Redwood Logistics expands Mexico footprint as nearshoring trend gains steam

Redwood Logistics has expanded its operations in Mexico, showing the latest step in a logistics industry trend to build tighter supply chains between the U.S. and Mexico in the wake of pandemic supply disruptions.

Chicago-based Redwood said it had expanded its operations into new offices in Monterrey, Mexico, building on a five-year history of doing business in that country. The move reflects the investment that businesses are making in nearshoring efforts as they look to reduce manufacturing and cash-to-cash cycles, the company said.

“Mexico has evolved from an exporter of basic goods to a manufacturing hub for the most complex and technologically advanced consumer goods, and we are seeing major investments from the world’s largest retailers and manufacturers from industries including automotive, appliances, aerospace, pharmaceutical, HVAC and food & beverage,” Jordan Dewart, president of Redwood Mexico, said in a release. “As shippers of all kinds make the move south of the border, it’s vital that we grow to match their efforts.”

The move came a day after the Florida-based third-party logistics provider (3PL) BlueGrace Logistics made a similar announcement, establishing a Mexico office that will provide support for an existing portfolio of shippers moving freight inter and intra Mexico beginning late 2023.

“As more companies look for nearshoring opportunities, BlueGrace is aligning itself with shippers’ needs,” said Bobby Harris, Founder and CEO of BlueGrace Logistics. “Our customers are becoming less reliant on overseas suppliers and this next phase in BlueGrace’s growth will help clear the path of least resistance getting their products to market.”

In the wake of Mexico’s accelerated nearshoring market, BlueGrace said it is positioning itself to become a transportation services gateway for the electronics, appliances, and automotive industries, as well as consumer packaged goods (CPG) shippers.

Another example of growing U.S.-Mexico ties was the approval last month of the $31 billion merger between Canadian Pacific and Kansas City Southern railroads, which the partners say creates “the first and only single-line railway connecting Canada, the U.S. and Mexico.”

“The port disruption and manufacturing delays that shippers experienced due to the pandemic was a wakeup call of epic proportions,” Redwood’s Dewart said. “Nearshoring is not a new idea, but what is new is the scale of investment that companies are making. The savings you get from manufacturing in Asia are offset if your containers sit on ships for hundreds of days, you rack up huge demurrage fees and chassis are unavailable at the destination port. With Mexico, you simply put what you need on a truck and can have it at a final-mile distribution warehouse within days, rather than months.”