- [Narrator] These trucks stretching
to the horizon are only a fraction
of the 5.5 million that entered Laredo, Texas in 2022.
It's one sign of a broader shift
in the global economy as hundreds
of companies around the world move their manufacturing
from China to here in Mexico,
and as a border town, that makes Laredo the hub
at the center of a trend that's changing global markets.
- If you are manufacturing in Mexico,
you can get that product
to the US consumer in under 24 hours in a truck.
If you are manufacturing in Asia,
it's gonna take you two to six weeks
- [Narrator] Amid an explosion of trade
between Mexico and the rest of North America,
here's a look at why Laredo is primed to become one
of the world's most important land ports and its role
in transforming global supply chains.
On this bridge dividing the US from Mexico,
trucks often wait hours
for a chance to cross into Laredo.
In 2022, more than $800 million worth of products,
from auto parts to carpets to avocados
passed through the city each day
according to US Census data.
- The total trade between Mexico and the United States,
40% of that crosses through the port of Laredo.
- [Narrator] Daniel Covarrubias
has spent years studying Laredo's role
in international trade
at Texas A&M International University.
- If you see on a map where Laredo is situated
between the United States, the biggest market in the world
and Mexico one of the biggest producing markets
in the world, well, it's right in the middle of it.
- [Narrator] Laredo is uniquely positioned
to handle all this trade
as more and more companies reduce their dependence
on Chinese factories and shift production to Mexico.
It's part of a larger strategy called nearshoring.
- It went from a trend of globalization to regionalization.
- Economists and executives say soaring shipping rates,
a trade war between China and the US
and geopolitical uncertainty caused by Russia's invasion
of Ukraine helped fuel the nearshoring trend.
Plus, Mexico's free trade deals mean companies
that make their products in Mexico can ship them
to the rest of North America duty free.
- You're seeing Chinese companies to get out of the tariffs
and post on them, well, they can come and take advantage
of the US-Mexico-Canada trade agreement
if they manufacture in Mexico.
- [Instructor] In 2022, goods traded
between the US and Mexico reached almost $780 billion,
an increase of nearly 18% from the previous year.
While Laredo isn't the only US border town capitalizing
on the expansion of nearshoring,
it's receiving the most activity.
In October 2022, about $27 billion worth
of freight moved through Laredo alone.
That month, it overtook the trade volume
from each of the ocean ports
of Los Angeles and Long Beach.
Executives say part of Laredo's appeal is its location.
The city is the closest US land port
to some of Mexico's largest manufacturing centers,
like the Nuevo Leon region,
which includes the massive industrial city of Monterrey.
- From loading up on a truck in Monterrey,
you have a two and a half hour drive north
from Monterrey until you hit the Laredo border.
- [Narrator] Tom Simmons is the vice president
of Majestic Realty,
a privately owned industrial real estate developer.
Over the last 10 years,
Majestic has invested in warehouse properties across Laredo.
- That product will get unpacked
in a Laredo warehouse like we're sitting in right now.
Will get repacked into outbound trucks and tractors
and will get distributed throughout the United States,
and you'll have all
of the roadway networks that will spread east and west.
- [Narrator] The expansion of trade in Laredo
is fueled by the surge
of foreign direct investment in Mexico
over the last two decades.
Mattel expanded its Monterrey plant
into its largest manufacturing facility worldwide.
LEGO also operates its largest factory in Nuevo Leon
with plans to expand, and Tesla recently announced plans
to build out a massive gigafactory in the Monterrey region.
And those are just a small sample of companies
relocating their operations.
The Mexican government said more than 400 companies
have shown interest
in moving production from Asia to Mexico.
That translates into a surge
of products funneled into logistics hubs like Laredo.
- If you take a 35-mile radius
and place it here on this cross-border region of Laredo,
and Nuevo Laredo, you're gonna find upwards
of 500 US custom brokers and Mexican custom brokers firms.
You're gonna find more than 500 transportation companies,
more than 350 logistics companies.
- [Narrator] That concentration of logistics companies
means trucks, (truck rumbling)
and lots of them.
- More than 15,000 trucks cross daily
by the port of Laredo
and this is between two bridges, the World Trade Bridge
and the Colombia Bridge.
- [Narrator] The amount of trucks passing
through Laredo has seen a steady increase
over the last 10 years.
To keep up,
large infrastructure build-outs are underway.
The city has already committed
to expanding the World Trade Bridge from eight lanes to 16
and the rail company, Canadian Pacific Kansas City,
broke ground on a project that will double the capacity
of a rail bridge spanning the Rio Grande.
More trade passing through Laredo also means greater demand
for warehouse space.
In this warehouse,
thousands of auto parts are transported in and out
by truck each day.
Just one lot over,
trucks flatten the ground to make room
for even more facilities.
- We're adjusting to the supply
and demand imbalance right now
with the simple answer of just build.
- [Narrator] This site is just one example
of the more than 3.8 million square feet
of warehouse space under construction in Laredo.
That amounts to a 28% increase in space since 2012,
according to CoStar, a real estate analytics firm.
But with warehouses more than 97% occupied,
companies are struggling to keep up with demand.
- It is actually an unhealthy market because there're a lot
of businesses in this market that want to grow.
- [Narrator] As manufacturing shifts south of the border,
it is creating job opportunities in the US.
That's because components
for certain equipment are often made in Mexico
but need a more skilled labor force for final assembly.
- The automotive and the electronic will oftentimes go back
and forth across the Mexico-US border four, five, six times
before the finished product is finally ready
for the US consumer.
- [Narrator] While the boom in trade between the US
and Mexico might mean a smaller slice of the pie for China,
executives and economists say
it will still remain a dominant supplier
for a vast range of goods.
In the meantime, the trade passing through Laredo
is projected to grow.
- What the numbers and data tell us
is that the port of Laredo is gonna keep on growing.
It's just so in a league in by itself
compared to other ports of entry,
it's gonna be hard to compete with Laredo.
(pensive music)