A street in Laredo, Texas. Photo / New York Times
Laredo, across from Mexico on the Rio Grande, is primed to become one of the world’s most important land ports as American companies reduce their reliance on factories in Asia.
The teeming warehouses carved into the desert surrounding Laredo attest to an explosion of trade between the United States and Mexico.
On a recent morning, 55-gallon (208-litre) drums full of chemicals concocted in Ohio awaited trucks that would haul them across the Rio Grande, for use as raw materials at a paint factory in Mexico’s industrial city of Monterrey. Destined northbound, brake pads manufactured in Mexico were headed to trucking firms as far away as South Dakota.
The more trade expands, the greater the opportunities for Laredo, a sprawling city of more than 250,000 people that has long been the dominant land port on the meandering border between the US and Mexico.
Now, it is poised to become an even more vital component of the global economy. American companies sobered by the supply-chain upheavals of the pandemic and alarmed by the animosity between the US and China are reducing their dependence on factories across the Pacific by shifting production to Mexico.
Already, about US$800 million ($1.2 billion) worth of products, from car parts to clothing to avocados, pass through Laredo every day. That reality is underscored by the parade of trucks rumbling through, waiting — often for hours — for their chance to cross a bridge spanning the Rio Grande, the murky river dividing Texas from Mexico.
By nearly every indication, more goods are on the way, presenting customs brokers, freight handlers and trucking companies with a monumental opportunity.
“Everyone’s been growing around here — 10, 20, 30 per cent every year,” said Pablo Garza, 30, head of strategic planning at Akzent Logistics, which owns two warehouses in Laredo and is nearly finished constructing a third. “It’s a hectic town. It’s astonishing the amount of movement that the city sees in terms of freight.”
During an event at City Hall last month, local officials celebrated a milestone — data revealing that US$27b worth of freight moved through Laredo in October, exceeding the flow through the twin ocean ports of Los Angeles and Long Beach, California, the primary gateway for American imports.
The Southern California ports grew exponentially during an era of globalisation centred on China. Laredo appears primed to assume a similar role in the anticipated next phase of globalisation, one centred on regional supply chains, with American companies forging greater reliance on Mexico and Central America.
But the exhilaration comes tinged with anxiety as businesses and city leaders fret that the existing infrastructure — a pair of commercial bridges spanning the Rio Grande, traffic-choked roads and a hive of warehouses — could be overwhelmed by an influx of cargo.
“We’ve got to get ahead of this tsunami that’s coming,” said Laredo’s then-mayor, Pete Saenz. “We’re behind now.”
A huge build-out is under way. North of the city, an army of excavators tore at the pale soil, turning ranch land dotted by cacti into industrial parks, warehouses and trucking yards on both sides of Interstate 35, the ribbon of pavement linking Mexico to the midsection of the US and Canada.
Some 185,806sq m of warehouse space is under construction in Laredo, according to Prologis, a real estate investment firm. That amounts to a 5 per cent increase in space.
But with warehouses more than 98 per cent occupied, the new facilities may be quickly filled.
“There’s definitely a space issue in Laredo,” Garza said. “Warehouses are full. We say no to clients a lot.”
Goods traded between the US and Mexico in 2021 exceeded US$660b, an increase of nearly one-fifth from the previous year, according to US census data. Trade expanded at a similar clip last year, according to available data.
Adding to the urgency is the widely held assumption that this is merely the beginning of what could be decades of growth in trade between the two neighbouring countries, as American retailers seek suppliers in the same hemisphere as their customers.
“A lot of companies are no longer willing to chase cheap labour at the cost of getting their goods to customers on time,” said Gene Lindgren, president of the Laredo Economic Development Corp, which courts investment for projects in the area. “China’s so big that just taking a tiny little slice and putting it in Mexico is huge for Laredo.”
Four years ago, the US Department of Transportation projected steep increases in trucks passing through Laredo, with southbound border crossings alone reaching 9800 by 2025. Traffic reached that level by the end of 2021, four years earlier than anticipated.
“All the projections are behind,” said Glafiro Montemayor, president of Gemco, another Laredo-based freight handler. He noted that 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?”
Montemayor is raising funding for a project presented as the answer to that question: a US$360m bridge crossing the Rio Grande south of Laredo. The customs process would be handled jointly by American and Mexican authorities, entailing only one inspection. That would allow trucks to complete the crossing within 30 minutes.
The Mexican Government has already approved the project, Montemayor said, while the US State Department is nearing the completion of its own review.
His plan is a linchpin to a logistics hub that could provide an alternative to excessive reliance on major ports like Los Angeles, the scene of torturous floating traffic jams during the worst months of the Covid-19 pandemic.
Nearly two-thirds of the containers reaching ocean ports on the West Coast of the US are destined for the middle of the country and the East Coast — regions reached more easily by rail and truck from Laredo, Montemayor said.
Already, some American companies importing goods from Asia are bypassing the 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 across North America.
Kansas City Southern, the giant railroad, picks up containers arriving from Asia at the port of Lazaro Cardenas, in the Mexican state of Michoacan, and carries them north. The company recently broke ground on a US$100m project that doubles the capacity of a rail bridge spanning the Rio Grande.
At the same time, Mexican authorities are pursuing their own plans to ease the flow of goods across the border.
At the City Hall event, Saenz appeared with officials from the Mexican state of Nuevo Leon, on the opposite bank of the Rio Grande. There, a young, development-minded governor, Samuel Garcia, is promising to upgrade highways linking Monterrey to the border as part of an aggressive courtship of foreign investment.
The highway project is aimed at increasing the appeal of a now largely spurned Rio Grande crossing, the Colombia bridge, a 40-minute drive from the warehouses and distribution centres in Laredo. More than 80 per cent of the cross-border truck traffic opts for the far closer World Trade bridge.
Given the typically horrendous congestion on the roads leading to the World Trade bridge, Nuevo Leon is betting that it can entice more traffic to the Colombia crossing by easing passage from that span to Monterrey.
Demand for the Colombia bridge appears destined to accelerate.
Tesla is expected to announce plans to locate a new electric vehicle plant within the Mexican state, shipping completed vehicles to the US and Canada. Lego operates its largest factory in Nuevo Leon, using 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 jeopardising the opportunities for the region by withholding funds needed to expand the surrounding highway system.
They complain that the Texas Department of Transportation bases highway funding on population size — a process that favours major cities like Dallas and Houston — even though 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.
Smack against the river in the old downtown, the pastel shades of Mexico visible on the opposite shore, storefronts lie abandoned.
What businesses remain highlight desperation — bail bonds agents, plasma collection centres offering cash for bodily fluid, pawnshops.
Border Patrol officers sit in their vehicles on a bluff looking down on the thigh-deep water.
A mile away from the river, alongside railroad tracks, the first generation of warehouses sit idle, the sun gleaming off their siding.
Fourteen kilometres to the north, at the Killam industrial park, trucks hauling 16m trailers pull in and out of sleek, modern warehouses, carrying goods moving north and south.
Garza’s family business occupies two of these structures. Its freight-forwarding business is largely devoted to moving vehicle parts.
On a recent morning, orange plastic crates holding seals for car doors made in Alabama were arrayed on wooden pallets, en route to an assembly plant in Mexico.
Transmission parts produced in Illinois and headed for a factory in Monterrey were stacked in a pile under a laminated white card marked “Expedited”.
“They will be out by the end of the day,” Garza said. “‘Urgent’ is a very common word around here.”
A forward-thinker by nature, Garza, whose only child is still a baby, confidently describes plans to have three more.
He brings the same state of mind to surveying the terrain 6km the interstate, looking for an empty plot that his company can buy and turn into more warehouses.
“We need to buy land now and build later,” he said.
This article originally appeared in the New York Times.
Written by: Peter S. Goodman
Photographs by: Carter Johnston
©2023 THE NEW YORK TIMES
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