Transport and logistics have always been the backbone of the global economy. Like any other industry, the transport and logistics industry faced several challenges during the pandemic. COVID-19 created an imbalance between supply and demand for goods, significantly affecting supply chains worldwide, which were only further impacted by the growing associated geopolitical tensions. In the United States, all of this triggered a wave of reorganization and nearshoring, much of which showed a focus not only on the cross-border freight market between the United States and Mexico, but also on the larger logistics industry within LATAM and the great growth opportunity that exists within this vertical and this region.
Technology at the heart of new-era logistics: Over the last decade, a first generation of logistics technology companies has digitized the logistics realm, particularly in the United States, setting the stage for innovation in other regions to follow suit. A recent McKinsey study showed that early adopters of AI in the supply chain saw logistics costs decrease by 15% and inventory levels decrease by 35%. The recent democratization of AI will only facilitate the building of logistics solutions in the space, particularly across ALL of LATAM.
Healthy trade between the United States and Mexico: While Mexico represents only one country within LATAM, it represents one of the most active regional players and is among the largest trading partners of the United States, with the multibillion-dollar cross-border goods market (which stood at $61B in December 2022, a 7% YoY increase) ripe for digitization and automation.
Internet penetration and e-commerce growth: In two decades, 57% of Latin America's population gained access to the Internet (up from 3% in 2000), according to Statista. The LATAM population with Internet connectivity represents ~10% of Internet users worldwide. This has only fueled a strong proliferation of new businesses across the region, including in last-mile delivery, 3PL, and a broader logistics sphere in LATAM.
While historically corruption, bureaucracy, violence, language barriers, and availability of funds have been risks in the region, government and regulatory bodies continue to drive policies and foster favorable social and economic conditions for the growth of a tech-friendly ecosystem for founders and investors. This ecosystem maturity will only accelerate as we see continued private investment pushing/pulling into the region that will require business processes and regulation to safeguard those assets.
Road transport between the United States and Mexico is among the five largest trade routes in the world, with 6.5 million truck shipments between Mexico and the United States each year. It's worth noting that 80% of all goods transported between the United States and Mexico are moved by truck.
https://www.wsj.com/video/series/in-depth-features/the-booming-texas-border-town-at-the-center-of-a-global-trade-shift/2F243A8C-F9AD-4148-8DB5-B820FA8FF3D1?reflink=share_mobilewebshare
https://www.youtube.com/watch?v=GXT46osICdY
A market (which stood at $61B in December 2022, a 7% YoY increase) ripe for digitization and automation.
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