Diesel price increases have an impact on US-Mexico import rates.
On Thursday, the price of diesel gasoline in the United States reached an all-time high of $5.55 per gallon, a rise of about 20 cents from just a week ago and 51 cents more than prices in April.
While carriers and owner-operators across the United States struggle to keep up with escalating fuel costs, the cost of diesel is also hurting freight rates and transportation capacity in Mexico.
According to Maria Teresa Torres, a pricing and procurement manager for Nuvocargo, a New York-based digital logistics platform for cross-border trade between the United States and Mexico, rising diesel prices have already forced some of Mexico’s major trucking companies to raise rates by 3% to 5%.
“Diesel is one of the most crucial components in any land freight rate because it accounts for around 30% of the overall price,” Teresa Torres explained. “The increase in fuel prices represents an expense that carriers must bear prior to shipping.”
She claims that import rates between the United States and Mexico are not as low as they once were due to a lack of cross-border freight capacity.
“Southbound rates are growing and approaching export expenses,” Teresa Torres explained. “We are presently dealing with a significant increase in import rates, not only due to the increase in gasoline prices but also due to limited capacity and driver shortage.”
Other factors influencing freight rate increases include market-based trading, wait periods, delays, and stays, all of which have an indirect impact on rates.
It’s uncertain whether current diesel costs are influencing US-Mexico commerce. Laredo, Texas, is currently the nation’s No. 1 port of entry for Mexican imports, handling everything from autos, automotive parts, and fresh and frozen vegetables, to home products, machinery, and electronics.
According to FreightWaves’ Outbound Tender Volume Index, which highlights whether markets are seeing continuous volume increase or contraction, Laredo volumes are down nearly 6% since Monday.
In Mexico, small trucking companies or owner-operators account for over 80% of fleets. Mexico imports 80 percent of its gasoline from the United States, but gas and diesel are cheaper in Mexico because the Mexican government provides subsidies to the trucking industry to offset operational costs.
Diesel prices in Mexico were around $4 per gallon last year. Diesel fuel in Mexico cost roughly $4.31 per gallon as of Friday.
“Although the increase is not as significant as in the United States because the Mexican government has subsidized most [diesel fuel], it is still negative,” Teresa Torres remarked.
Fuel surcharges on freight rates are not yet typical in Mexico, which might catch cross-border shippers off guard.
“Lower prices and how long they can be maintained are a key aspect for client attractiveness,” Teresa Torres stated. “Although fuel surcharges are required in Mexico, price volatility is a key worry for shippers.” This is because the increase in fuel prices has a direct impact on the final price for consumers. Fuel surcharges (rather than set rates) assist supply chain participants to avoid financial losses.”
South Texas College collaborates with a carrier to provide CDL instruction.
South Texas College (STC) in McAllen, Texas, has established a partnership with a cross-border carrier to offer a CDL curriculum.
The program is a collaboration between the institution and Trancasa, which operates a fleet of 700 trucks, 450 in Mexico and 250 in the United States. Trancasa is headquartered in nearby Pharr, Texas.
According to officials, the program will meet the Federal Motor Carrier Safety Administration’s new entry-level driver training criteria.
“We realize there is an urgent demand for truck drivers, and we are planning a very rigorous program where students will be able to acquire their CDL… and get them on the road as quickly as possible,” said South Texas College President Ricardo J. Solis in a statement.
Over the course of five weeks, the CDL course will consist of 200 hours of instruction: 40 hours of classroom and computer lab teaching, as well as 160 hours of observation and driving on a training range and public roadways.
The program is set to start in the fall semester.
Logistics Plus opens a facility in Arizona of 542,000 square feet.
Logistics Plus, based in Erie, Pennsylvania, recently completed a 542,000-square-foot warehouse in Phoenix to improve supply chain efficiency for West Coast imports and exports.
“A portion of the building will be instantly occupied with clients from our burgeoning solar and technology sectors,” said Tom Kelly, who will oversee the warehouse’s operations.
Logistics Plus’ second-largest commercial warehouse is housed in this building. Logistics Plus maintains over 2 million square feet of warehouse space across the country at over a dozen facilities.
Mexican tequila exports increase by 32% in the first four months of 2022.
According to data from the Jalisco, Mexico-based Tequila Regulatory Council, Mexican manufacturers exported 126 million liters (33 million gallons) of tequila from January to April, a 32.1 percent increase over the first four months of 2021. (CRT).
The US remains the leading importer of Mexican tequila, accounting for 83 percent of sales in the first quarter. The United States imported 104.9 million liters of tequila, a 27 percent increase over the same period in 2021.
Germany, Spain, Colombia, and Latvia were among the top importers of Mexican tequila during the first four months of the year.
According to CRT, Mexican tequila exports have climbed over 50% in the last two years, from 351.7 million liters in 2019 to 527 million liters in 2021.
