Issue #26: Monthly Digest – May
After essentially writing a long-form newsletter every week, I decided to try something different with more of a digest format for this week. Turns out this one is still long.
Last week in Laredo and Eagle Pass
I spent most of the last week at the US-Mexico border, mostly in Laredo, with a few hours in Eagle Pass, which is a two-hour drive northwest of Laredo. We attended the 4th annual Port of Eagle Pass Trade Summit, where I ran into a few industry friends, including Noi Mahoney at FreightWaves, who covered his visit in his weekly Borderlands writeup. Eagle Pass is a very small town compared to even Laredo, as it ranks #12 out of 14 commercial border crossing cities, but was also the fastest growing border city in the US when you compare Q1 2023 to Q1 2024.
Fun fact about Eagle Pass: Corona and Modelo are both made just across the border from Eagle Pass, TX, in Nava, COA, at Constellation Brand’s brewery.
Second (and heavily related to the first) fun fact about Eagle Pass: Hops and beer make up the two of the highest traded goods that move through this border city.
Most of our time spent in Laredo was meeting with carriers who have been engaging with our platform in the first six weeks that it’s been live. We’re learning quickly by going and meeting with users early and asking them the right questions. While meeting with carriers, we revisited some of the key decisions that go into a carrier’s strategy for how they operate. I’ve talked about how carriers operate in the past, if you want to read Issue #22: Put on your carrier sales hat, shirt, and pants. We spent some time talking about their networks and the market and how those two things intersect.
Mexico Market Update
Before I share some of the market takeaways from the conversation, I wanted to share this map of Mexico and highlight something that’s core to how freight moves from Mexico to the United States. Over forty percent of all freight moving across the US-Mexico border moves through Laredo TX. That volume is generally starting or ending in one of four major markets that, collectively, make up the Golden Triangle in Mexico: Monterrey / Saltillo, Guadalajara, Mexico City / Puebla, and el Bajio, which is in the center of those markets. You can see it laid out in this map:
We’re getting into that part of the year where Mexico volume could start to pick up. I’ll share a few takeaways from the Laredo trip below:
Most cross-border carriers prefer freight out of Monterrey, NLE and Ramos Arizpe / Saltillo, COA. It’s only 155mi and 205mi, respectively, south of Laredo TX, the highest volume port in all of North America.
Mexico City is over 700mi south of Laredo and, while there’s a ton of demand out of that area, less carriers are willing to service it. There just isn’t enough volume moving to southern Mexico that will help move equipment that far south. Instead, logistics providers and shippers are forced to pay carriers to deadhead from their next closest terminals, either in Monterrey or el Bajio, which drastically drives rates up. Combine the distance and lack of volume with security concerns in the area, and you’re going to see limited supply from carriers and increased rates.
Bottom line, between Monterrey and Mexico City, carriers have a strong preference toward moving freight out of northern Mexico as it’s simpler and safer. They will move freight out of Mexico City and the surround areas, like Edo Mex, Tlaxcala, Hidalgo, and Puebla, but it’ll cost you.
Some carriers will service Guadalajara but only if they have the right partner carrier who already services it. They won’t go out of their way to pickup in the area given the limited commodities that ship out of there, along with the high value with freight like tequila and electronics.
Once in a while, you run into those carriers who do like moving freight out of southern Mexico, and when I say southern, I mean as far south as you can get. They’ll pick up in Chiapas, Quintana Roo, and Michoacan. While most carriers don’t get that far south, some do. It may be worth a deeper dive in a future newsletter, covering how those carriers service markets like that.
Produce season also seems to be picking up as refrigerated capacity is tightening up too (read more about produce in Issue #12: Produce from Mexico).
Building in Mexico Tip of the Week
There’s so much that goes into expanding a service offering into Mexico as a US-based logistics provider. I went into detail on this in Issue #13: The Cross-Border Blueprint but I get so many questions about how to execute on a strategy like this.
I’ll share a key tip that I think a lot of people overlook, and some people will disagree with: establish a physical footprint in Monterrey, NLE. Yes, I think a presence in el Bajio and Mexico City can and will have value, but, if I were going to build anywhere in Mexico today, it would be Monterrey. It’s only three hours away from Laredo, where most customs brokers and carriers are located, and it’s where you’re going to find the most bicultural talent. It’s getting more expensive than other areas of Mexico, but it’s worth the investment to start in this critically important city. It’s easy to get to from most major cities in the US and there’s flights from Monterrey to every other major city in Mexico.
When you think about eventually building out that sales footprint, I would have a combination of in-office sales and boots on the ground. Your shipper customers want to meet their suppliers in person in Mexico and, having people strategically located in major manufacturing hubs like Tijuana, Mexicali, Juarez, Chihuahua, Queretaro, San Luis Potosi, Guadalajara, Mexico City, Reynosa, and Matamoros is ultimately how you can get a true sales advantage. Just my two cents.
Building in Public
I’ve talked in the past about how I would aim to get to one hundred customers before hiring any sales people. I’ve been adamant about that. My schedule has turned into a nightmare as I spend most of my day doing demos and have also started setting up regular check-in calls with our earliest customers to keep the feedback loop tight.
Recently, my board pushed me to think about bringing on sales support sooner. While we aren’t hiring a salesperson yet, we’re hiring some incredible operators who are going to help dramatically accelerate our GTM and operations functions and position us to better scale. I imagine we’ll end up bringing on our first account manager or account executive sooner than later, as that’s what makes the most sense for the business. Rather than me trying to handle every single sales call, we’re going to turn that into a repeatable motion and hopefully accelerate growth even more.
More content is coming
I’m committed to a weekly newsletter and am always open to covering other topics within freight or entrepreneurship. If there’s something you’re interested in learning more about, send me back a note and let me know what you would find interesting. Who knows, at some point I’ll even talk about what we’ve been building this whole time at Cargado.
Speaking of Cargado, if you’re actively moving cross-border freight and aren’t leveraging our platform, you’re missing out. Join the waitlist to get a demo and I’ll show it to you myself!