The teeming warehouses carved into the desert around Laredo, Texas testify to an explosion of trade between the United States and Mexico.
On a recent morning, 55-gallon barrels of chemicals, made up in Ohio, were waiting on trucks to transport them up the Rio Grande for use as feedstock at a paint factory in Mexico’s industrial city of Monterrey. The brake pads made in Mexico were destined for the north and went to trucking companies as far away as South Dakota.
The more commerce expands, the greater the opportunities for Laredo, a sprawling city of more than 250,000 that has long been the dominant land port on the meandering border between the United States and Mexico. Now it is poised to become an even more important part of the global economy. U.S. companies, sobered by the supply chain turmoil of the pandemic and alarmed by the animosity between the United States and China, are reducing their reliance on Pacific factories by moving production to Mexico.
Already about $800 million worth of products, from auto parts to clothing to avocados, pass through Laredo every day. That reality is underlined by the parade of trucks speeding by, often waiting for hours for their chance to cross a bridge over the Rio Grande, the murky river that separates Texas from Mexico.
By almost every indication, more goods are on their way, presenting a monumental opportunity for customs brokers, freight handlers and transportation companies.
“Everyone is growing here — 10, 20, 30 percent a year,” said Pablo Garza, 30, head of strategic planning at Akzent Logistics, who owns two warehouses in Laredo and is about to finish building a third. “It’s a hectic city. It’s amazing how much movement the city is seeing in terms of cargo.”
At an event at city hall last month, local officials celebrated a milestone: Data showed $27 billion worth of cargo moved through Laredo in October, with the flow through the two ocean ports of Los Angeles and Long Beach, California, the primary gateway, was surpassed. for US imports.
Southern California’s ports grew exponentially during an era of globalization centered around China. Laredo appears poised to take on a similar role in the anticipated next phase of globalization, one that focuses on regional supply chains, with US companies becoming more reliant on Mexico and Central America.
But the excitement is accompanied by fear as businesses and city leaders worry that existing infrastructure — a few commercial bridges spanning the Rio Grande, busy roads and a hive of warehouses — could be overwhelmed by an influx of freight.
“We have to get ahead of this tsunami that is coming,” said then-Laredo Mayor Pete Saenz. “We’re behind now.”
Massive expansion is underway. North of town, an army of excavators tore at the pale soil, turning cacti-dotted ranchland into industrial, warehouse, and truck yards on both sides of Interstate 35, the ribbon that connects Mexico to the central United States and Canada.
According to Prologis, a real estate investment firm, about two million square feet of warehouse space is under construction in Laredo. That equates to a 5 percent increase in space.
But with warehouses more than 98 percent occupied, the new facilities can fill up quickly.
“There’s definitely a space problem in Laredo,” said Mr. Garza. “The warehouses are full. We often say no to customers.”
Goods traded between the United States and Mexico in 2021 exceeded $660 billion, up nearly a fifth from the previous year, according to US Census data. According to available data, trading grew at a similar clip last year.
What becomes even more urgent is the widespread assumption that this is just the beginning of what could be decades of growth in trade between the two neighboring countries, as US retailers seek suppliers in the same hemisphere as their customers.
“Many companies are no longer willing to chase cheap labor at the expense of getting their goods to customers on time,” said Gene Lindgren, president of the Laredo Economic Development Corporation, which adjudicates investment for projects in the area. “China is so big that taking a very small piece and putting it in Mexico is huge for Laredo.”
Four years ago, the U.S. Department of Transportation predicted a sharp increase in the number of trucks passing through Laredo, with southbound border crossings alone reaching 9,800 by 2025. Traffic reached that level in late 2021, four years earlier than expected.
“All forecasts are behind,” said Glafiro Montemayor, president of Gemco, another Laredo-based cargo handler. He noted that the number of goods crossing the border had more than doubled since 2000 without the addition of major infrastructure.
“Laredo is full of trucks,” he added. “How are you going to handle it?”
Mr. Montemayor is raising money for a project presented as the answer to that question: a $360 million bridge over the Rio Grande south of Laredo. The customs process would be handled jointly by US and Mexican authorities, with just one inspection. This would allow trucks to complete the crossing in 30 minutes.
The Mexican government has already approved the project, Mr. Montemayor said, while the US State Department is nearing completion of its own review.
His plan is at the center of a logistics hub that could provide an alternative to over-reliance on major ports like Los Angeles, the scene of torturous floating traffic jams during the worst months of the pandemic.
Nearly two-thirds of the containers reaching the ocean ports on the west coast of the United States are destined for the center of the country and the east coast — regions more easily accessible by train and truck from Laredo, Montemayor said.
Some U.S. companies importing goods from Asia are already bypassing docks in Southern California and shipping instead to Manzanillo, on Mexico’s Pacific coast. From there, they move containers north to Laredo en route to destinations in North America.
Kansas City Southern, the giant railroad, picks up containers at Manzanillo and takes them north. The company recently broke new ground with a $100 million project that will double the capacity of a rail bridge across the Rio Grande.
At the same time, the Mexican authorities are implementing their own plans to facilitate the flow of goods across the border.
During the event at City Hall, Mayor Saenz appeared with officials from the Mexican state of Nuevo León, across the Rio Grande. There, a young development-minded governor, Samuel García, vows to improve highways connecting Monterrey to the border as part of an aggressive courtship of foreign investment.
The freeway project is aimed at increasing the appeal of a now largely abandoned Rio Grande crossing, the Colombia Bridge, a 40-minute drive from the warehouses and distribution centers in Laredo. More than 80 percent of cross-border truck traffic opts for the much closer World Trade bridge.
Given the typically horrendous traffic congestion on the roads leading to the World Trade bridge, Nuevo León is betting it can draw more traffic to the Colombia crossing by facilitating that span’s passage to Monterrey.
Demand for the Colombia Bridge appears destined to accelerate.
Tesla is expected to announce plans to establish a new electric vehicle factory in the Mexican state and ship completed vehicles to the United States and Canada. Lego operates its largest factory in Nuevo León and uses the Colombia Bridge to ship finished products directly to warehouses in Texas.
In Laredo, business interests and local government officials accuse state and federal authorities of jeopardizing the region’s opportunities by withholding funds needed to expand the surrounding road network.
They complain that the Texas Department of Transportation bases highway funding on population size — a process that favors major cities like Dallas and Houston — even as the traffic passing through Laredo supports jobs at retailers and warehouses across the state and beyond.
Over the decades, Laredo has grown in rings, each distinguished by its distance from the Rio Grande.
Right up against the river in the old town, the pastel colors of Mexico visible across the street, shopfronts lie abandoned.
What companies remain marks desperation – bail bondsmen, plasma collection centers offering cash for bodily fluids, pawnshops.
Border patrol officers sit in their vehicles on a bluff, looking down at the thigh-deep water.
A mile from the river, along the track, the first-generation warehouses stand empty, the sun shining on their siding.
Nine miles north, in Killam’s industrial estate, trucks with 53-foot trailers drive in and out of sleek, modern warehouses, moving goods north and south.
Mr. Garza’s family business is located in two of these buildings. The forwarding activities are largely devoted to moving car parts.
On a recent morning, orange plastic crates of car door seals made in Alabama were lined up on wooden pallets en route to an assembly plant in Mexico.
Transmission parts produced in Illinois and bound for a plant in Monterrey were stacked in a pile under a laminated white card marked “Expedited.”
“They’ll be gone by the end of the day,” Mr. Garza said. “‘Urgent’ is a common word here.”
Mr. Garza, a progressive thinker by nature, whose only child is still a baby, confidently describes his plans to have three more.
With the same frame of mind, he surveys the site four miles down the highway, looking for an empty plot of land that his company can buy and convert into more warehouses.
“We need to buy land now and build later,” he said.
