Laredo has long been the dominant land port between the United States and Mexico, but according to The New York Times, the city may soon play an even more important role on the global economic stage.
After supply chain turmoil and tensions with China, some U.S. companies are shifting production across the Pacific to Mexico. This may signal that more goods may soon be flowing across the border across the several international bridges that cross the Rio Grande between Laredo and Nuevo Laredo.
Daniel Covarrubias, director of the Research and Data Center for the Texas Center for Frontier Economics and Enterprise Development at Texas A&M International University Laredo, joined Texas Standard to talk about the new role Laredo can play in the global economy. Listen to the story above or read the transcript below.
This transcript has been lightly edited for clarity:
Texas Standard: As far as I understand, you are now in Washington, and this issue is in the center of attention. Let’s talk a little about how much cargo passes through the port of Laredo every day in its current form.
Daniel Covarrubias: Port of Laredo is a very important port. Many people, when they talk about ports, mean only seaports through Los Angeles, airports – Chicago, Kennedy. But Port Laredo, it’s right there. He is always in the top three. In numbers, from January to November 2022, $275 billion in total trade passed through Laredo. So that brings it down to about $25 billion a month. And if you reduce that to a day, then the total trade that goes through Laredo is about $833 million a day.
Well, Mexico is our No. 1 trading partner, so increased activity through the port of Laredo has the potential to lead to significant transformation. Are you already seeing these changes? I mean, is there more traffic going through Laredo now?
Well, the goal you’re talking about is a whole trend called “nearshoring”. And near shoring is essentially what you describe, where companies move their supply chain components and regionalize them even more. So lower it so you don’t suffer from the kind of supply chain congestion they’re suffering from due to the pandemic. We still do not see a sharp increase in the number. This is something that will take some time. These investments are not made so quickly. I mean, very large investments are needed in the creation of manufacturing enterprises and so on. But we see the possibility of this growth.
There is one report that at least I found from the World Bank: it is an estimate of how exports from Mexico could grow to the United States. That’s about $25 billion more exports than Mexico exports to the United States right now – about $150 billion – so you add $25 billion, that’s significant.
Is the local infrastructure of Laredo ready for such a surge in trade?
This is important, but Laredo has grown because there is a whole regional logistics system. I mean that there is sufficient infrastructure with customs brokers, with transport companies, with logistics companies. There’s a lot of storage space growth and so on. We have to look at the physical infrastructure on the bridges. There are two major bridges in Laredo, the World Trade Bridge, which carries over 90% of all this cargo, and the Columbia Bridge, which carries 10%. So the Columbia Bridge has room to grow. There is a new planned 4/5 bridge which is currently in the planning stages.
But what we’re looking at at the Texas Center is how technology can improve and make those flows more efficient. We have developed a concept that we call “logistics technology” – a play on the words “logistics” and “technology” – and we are analyzing and trying to help politicians, government and CBP see how technology can better deal with all these cross-cutting issues. border flows and this can make these crossings more efficient and timely.