
rules of engagement are. Yet the three countries are entangled, in a good way,” Cox says. Together, the countries are home to a well-educated, competitively priced workforce, a massive market, and the infrastructure needed to make goods at a relatively low cost, he says. Companies that shift from offshore production, sometimes thousands of miles from a company’s market, and instead manufacture in an adjoining country, often can use ground transportation for assembly and distribution, says Brad Colvin, director of business development and logistics with Tri-National, Inc. They bene t from reduced transit times and the potential for greater exibility in production. Nearshoring can also eliminate the risks of lengthy port delays, container ship logjams, and lost cargo due to geopolitical turmoil. “Nearshoring is not as logistically challenging as offshore manufacturing, as everything is thousands of miles closer to where the end product is produced,” Colvin says. ESTABLISHED OPERATIONS ENJOY AN EDGE For example, Mexico produces around 180,000 tractors each year, with about 90% heading to the United States and Canada, says Diego Anchustegui, chief marketing of cer with EASO, which is now partnered with Hub Group through a joint venture. “The factories are already set up in Mexico. The production operations and supply chains took a lot of years to build.” Replicating them elsewhere within even a 10- or 20-year time frame would be dif cult. This provides an edge to companies that have already established operations in Mexico for the North American market. Mexico’s shared border with the United States offers businesses targeting a North American consumer base the opportunity for greater supply chain ef ciency and control, when compared to overseas options, says Alex Garza, vice president of Mexico Cross-Border Services at Landstar. “Companies that move operations from other parts of the world to North America
F or decades, Canada, Mexico, a result of cross-border commerce, many shared values, and with Canada, a shared language. In 2024, U.S. goods traded with Canada totaled about $762 billion, and with Mexico, about $840 billion, the U.S. Census reports. While the current geopolitical environment is in ux, businesses and the United States have been tightly tied to each other. Partly an accident of geography, it’s also throughout these countries are carrying on. And logistics providers are working diligently to ensure they can help supply chain organizations continue operating across borders in a timely and effective manner. Many supply chains are interconnected among all three countries, and that’s wonderful, says David Cox, chief executive of cer with Polaris Transportation Group. Especially after the pandemic, many businesses made capital investments based on the rules of engagement outlined in the United States-Mexico-Canada Agreement (USMCA). The agreement’s provisions helped to shorten lead times and inject agility into companies’ supply chains. “There’s churn in the water right now just because we don’t know what the new
March 2025 • Inbound Logistics 31
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