CPG: What to expect in US/MX trade for the rest of 2023?
In today's fast-paced and ever-evolving business landscape, the logistics industry plays a crucial role in ensuring smooth operations and efficient supply chains. As we look to the second half of 2023, it becomes important to stay ahead of the curve by keeping up with the latest trends and innovations shaping cross-border logistics operations. Figures for Q1 2023 show that US-MX trade is on the rise, reaching US $196.7 billion in imports and exports, an 8% increase over the same period in 2022. This is just the tip of the iceberg, so let’s explore the emerging logistics trends in the CPG Industry, especially around US-MX freight.
The logistics landscape in the CPG industry is undergoing a remarkable transformation, fueled by changing consumer behavior and market innovations. From nearshoring to artificial intelligence, the market is ripe for disruption. These are our top predictions for the rest of the year that we are sure will continue to impact the CPG industry.
1. Reshoring and nearshoring for manufacturers
Reshoring and nearshoring have increased over the past decade, mostly due to ongoing tension between the US and China, significant increases in shipping costs from China, the effects of the pandemic on global supply chains, and sustainability concerns. According to a Thomas Survey in April 2020, 64% of North American manufacturers interviewed said they were likely to bring manufacturing production back to the Americas. Many multinational CPG companies have either relocated from Asia to Mexico or expanded their presence in the country to lower transit times and reduce risk around potential challenges. For the CPG industry, Mexico’s strategic location, closer to end users, is key in reducing complex and extensive supply chains that involve multiple suppliers, manufacturers, distributors, and retailers. Managing and coordinating these interconnected networks can be challenging, especially when it comes to maintaining visibility, collaboration, and efficient communication across the entire supply chain. Mexico’s proximity, social and cultural similarities and beneficial trade agreements offer an opportunity to reduce some of these complexities.
2. AI and Automation
Technology and automation in logistics operations has become very important to address pain points in the industry and manage shipments at lower costs and in a timely manner. According to the McKinsey Global Institute, the transportation and warehousing industry has the third-highest automation potential of any sector. AI, machine learning, computer vision, connected IoT networks, and blockchain can all be applied to simplify logistics operations, make them more efficient, and optimize resources. For that, the rise of automation is expected to keep trending in 2023. The CPG industry is increasingly adopting digital technologies to optimize their supply chain operations. This includes the use of advanced analytics, artificial intelligence (AI), and Internet of Things (IoT) devices to gather and analyze data, improve inventory management, enhance demand forecasting, and streamline distribution processes.
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3. Omni-channel distribution
With the rise of e-commerce and changing consumer expectations, CPG companies are adopting omni-channel distribution strategies. This involves integrating various sales channels, such as traditional brick-and-mortar stores, online marketplaces, and direct-to-consumer platforms, to provide seamless and efficient order fulfillment to customers.
4. Real-time visibility and tracking
Data analytics and intelligence provide increasing visibility to customers, which is still one of the biggest challenges for shippers today. When a shipper works with multiple vendors, it’s difficult to know the latest shipment updates without calling different suppliers and simultaneously piece together the legal documentation for transportation. This hassle not only reduces time and operational efficiency but also increases margin of error. For CPG companies it is essential to improve tracking and visibility of goods throughout the supply chain. Advanced tracking technologies, such as RFID (Radio-Frequency Identification) and blockchain, are being implemented to provide real-time updates on the location and condition of products, enabling better inventory management and proactive issue resolution.
By staying abreast of the latest developments and actively embracing these changes, companies operating within the CPG industry can position themselves as leaders and gain a competitive edge.
We would love to hear your thoughts on the latest trend and help you navigate this changing landscape. Get in touch, here.