WEBVTT - Why a Former Freight Broker Is Making a Major Bet on Mexico 0:00:02.480 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.160 --> 0:00:22.279 Hello and welcome to another episode of the Odd Lags podcast. 0:00:22.360 --> 0:00:24.639 I'm Jill Wisenthal and I'm Tracy Allaway. 0:00:24.800 --> 0:00:28.440 So obviously, Tracy is something that we've grown more interested 0:00:28.600 --> 0:00:30.720 in lately and it has very interesting sort of a 0:00:31.000 --> 0:00:35.440 macro trade maybe political implications. Is this sort of the 0:00:35.479 --> 0:00:38.400 booming numbers we see in US Mexico trade? 0:00:38.720 --> 0:00:42.840 Absolutely so, US Mexico trade has picked up, as you 0:00:42.880 --> 0:00:45.959 have pointed out, and I'm kind of curious about the 0:00:46.000 --> 0:00:49.440 reasons why this is what most interests me at the moment, 0:00:49.600 --> 0:00:52.200 as well as like the physical process of moving goods 0:00:52.200 --> 0:00:55.640 from Mexico into the US. But there's the story this 0:00:55.760 --> 0:00:59.960 idea here about friend shoring. So given the Trump trade 0:01:00.280 --> 0:01:05.040 war and its ongoing evolution under the Biden administration, tensions 0:01:05.080 --> 0:01:09.000 happened rising with China, there's this idea of companies maybe 0:01:09.040 --> 0:01:12.800 moving some of their production away from China into either 0:01:12.840 --> 0:01:16.479 Southeast Asia or maybe Mexico. So we've seen a bit 0:01:16.520 --> 0:01:19.200 of a pickup. I really want to know what is 0:01:19.280 --> 0:01:22.640 driving it. Is it actually that friend shoring idea, or 0:01:22.720 --> 0:01:25.080 is it maybe something else. I know, Mexico, for instance, 0:01:25.120 --> 0:01:28.280 is a really big exporter of car parts, so how 0:01:28.360 --> 0:01:31.280 much of that is driving it? I've seen Brad Setzer 0:01:31.440 --> 0:01:34.160 discuss this a little bit on Twitter. So I am 0:01:34.200 --> 0:01:37.240 excited to get into Mexico US trade totally. 0:01:37.319 --> 0:01:39.640 And you know you mentioned, you know, sort of Trump 0:01:39.760 --> 0:01:42.600 kicked it off after he won the twenty sixteen election 0:01:43.160 --> 0:01:47.000 by beginning the process of tariffs sound China and rewriting 0:01:47.080 --> 0:01:50.720 NAFTA which became the USMCA and really sort of encouraging 0:01:51.160 --> 0:01:55.360 a shift in supply chains to North America to the 0:01:55.360 --> 0:01:58.760 Western hemisphere. And then it probably really accelerated further with 0:01:58.880 --> 0:02:01.559 COVID and just the mass of headaches that everyone had 0:02:02.000 --> 0:02:05.320 getting stuff out of China. And so right, that's sort 0:02:05.360 --> 0:02:08.080 of when the idea of like friends showing or near 0:02:08.120 --> 0:02:10.160 shoring like really picked up, like just sort of this 0:02:10.280 --> 0:02:15.119 supply chain resiliency idea. And then this raises all sorts 0:02:15.120 --> 0:02:17.760 of other interesting questions because of course, if you're a 0:02:17.840 --> 0:02:21.600 Chinese company, like you're a Chinese automaker, say, or a 0:02:21.720 --> 0:02:24.280 company that makes other high tech goods and maybe you're 0:02:24.320 --> 0:02:27.000 worried about terrorists, we're like, well, can you set up 0:02:27.000 --> 0:02:29.360 in Mexico and get around evidence so that it's like, 0:02:29.680 --> 0:02:32.520 so it is still coming in from Mexico, but the 0:02:32.520 --> 0:02:35.280 beneficial owner somewhere in China. Like, there are some really 0:02:35.440 --> 0:02:40.120 interesting questions that arise out of cross border US Mexico trade. 0:02:40.200 --> 0:02:42.160 Yeah, it's funny you mentioned that. I was just reading 0:02:42.240 --> 0:02:45.480 an article in the FT that came out recently and 0:02:45.520 --> 0:02:48.000 they were talking about the number of container ships going 0:02:48.000 --> 0:02:51.320 from China to Mexico has hit eight hundred and eighty 0:02:51.360 --> 0:02:54.600 one thousand in the first three quarters of twenty twenty three, 0:02:54.880 --> 0:02:58.239 which is up from like six hundred eighty nine thousand 0:02:58.320 --> 0:03:01.840 in the same period from so a lot of growth 0:03:02.040 --> 0:03:03.600 just in the space of a year. And it does 0:03:03.639 --> 0:03:07.880 beg the question again of what exactly is coming through Mexico. 0:03:08.040 --> 0:03:10.640 How much of this is a genuine shift in US 0:03:10.800 --> 0:03:15.359 trade away from China versus the sort of rerouting totally. 0:03:15.400 --> 0:03:17.280 So we see the numbers and we want to get 0:03:17.280 --> 0:03:19.560 a better understanding what are the types of goods and 0:03:19.600 --> 0:03:21.960 so on. And I'm very excited to say, we really 0:03:21.960 --> 0:03:24.720 do have the perfect guest. It's someone from the freight 0:03:24.760 --> 0:03:28.200 world who's been working with US Mexico trade for a 0:03:28.200 --> 0:03:31.160 long time and now the co founder of a new 0:03:31.240 --> 0:03:34.440 company that's sort of going to focus on freight that 0:03:34.520 --> 0:03:37.480 goes cross border from Mexico to the US. Matt Silver, 0:03:37.600 --> 0:03:40.240 co founder and CEO of car Gato, Matt, thank you 0:03:40.320 --> 0:03:41.680 so much for coming on odd Laws. 0:03:42.000 --> 0:03:44.080 Absolutely thank you for having me excited to be here. 0:03:44.200 --> 0:03:48.760 All right, So, really simple question to start. If there's 0:03:48.800 --> 0:03:51.960 some piece of machinery that you want to ship from, 0:03:52.000 --> 0:03:56.440 say Texas to California, how much easier is that than 0:03:56.760 --> 0:04:00.080 shipping a piece of machinery from Mexico to California. May 0:04:00.280 --> 0:04:03.080 to flip it the other way around. For a given 0:04:03.280 --> 0:04:07.240 unit of good, what is the complexity of getting that 0:04:07.280 --> 0:04:09.400 good across the border rather than just shipping it. 0:04:09.360 --> 0:04:14.440 Domestically, So shipping something from Texas to California, if you're 0:04:14.440 --> 0:04:17.599 a logistics provider or a trucking company, your main responsibility 0:04:17.640 --> 0:04:19.560 is to make sure that you get the freight picked 0:04:19.640 --> 0:04:23.560 up at that location in Texas, that it's scheduled to delivery, 0:04:23.720 --> 0:04:25.880 and that ultimately you go deliver the load on time, 0:04:26.480 --> 0:04:28.680 and that you get what was considered the bill of 0:04:28.760 --> 0:04:31.200 lading signed by the receiver and it turns into a 0:04:31.240 --> 0:04:33.880 proof of delivery and you're good to go. When you're 0:04:33.920 --> 0:04:36.240 moving a shipment from Mexico to the United States. And 0:04:36.320 --> 0:04:39.480 let's say you're going from somewhere Lake Monterey to California. 0:04:40.080 --> 0:04:42.040 You would get that load picked up in Monterey by 0:04:42.080 --> 0:04:44.440 a Mexican trucking company that would bring the freight up 0:04:44.480 --> 0:04:47.599 to the border. It would clear Mexico customs, go through 0:04:47.720 --> 0:04:50.880 US customs, dealing with a Mexico customs broker and a 0:04:50.960 --> 0:04:54.400 US customs broker and a border crossing carrier, and then 0:04:54.400 --> 0:04:57.039 you're working with a US trucking company that's going to 0:04:57.040 --> 0:05:00.360 bring that load from say Laredo, Texas to Los Angeles. 0:05:00.800 --> 0:05:03.719 And so for a cross border shipment, there's somewhere between 0:05:03.760 --> 0:05:06.599 six and eight parties involved in a single shipment, whereas 0:05:06.600 --> 0:05:09.080 the domestic shipment has you know, the trucking company and 0:05:09.080 --> 0:05:09.960 the shipper and the receiver. 0:05:10.640 --> 0:05:13.240 As someone who has shipped a lot of stuff like 0:05:13.440 --> 0:05:17.080 home goods between the US and other places, the customs 0:05:17.160 --> 0:05:21.000 process is always more complex and more time consuming than 0:05:21.040 --> 0:05:23.960 you think it will be. On which note, Matt, how 0:05:24.040 --> 0:05:27.360 long would it take for that entire end to end 0:05:27.560 --> 0:05:31.359 process versus say a domestic shipment, which I guess just 0:05:31.360 --> 0:05:33.880 gets picked up. And then the uncertainty on the time 0:05:33.920 --> 0:05:36.760 is really just the driver going somewhere, and how long 0:05:36.800 --> 0:05:39.880 that takes. How long does that sort of customs process 0:05:40.000 --> 0:05:40.640 usually take. 0:05:41.320 --> 0:05:44.039 Customs can take anywhere from one to three days. It 0:05:44.080 --> 0:05:46.440 could really go up to ten days. It could get 0:05:46.480 --> 0:05:48.240 longer than that if it takes a long time to 0:05:48.320 --> 0:05:51.520 prepare the paperwork. So the way that I always compare 0:05:51.560 --> 0:05:53.719 it from explaining this to somebody that has a basic 0:05:53.800 --> 0:05:57.400 understanding of freight is that a domestic shipment is your 0:05:57.400 --> 0:06:00.640 responsibility as a broker for you know, call it one 0:06:00.760 --> 0:06:03.160 to two days, maybe three days if it's a longer 0:06:03.240 --> 0:06:05.839 length of haul, but that load picks up and it delivers, 0:06:05.839 --> 0:06:08.400 and that's it. For a cross border shipment, it can 0:06:08.400 --> 0:06:11.719 be any anywhere from seven to twenty days. So you 0:06:11.800 --> 0:06:14.480 got your your standard transit time that you know from 0:06:14.560 --> 0:06:18.599 Monterey is four to six hours. From Central Mexico could 0:06:18.600 --> 0:06:20.800 be about a day, and then it could take anywhere 0:06:20.839 --> 0:06:22.680 from one to three days to cross the border, and 0:06:22.720 --> 0:06:24.800 then you know there might be a twenty four hour 0:06:24.880 --> 0:06:27.360 wait time before the load actually gets dispatch for delivery 0:06:27.400 --> 0:06:30.680 and then your standard transit in the US. So that's 0:06:30.720 --> 0:06:32.760 where it ends up at that seven to ten if 0:06:32.800 --> 0:06:33.760 not twenty days. 0:06:34.080 --> 0:06:36.719 Let's back up a little bit. I mentioned that you're 0:06:36.800 --> 0:06:39.200 the co founder of a new company that's going to 0:06:39.240 --> 0:06:43.720 focus on US Mexico trade. You've been interested in Mexico 0:06:44.279 --> 0:06:46.240 for several years. Why don't you just sort of give 0:06:46.320 --> 0:06:49.880 us the quick background of how you became a Mexico 0:06:50.000 --> 0:06:53.640 trade person and why you want to continue making this bet. 0:06:53.640 --> 0:06:54.960 A Mexico trade mega. 0:06:55.080 --> 0:06:57.680 Let you know you can describe your proper title. I'm 0:06:57.680 --> 0:06:59.200 just going to call you a Mexico trade. 0:06:59.000 --> 0:07:02.880 Person, Mexico freight expert, Mexico freight expert. May that's a 0:07:02.920 --> 0:07:09.000 little bitter Mexico Matt, there's a joke, but all right. 0:07:09.040 --> 0:07:11.040 So I got involved in Mexico freight when I was 0:07:11.080 --> 0:07:13.240 at Coyote. I was at Coyote for about a decade 0:07:13.640 --> 0:07:18.280 and some freight brokerage, yes, Coyote Logistics Brokerage. And I 0:07:18.320 --> 0:07:20.360 started the Mexico business while I was there by by 0:07:20.360 --> 0:07:24.320 sheer dumb luck and started building the network out and 0:07:24.320 --> 0:07:26.960 growing the Mexico business. And I spent about three three 0:07:27.000 --> 0:07:28.720 and a half years doing that, and then I left 0:07:28.720 --> 0:07:31.960 Coyote in twenty eighteen started my own company called Forager. 0:07:32.080 --> 0:07:34.440 We were a cross border digital freight brokerage. So we 0:07:34.640 --> 0:07:38.000 built our own proprietary technology similar to like an uber 0:07:38.040 --> 0:07:41.040 freight or a convoy, but specifically focused on moving freight 0:07:41.040 --> 0:07:43.920 between the US and Mexico. We were acquired by Arrival 0:07:43.920 --> 0:07:46.160 Logistics at the end of January of twenty twenty two, 0:07:46.640 --> 0:07:48.240 and then I left at the end of September of 0:07:48.280 --> 0:07:52.000 twenty twenty three. After helping integrate Forgernal Arrive and helping 0:07:52.360 --> 0:07:55.120 leading grow the Mexico business, ultimately left at the end 0:07:55.120 --> 0:07:57.720 of September and started working on Cargado shortly after that. 0:07:58.640 --> 0:08:02.880 So what was the in inspiration behind creating a company 0:08:02.880 --> 0:08:07.320 that is dedicated to Mexico US freight. What's the opportunity 0:08:07.320 --> 0:08:08.040 that you see there. 0:08:08.880 --> 0:08:11.360 I think there is so much complexity involved in moving 0:08:11.440 --> 0:08:13.880 across order shipment. Like I just kind of outlined that, 0:08:14.560 --> 0:08:16.880 I think there's a lot of need for technology, and 0:08:17.080 --> 0:08:20.480 with near shoring becoming such a major trend, all these 0:08:20.480 --> 0:08:24.160 manufacturers are moving production in Mexico. That's leading to the 0:08:24.200 --> 0:08:27.320 suppliers that have to support those manufacturers, whether it's their 0:08:27.720 --> 0:08:30.160 physical suppliers that are building the goods that are going 0:08:30.240 --> 0:08:32.800 into the parts that go into the car, or the 0:08:32.840 --> 0:08:37.080 packaging that goes into CpG products. Ultimately, it could be 0:08:37.080 --> 0:08:39.280 those types of suppliers, or it could be logistics companies 0:08:39.280 --> 0:08:42.520 and trucking companies, but they're all rushing to support their 0:08:42.559 --> 0:08:46.280 customers in Mexico. And so as all these logistics providers 0:08:46.320 --> 0:08:49.679 and trucking companies get involved in Mexico, I believe that 0:08:49.679 --> 0:08:51.160 they're going to need tools to be able to do 0:08:51.200 --> 0:08:53.120 their jobs. And I think that there's a better way 0:08:53.160 --> 0:08:56.280 to help them do their jobs. And it's just a 0:08:56.320 --> 0:08:58.840 matter of starting with the roadmap that we've built out 0:08:58.840 --> 0:09:00.720 to build what we're building at Cargatto. 0:09:01.320 --> 0:09:03.280 Talk to us about what you see on the ground. 0:09:03.400 --> 0:09:06.199 So I know a lot of the investments in Monterey, 0:09:06.640 --> 0:09:09.640 you know, we know there's a Tesla factory, say twenty 0:09:09.679 --> 0:09:12.080 twenty four versus I think you said you've gotten to 0:09:12.200 --> 0:09:15.520 Mexico stuff about a decade ago. Talk to us about, 0:09:15.520 --> 0:09:18.600 like what you see happening on the ground in various 0:09:18.640 --> 0:09:21.400 parts of northern Mexico and elsewhere in twenty twenty four 0:09:21.800 --> 0:09:23.480 versus what it looked like in twenty fourteen. 0:09:24.040 --> 0:09:26.800 Let me start at a really high level. When I 0:09:26.840 --> 0:09:30.680 started building with Mexico at Coyote, we were communicating with 0:09:30.760 --> 0:09:33.880 drivers in Mexico via those nextele phones where it was 0:09:33.880 --> 0:09:37.280 like a walkie talkie they would click to communicate with them. 0:09:37.320 --> 0:09:39.679 And so now most of the drivers in Mexico, most 0:09:39.720 --> 0:09:43.080 of the trucking companies have smartphones, they have iPhones or androids, 0:09:43.360 --> 0:09:46.360 they've got laptops, they've got iPads or tablets, and so 0:09:46.679 --> 0:09:49.040 technology has come a lot further along in the last 0:09:49.080 --> 0:09:52.679 decade from a you know, physically what's on the ground perspective, 0:09:53.000 --> 0:09:55.360 Monterey has expanded massively. You know, I was down there 0:09:55.360 --> 0:09:58.560 a few weeks ago and the amount of new facilities 0:09:58.559 --> 0:10:01.440 that are still getting built. Everywhere you drive, you see 0:10:01.480 --> 0:10:04.959 brands that you recognize, like I saw LG. I saw 0:10:05.320 --> 0:10:08.120 some of the different golf companies that produce golf balls 0:10:08.120 --> 0:10:10.280 and golf clubs and everything else that comes along with that. 0:10:10.760 --> 0:10:14.480 Manufacturing in money, there's lots of CpG brands that are 0:10:14.480 --> 0:10:17.319 starting to build up plants in money, appliances and electronics, 0:10:17.360 --> 0:10:19.760 and so you see all these different companies that are 0:10:19.760 --> 0:10:22.760 building in Monterey right now that the same things happening 0:10:22.760 --> 0:10:26.080 in Ramasresepei, which is just south of Monterey, and Salteo. 0:10:26.240 --> 0:10:31.760 It's happening in the Baihio, which is in Central Mexico, Cadetro, Aguas, Calientis, Guadalajara, 0:10:32.160 --> 0:10:35.760 Mexico City, Puebla. It's starting to spread all throughout Mexico 0:10:35.800 --> 0:10:38.640 as people realize makes a lot more sense to manufacture 0:10:38.640 --> 0:10:39.959 there than it does overseas. 0:10:40.280 --> 0:10:43.160 What exactly is Mexico actually exporting to the US? So 0:10:43.320 --> 0:10:46.240 I mentioned in the intro famously there's a lot of 0:10:46.480 --> 0:10:50.440 car components and vehicles involved here, and you were just 0:10:50.480 --> 0:10:52.840 discussing some of the car companies that have been moving 0:10:53.000 --> 0:10:55.760 some aspects of production down there. But what are the 0:10:55.800 --> 0:10:59.040 things that are actually coming across the border? And has 0:10:59.080 --> 0:11:02.040 there been any changed there over the past couple of 0:11:02.080 --> 0:11:02.600 years or so. 0:11:03.240 --> 0:11:04.960 I think it's been a lot of the same stuff. So, 0:11:05.000 --> 0:11:07.360 like a lot of the automotive companies, for example, have 0:11:07.360 --> 0:11:10.200 been in Mexico for decades, like General Motors and Ford 0:11:10.240 --> 0:11:14.240 and Brysler and everybody else. Like Tesla's the newest entrant 0:11:14.240 --> 0:11:16.400 to come into Mexico, and they've done it the loudest, 0:11:16.400 --> 0:11:18.120 but they've been there for a long time. Most of 0:11:18.120 --> 0:11:21.640 the automotive suppliers, and so automotive has along been a 0:11:21.640 --> 0:11:25.959 big part of it. Electronics, whether it's appliances or computers 0:11:26.000 --> 0:11:29.400 or TVs. I remember we used to ship video game 0:11:29.440 --> 0:11:33.959 consoles to Mexico for a large electronics manufacturer. Beer is 0:11:34.000 --> 0:11:36.520 a major product that comes out of Mexico. All sorts 0:11:36.520 --> 0:11:39.839 of food products. Obviously, tequila comes out of Mexico, out 0:11:39.840 --> 0:11:42.800 of Jalisco. You've got mezcal coming out of Wahaka and 0:11:42.840 --> 0:11:45.640 some other parts of Mexico. There's a lot of components 0:11:45.679 --> 0:11:49.960 that go into anything electrical. And then you've got anything 0:11:49.960 --> 0:11:51.840 that you would find in an office, anything that you'd 0:11:51.880 --> 0:11:54.920 find around your house that's got wiring in it, there's 0:11:54.920 --> 0:11:57.040 a really good chance that it came from Mexico. So 0:11:57.120 --> 0:11:59.960 most of the major appliance manufacturers have plants throughout back, 0:12:00.480 --> 0:12:03.760 whether it's LG or Samsung or higher which is ge. 0:12:04.360 --> 0:12:06.640 The majority of them are manufacturing in Mexico. 0:12:06.920 --> 0:12:09.000 So what is the main case? Why are they doing it? 0:12:09.040 --> 0:12:11.120 I mean, I guess obviously some of it must be 0:12:11.520 --> 0:12:15.480 the USMCA and Trump's the tariffs on China. Maybe some 0:12:15.640 --> 0:12:19.680 of it the COVID supply chain frailties. But what is 0:12:19.720 --> 0:12:22.240 the pitch right now? A company is thinking about setting 0:12:22.280 --> 0:12:24.000 up to Mexico, how much is it about that and 0:12:24.040 --> 0:12:27.680 how much is it about, say, improvements in Mexico's own 0:12:27.800 --> 0:12:31.000 infrastructure such that a neighbor that's so close to the 0:12:31.120 --> 0:12:35.160 United States actually makes more sense as a manufacturing hub. 0:12:35.559 --> 0:12:38.199 I think it boils down to a few things. USMCA 0:12:38.480 --> 0:12:40.679 update from NAFTA is definitely one of them, and so 0:12:40.760 --> 0:12:44.560 you touched on that. That encouraged more automotive parts, for example, 0:12:44.559 --> 0:12:47.080 to be made in North America that go into a car. 0:12:47.280 --> 0:12:49.480 That raised that percentage from sixty two and a half 0:12:49.520 --> 0:12:52.720 to seventy five percent. Pandemic was definitely another major piece. 0:12:52.760 --> 0:12:55.760 So I remember at Forger we had a customer reach 0:12:55.800 --> 0:12:58.920 out a company called Premium Guard that said, we just 0:12:58.960 --> 0:13:02.600 acquired this plant from Federal Mogul in Mexico because our 0:13:02.640 --> 0:13:04.960 manufacturing in China was slowing down and so we needed 0:13:04.960 --> 0:13:08.000 to be able to continue to manufacture and sell filters 0:13:08.360 --> 0:13:10.360 in spite of the fact that China was shut down, 0:13:10.440 --> 0:13:12.719 and so we bought a plant in Mexico. We need 0:13:12.720 --> 0:13:15.000 your help shipping their freight from Mexico the United States, 0:13:15.160 --> 0:13:18.880 and so overnight their volume just started shipping. And we 0:13:18.960 --> 0:13:21.160 saw that happen with a lot of other companies, and 0:13:21.200 --> 0:13:24.000 so the pandemic secured everybody is the second piece, and 0:13:24.040 --> 0:13:27.360 then the third piece is that the proximity makes a 0:13:27.400 --> 0:13:30.680 lot of sense. Like it's a three hour flight from Chicago, 0:13:30.720 --> 0:13:32.600 monor A to go meet with a customer, to go 0:13:32.640 --> 0:13:35.120 meet with the team, to meet with a potential vendor. 0:13:35.559 --> 0:13:37.559 It's I think, what fifteen to eighteen hours to fly 0:13:37.640 --> 0:13:41.599 to China from the US. So getting to Mexico's a 0:13:41.640 --> 0:13:44.360 lot easier. Time zones are a lot more similar. They're 0:13:44.400 --> 0:13:47.280 not exactly the same, but they're similar, and so it's 0:13:47.320 --> 0:13:50.520 easier from a communication perspective. There's also a lot more 0:13:50.520 --> 0:13:52.960 people that speak Spanish in the United States than Mandarin, 0:13:53.080 --> 0:13:56.679 and so you're much likelier to find more cultural alignment, 0:13:57.080 --> 0:13:59.920 easier to communicate with people in Mexico than people in 0:14:00.160 --> 0:14:04.199 Asia or overseas. And ultimately, that time that you can 0:14:04.200 --> 0:14:07.920 cut down on travel and everything else directly affects your 0:14:07.920 --> 0:14:11.440 ability to control quality and control cost and everything else. 0:14:11.520 --> 0:14:14.120 And so Mexico has just made so much more sense. 0:14:14.160 --> 0:14:16.360 And then on top of it, if you're setting up 0:14:16.400 --> 0:14:19.720 manufacturing and Monterey right now, it's like shooting fish in 0:14:19.760 --> 0:14:21.720 a barrel to be able to go find a provider 0:14:21.760 --> 0:14:24.760 that can help you. If you're freight or help you 0:14:25.080 --> 0:14:29.080 manage your customs process because of the density that's already there. 0:14:29.480 --> 0:14:32.360 You're walking into a market that already exists. It's getting 0:14:32.480 --> 0:14:48.840 more expensive, but it's there already. 0:14:50.360 --> 0:14:52.680 Tracy, have you been to Mexico. I have not, So 0:14:52.960 --> 0:14:54.920 I just this is going to be like the most part. 0:14:54.920 --> 0:14:56.640 But I mean I have when I was like a 0:14:56.720 --> 0:14:58.880 kid and we lived in Dallas. I think we went 0:14:58.920 --> 0:15:02.200 to one of the border towns, but I barely remember it. Sorry, 0:15:02.240 --> 0:15:04.520 I feel like I have to be very specific here. 0:15:04.680 --> 0:15:07.000 Yeah, this is like gonna be the most boring point. 0:15:07.160 --> 0:15:09.440 But like to Matt's point about how it's just a 0:15:09.440 --> 0:15:12.280 three hour flight, Mexico is so close from like anywhere, 0:15:12.280 --> 0:15:14.200 and like you could just take a long weekend trip. 0:15:14.240 --> 0:15:17.200 There's so easy. And every time I traveled to Mexico, 0:15:17.240 --> 0:15:20.160 like on a vacation, I'm just like it's like it's 0:15:20.280 --> 0:15:22.720 right here. And so that point about I was just 0:15:22.800 --> 0:15:25.400 a three hour flight from Mexico maybe seems obvious, but 0:15:25.480 --> 0:15:27.480 it also is like it is so easy. 0:15:27.680 --> 0:15:30.400 Wait, I'm glad you brought that up. Actually, the idea 0:15:30.560 --> 0:15:34.280 of obvious. So I'm thinking how to frame this question. 0:15:34.640 --> 0:15:37.800 So I realized there is already a degree of trade 0:15:37.840 --> 0:15:40.640 between the US and Mexico obviously, and there is the 0:15:40.800 --> 0:15:44.720 free Trade Agreement, of course, But why hasn't Mexico been 0:15:44.960 --> 0:15:48.560 a bigger market before, like, let's say, twenty years ago. 0:15:49.000 --> 0:15:51.520 Why didn't this happen earlier? What was the hold up? 0:15:52.040 --> 0:15:55.160 I think the technology advancement was a big piece. Again, 0:15:55.200 --> 0:15:58.320 there's been manufacturing down there for decades, like General Motors 0:15:58.360 --> 0:16:00.200 has been down there I think for fifty years or 0:16:00.240 --> 0:16:02.440 something like that. But it was while Trump was in 0:16:02.480 --> 0:16:05.040 office and started the whole trade war thing with China 0:16:05.200 --> 0:16:07.440 and said we're going to bring everything closer to home 0:16:07.560 --> 0:16:11.680 and branded the usmcas America First. But in reality, quote 0:16:11.720 --> 0:16:14.320 unquote America First was really about North America, and so 0:16:14.800 --> 0:16:17.360 that encouraged trade for all of North America. And I 0:16:17.360 --> 0:16:20.640 think that was the catalyst that caused all this growth 0:16:20.720 --> 0:16:23.000 to happen. And then the pandemic kind of tipped it 0:16:23.040 --> 0:16:26.440 all over. But you know, it's been growing steadily for 0:16:26.680 --> 0:16:27.960 twenty or thirty years. Now. 0:16:28.760 --> 0:16:31.840 What about infrastructure, You know, Joe brought that up. We've 0:16:31.880 --> 0:16:36.480 seen some concerns over things like congestion in the Suez Canal. 0:16:36.520 --> 0:16:39.760 At various points in time, You've seen attacks on ships. 0:16:39.840 --> 0:16:44.360 You've seen drought in the Panama Canal. Has Mexico built 0:16:44.440 --> 0:16:47.680 out its infrastructure at all to make the exchange of 0:16:47.680 --> 0:16:51.920 goods easier or is it benefiting from I guess, deteriorating 0:16:52.000 --> 0:16:54.880 infrastructure elsewhere in the world both. 0:16:55.200 --> 0:16:58.840 I think, you know, there's definitely those external factors that 0:16:58.880 --> 0:17:02.160 are providing benefit. But you know, there's been some investment 0:17:02.160 --> 0:17:05.640 in infrastructure in Mexico, and the highways are getting better, 0:17:05.800 --> 0:17:07.720 the toll ways that most trucks are going to use 0:17:07.840 --> 0:17:10.640 are getting better. There's definitely still a need to better 0:17:10.680 --> 0:17:13.960 support it and better regulate it. So, for example, in 0:17:13.960 --> 0:17:16.080 the United States, you could go on a website and 0:17:16.119 --> 0:17:18.800 you could find a bunch of details about a trucking 0:17:18.840 --> 0:17:21.159 company and a matter of you know, three minutes if 0:17:21.200 --> 0:17:24.080 you just type in their MC number their dot number. 0:17:24.280 --> 0:17:26.159 You can't do that with the trucking company in Mexico. 0:17:26.520 --> 0:17:29.280 And there's no regulation over freight brokeriges in Mexico. And 0:17:29.320 --> 0:17:32.000 so I think what I would ask of Mexico to 0:17:32.080 --> 0:17:35.040 do to make things better would be figuring out ways 0:17:35.080 --> 0:17:38.679 to help with security issues like theft in Mexico. You know, 0:17:38.720 --> 0:17:41.880 the cartel issues in Mexico definitely continue to be an issue. 0:17:42.400 --> 0:17:45.440 And then the infrastructure side of it is really related 0:17:45.480 --> 0:17:48.919 to the actual information related to the companies that are 0:17:48.920 --> 0:17:51.679 involved in the transactions and being able to register them, 0:17:51.720 --> 0:17:54.160 being able to understand what they do, because otherwise it's 0:17:54.200 --> 0:17:55.760 just the wild West, and that's how you end up 0:17:55.800 --> 0:17:56.719 with freak getting stolen. 0:17:57.359 --> 0:18:00.359 Joe, have you been on the Mexican trucking boards there 0:18:00.400 --> 0:18:01.600 are Mexican shocking boards. 0:18:01.640 --> 0:18:03.159 No, I have it, But I find that to be 0:18:03.359 --> 0:18:06.000 a really interesting point that I'd never thought of, which 0:18:06.040 --> 0:18:10.479 is we talk about infrastructure as highways or toll roads 0:18:10.760 --> 0:18:14.600 or canals or whatever, but the idea of like also 0:18:14.880 --> 0:18:17.840 it's important that there be some sort of centralized place 0:18:17.880 --> 0:18:20.159 where you can just look up the reputation of a 0:18:20.200 --> 0:18:23.280 freight brokerage or a truck and company, and how valuable 0:18:23.400 --> 0:18:25.760 it is for the government to be able to centralize 0:18:25.760 --> 0:18:28.919 that and just sort of smooth. That is not something 0:18:29.000 --> 0:18:32.119 I had really thought about before, but it is infrastructure 0:18:32.240 --> 0:18:33.960 in the sense talk to us a little bit more 0:18:34.000 --> 0:18:37.320 obviously the security situation. So it seems like this is 0:18:37.359 --> 0:18:40.280 one area where under the Homlo years, over the last 0:18:40.280 --> 0:18:43.880 five or six years, maybe no progress at all on security, 0:18:43.880 --> 0:18:47.239 whether we're talking about homicides or the strength of the 0:18:47.240 --> 0:18:49.719 cartels in certain parts of the country. Talk to us 0:18:49.720 --> 0:18:52.879 a little bit more about what you're seeing on the 0:18:52.920 --> 0:18:56.359 ground from that perspective, and then how risk of freight, theft, 0:18:56.400 --> 0:18:59.800 et cetera goes into companies making investment decisions. 0:19:00.280 --> 0:19:03.639 So there are parts of Mexico that are totally fine 0:19:04.160 --> 0:19:06.800 when it comes to moving freight, like you know, knock 0:19:06.880 --> 0:19:09.760 on wood. I rarely hear about issues with product coming 0:19:09.760 --> 0:19:12.840 out of Monterey, like out of northern Mexico or central Mexico. 0:19:13.400 --> 0:19:16.520 It's usually product coming out of southern Mexico, like near Puebla, 0:19:17.080 --> 0:19:20.000 So Pueblo. There's a big Volkswagen plant there and it's 0:19:20.040 --> 0:19:24.320 about two hours south of Mexico City, and so it's 0:19:24.400 --> 0:19:26.520 relatively close to what I would consider to be a 0:19:26.520 --> 0:19:29.879 major market, but a lot of carris are scared to 0:19:29.880 --> 0:19:31.439 go there because of theft, and there's a lot of 0:19:31.440 --> 0:19:34.680 cartile activity there. And then Vera Cruz, which is along 0:19:34.720 --> 0:19:37.960 the Gulf of Mexico, and so that's southern part of Mexico, 0:19:38.040 --> 0:19:40.200 is still very frightening for a lot of trucking companies, 0:19:40.200 --> 0:19:42.480 for a lot of shippers, for a lot of freight 0:19:42.480 --> 0:19:45.240 brokridges to get involved in moving freight there, and so 0:19:45.280 --> 0:19:48.320 that's where there's a lot of cartele activity. I've also seen, 0:19:48.640 --> 0:19:51.200 you know, shipments get stolen coming out of Jalisco and 0:19:51.280 --> 0:19:54.719 Aguas Calientis, which is in central Mexico. So it's not 0:19:54.760 --> 0:19:58.240 to say that it doesn't happen, but the concern is 0:19:58.280 --> 0:20:02.200 definitely in southern Mexico. And then from a perspective of 0:20:02.400 --> 0:20:05.040 what people think about when they start investing in Mexico. 0:20:05.640 --> 0:20:08.720 Another thing related to the regulation and infrastructure side is 0:20:08.720 --> 0:20:11.719 that in the United States, cargo insurance is something that 0:20:12.080 --> 0:20:15.639 is required of freight brokerages and trucking companies, and so 0:20:15.760 --> 0:20:18.959 anybody that's shipping goods in the United States, there's cargo 0:20:19.000 --> 0:20:21.720 insurance that insured those goods if there were a truckload 0:20:21.760 --> 0:20:25.000 that got into an accident and the goods were destroyed. Separately, 0:20:25.000 --> 0:20:27.280 there's insurance if a car was damaged or if anybody 0:20:27.359 --> 0:20:30.320 was hurt, but there's insurance for the freight. In Mexico, 0:20:30.400 --> 0:20:33.359 there's no requirement for freight to be insured, and so 0:20:33.520 --> 0:20:36.119 none of the freight providers insure it, none of the 0:20:36.119 --> 0:20:39.760 trucking companies insure it, and most of the beneficial cargo owners, 0:20:39.760 --> 0:20:43.320 like the manufacturers, some of them don't know that it's required, 0:20:43.400 --> 0:20:46.400