The assassination of Nemesio “El Mencho,” the leader of the Jalisco New Generation Cartel, recently sparked a wave of violence throughout Mexico, highlighting threats to the interconnected North American supply chain. The trucking industry transports billions of dollars’ worth of goods between the US and Mexico, so any political or terror-related unrest will also impact this relationship.
In a number of Mexican states, cartel attacks, road blockades, and arson have caused disruptions to freight corridors. Truck drivers face increased difficulties traversing these routes, which delays supplies along important routes that serve supply chains heading north. This volatility coincides with increased security threats to shipping, such as highway violence and cargo theft, which have put pressure on shippers and carriers for years.
The U.S.-Mexico trade connection is crucial because land freight makes up the majority of bilateral trade, with millions of truck crossings each year facilitating everything from food and agricultural items to electronics and car parts. Mexican roadway instability can result in lengthier transit times, higher insurance premiums, redirected logistics, and delays at border crossings, all of which have an impact on trucking operations in the United States.
As security fees and risk-mitigation expenses climb, American carriers that transport cross-border freight may experience an increase in rates. Long-term delays and route changes also run the risk of disrupting the carefully-planned and extremely precise supply chains that American merchants and manufacturers rely on, which could force shippers to look into more costly options.
Increased cargo theft and worries about driver safety may also raise insurance rates for US carriers. Some may simply choose to temporarily cut back on or stop operating north-south routes until things settle down. Logistics professionals caution that in order to preserve cross-border freight flows, trucking businesses need to invest in improved security measures and create backup plans, even if the turmoil is isolated.
Long-term, persistent instability in Mexico may have a structural impact on the trucking business in the United States, changing routes, raising prices, and hastening investment in alternate supply chain tactics.