From truck terminals and rail yards along the U.S.-Mexico border to warehouses in Guadalajara and Monterrey, infrastructure targeting Mexican trade has drawn billions of dollars on the promise that bigger volumes of manufactured goods were on the horizon.
President-elect Donald Trump’s threat to impose new tariffs casts a cloud over that hoped-for surge heading into the New Year, and it raises the risks of bets that logistics operators have made on North American trade.
Logistics companies aren’t backing away from the border, however. Many say they expect the investments to pay off in the long run, even if trade relations between the U.S. and Mexico grow more complicated in the next few years.
“It’s not just about tariffs,” said Joachim Goller, a senior vice president of North America road logistics for freight forwarder Kuehne + Nagel International, which is setting up new warehousing to handle manufacturing moving to the region from Asia. “There are more factors contributing to the nearshoring boom.”
U.S. freight broker C.H. Robinson Worldwide has more than 1.5 million square feet of cross-dock and warehousing space along the border, and Chief Executive Dave Bozeman says he’s not concerned about the investment.
“This is not the first time that we’ve had tariffs that—I mean, it’s not going to be the last time,” Bozeman told a Dec. 12 investor meeting.
Truckers XPO and Schneider, industrial property developer Prologis and freight forwarders Kuehne + Nagel and DSV are among companies that have opened new trucking terminals and warehouses or started new services to accommodate an expected surge in cross-border business as more companies set up manufacturing hubs in Mexico.
One of the biggest investments came in the form of a $31 billion merger in 2023 that created the only freight railroad directly connecting Mexico, the U.S. and Canada. The new Canadian Pacific Kansas City, or CPKC, operates a 20,000-mile network stretching from Canada’s ports on the Pacific and Atlantic coasts through Midwest rail hubs such as Chicago and down to factories and seaports in Mexico.
The U.S. imported $475 billion of goods from Mexico in 2023, up 5% from 2022 and 69% from 2013, while imports from Canada totaled about $419 billion in 2023, down 4% from the previous year but 26% above 2013, according to the U.S. International Trade Commission.
Trump’s threats to impose a 25% tariff on imports from Canada and Mexico if the countries don’t do more to stem the flow of migrants and drugs across the border add a new wild card to the trade relationships because they take in issues that go beyond strict trade matters.
Mark Rourke, chief executive of Schneider, which in 2023 struck a deal with CPKC to haul shipping containers between Mexico and the Midwest, said the company is positioned to expand its business moving freight across North America “regardless of what happens with the tariffs.”
Schneider recently announced a new route with CPKC and rival railroad CSX that connects Mexico with the Southeast U.S.
XPO added more trucking capacity to handle expected U.S.-Mexico trade growth, and Ryder System, which manages trucking fleets and logistics for companies, in February opened a warehouse and cross-dock facility in Laredo, Texas, across the border from Mexico and expanded its container yard in Nuevo Laredo, Mexico.
Prologis, the world’s largest warehouse developer, pointed to nearshoring trends as one reason behind its acquisition in August of a Mexican real-estate company. Chief Executive Hamid Moghadam said Prologis would continue investing in its businesses in Mexico and Canada “even as trade policies evolve.”
The Mexican government isn’t backing away from its efforts to build up freight transport capabilities. The government pledged shortly after Trump’s election to invest $2.7 billion to expand the Port of Manzanillo on the Pacific Coast and double the port’s capacity to 10 million containers annually by 2030.
Jason Miller, a logistics professor at Michigan State University, said he doesn’t expect freight companies that have forged stronger cross-border connections to walk away over the new uncertainty. “If you’re considering Mexico, you’re doing so because of labor,” Miller said. “A 25% tariff is not in any way, shape or form going to make the U.S. market where you decide to put that production.”
Miller said companies might look at shifting production to other countries besides Mexico. “I think that it maybe poses the question of, is Mexico the most attractive destination for those goods, versus is it something that maybe now we keep in South Asia or Southeast Asia?” he said.
Kuehne + Nagel in 2024 replaced four cross-border warehouses with a larger 363,000-square-foot facility in El Paso, Texas. This year, it is opening a roughly 450,000-square-foot warehouse in Laredo that will more than double its capacity in the area.
Goller said Kuehne + Nagel is paying about 50% more per square foot for the warehouses than it paid five years ago.
That kind of pricing suggests demand is strong and is unlikely to waver unless the sharp rhetoric over tariffs escalates and new levies cut into the flow of goods.
“We still need to see what policies are going to get implemented as opposed to narrative that may or may not lead to an actual policy decision,” said Jared Weisfeld, chief strategy officer of freight broker RXO, at a Goldman Sachs investor conference on Dec. 4.
RXO said its cross-border business grew about 37% in 2023 from the year before.
“Within our business, when we talk about tariffs, there’s always going to be puts and takes. There’ll be some markets that benefit and others that maybe don’t,” Sean Pelkey, chief financial officer of the CSX railroad, told a UBS investor conference on Dec. 4.
CPKC is already building on its big merger to handle North American trade. In December, the railroad completed construction of a $100 million railway bridge over the Rio Grande from Laredo to Nuevo Laredo that more than doubles its capacity for moving traffic across the border.
