Borderlands Mexico: Cartels a barrier to growing cross-border trade, expert says

Cartels a barrier to growing cross-border trade, expert says

An international trade expert sees promise in Mexico’s approach to enhancing trade but says organized crime remains an obstacle.

On Jan. 13, Mexican President Claudia Sheinbaum unveiled Plan Mexico, an ambitious initiative aimed at ultimately lifting her country from 12th place to among the top 10 economies in the world.

Plan Mexico includes a portfolio of $277 billion in national and foreign investments to be distributed across 2,000 projects in sectors such as the automotive, pharmaceutical, aerospace, agribusiness, electromobility and textile industries.

The initiative also includes increasing Mexico’s share in global exports to 15%, reducing the time to approve investment projects in the country from 2.6 years to one year and solidifying the United States-Mexico-Canada Agreement to help North America compete against China.

Jorge Gonzalez Henrichsen, co-CEO of The Nearshore Co., praised the plan as a step in the right direction for trade across North America but said it fails to address the issue of organized crime in Mexico.

“Plan Mexico has positive initiatives, good initiatives. I’m glad that the government is looking at this, but some questions are how it is going to be executed,” Henrichsen told FreightWaves in an interview. “One thing that I was surprised that the Mexico plan does not talk about, or at least it doesn’t seem to be addressing, is the cartel issue, which is really the elephant in the room.”

The Nearshore Co., based in Brownsville, Texas, is an international trade and development firm that helps companies set up shelter operations in Mexico.

A trade spat between the U.S., Canada, Mexico and China has emerged in the past several weeks over President Donald Trump’s use of tariffs against those countries as a way to hold them accountable for what he said is the growing flow of fentanyl and illegal immigrants across U.S. borders.

The Trump administration hit imports from Canada and Mexico with 25% tariffs at midnight on Tuesday, alongside an additional 10% tariff on goods from China imposed Monday.

On Thursday, Trump paused the 25% tariffs on goods from Canada and Mexico until April 2.

“We’re talking about tariffs, but everything you read and hear from the politicians is this link between the tariffs to the cartels. The cartels are actually involved in both issues that the Trump administration keeps talking about, which is fentanyl, the drug trade, and in the immigration issue,” Henrichsen said. “In my view, for nearshoring in Mexico to take off as we all once imagined it would, if we want to improve [Mexico’s] chances of this being a success story for the next decades, we need to address the things that are in the Plan Mexico, plus the cartel situation.”

The U.S. and Mexico have cooperated in the past to curb cartel crimes, including the Mérida Initiative, according to the Council on Foreign Relations, a Washington-based think tank.

“In 2008, the United States and Mexico began implementing the Mérida Initiative, a counternarcotics cooperation framework that provides Mexico roughly $400 million a year in assistance, including military aircraft, surveillance software, and airport inspection equipment. Meanwhile, drug-related killings soar; in 2009 alone, more than 9,600 people are killed in connection with organized crime,” the Council on Foreign Relations said in a report.

In 2023, President Joe Biden and Mexican President Andrés Manuel López Obrador agreed to boost bilateral efforts to curb manufacturing and distribution of fentanyl. 

“The two leaders also discuss how to manage the nearly 2.5 million irregular border encounters recorded in fiscal year 2023, the most on record,” the Council on Foreign Relations said.

In recent weeks, Mexican authorities have made some moves to crack down on illegal border crossings and curb organized crime in the country.

Mexico began using members of its Army at border crossings in Laredo and Pharr, Texas, to inspect cargo trucks and passenger vehicles before they enter the United States. 

Last week, Mexican authorities sent 29 drug cartel figures, including a man involved in the 1985 killing of a Drug Enforcement Administration agent, to the U.S., The Associated Press reported.

U.S. Border Patrol recorded about 8,450 apprehensions of migrants who crossed into the country unlawfully along the U.S.-Mexico border, according to preliminary government data obtained by CBS News.

February’s total could be the lowest monthly apprehensions recorded by border agents since at least fiscal year 2000.

Henrichsen said if Mexico can clamp down on organized crime and make good on other initiatives as part of Plan Mexico, it would improve foreign investment opportunities, not just in Mexico, but across North America.

“Companies do call us and they are interested in Mexico,” Henrichsen said. “They say, ‘I want to try putting a business there, but I want to try it with you as a local partner, because I’ve never run a facility there.’”

Henrichsen said his firm recently talked to a company that has operations in China that is seeking to diversify its supply chain because of geopolitical uncertainties around the world. 

“They have already opened another operation in Vietnam, and they have an operation in the U.S., in Texas, and they want to be diversified between several countries. This is an example of a company that is looking to structure their supply chain for the next 20 years,” Henrichsen said. 

Related: Trump pauses tariffs on all imports from Canada, Mexico for 1 month

Tesla plans to build massive battery plant in Texas

Tesla (NASDAQ: TSLA) plans to build a battery factory and storage facility near Houston, according to Electrek.

Austin, Texas-based Tesla will take over a 1 million-square-foot building that it already held the lease on at Empire West industrial park near Brookshire, about 40 miles west of downtown Houston.

The facility had previously been occupied by freight forwarder DB Schenker, where it handled parts deliveries for Tesla in the region.

The Tesla factory will build megapack batteries, along with large-scale energy storage systems for solar and other renewable energy projects.

The factory could employ as many as 1,500 workers by 2028. Tesla did not disclose the timeline for the factory, but a tax abatement agreement with Waller County starts in 2026.

Logistics firm opens second supply chain facility in Austin, Texas

RK Logistics Group opened its second facility in Austin, Texas, aimed at providing supply chain management solutions for semiconductor, automotive and lithium-ion battery companies.

The 84,000-square-foot logistics center is in north Austin at 2120 Grand Avenue Parkway. The 15-dock-door temperature-controlled warehouse provides secured storage, inventory management, order assembly and kitting, order fulfillment, and expedited and dedicated transportation solutions, according to a news release.

In 2023, RK Logistics opened a 200,000-square-foot warehousing and distribution center in Kyle, about 20 miles south of Austin.

RK Logistics Group, based in Fremont, California, is a 3PL that targets high-tech companies. The company has 17 facilities in five states totaling 1.7 million square feet of warehouse space.

Authorities seize $4M in drugs hidden in blueberry shipment

Law enforcement in South Texas recently discovered 1,500 pounds of methamphetamine concealed in pallets containing blueberries from Mexico, according to the U.S. Drug Enforcement Administration.

The Pharr Police Department contacted the DEA on Tuesday with information that pallets containing methamphetamine were at a distribution warehouse in Pharr, Texas, Eric Castaneda, assistant special agent with the DEA, told KRGV.

Police worked with the DEA to seize the drugs. The load containing the blueberries originated in the Mexican state of Michoacan and was destined for Atlanta, Castaneda said.

Authorities did not say if any arrests were made when the methamphetamine was seized. The drugs had a street value of $4.8 million.    

The Pharr-Reynosa International Bridge, which connects Pharr to Reynosa, Mexico, is one of the busiest border crossings in the country for fresh produce from Mexico.

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