Manufacturing reshoring, nearshoring, and friendshoring are key components of a broader derisking strategy driving significant shifts in transportation supply, demand, and performance. Transportation systems and operations must evolve to support and enable these changes.
This post focuses the attention on trade within North America and the transportation networks that are bracing for even more demand in the future.
The Strategic Importance of North American Connectivity for Nearshoring
Manufacturing and logistics in North America are deeply interconnected, with U.S. borders with Canada and Mexico facilitating about $3 billion in trade daily and over $1 trillion in annual cross-border trade. In 2023, U.S. trade with Canada and Mexico represented 30.8% of the country’s total international trade, equaling $1.57 trillion in freight flows and 2,484.7 million tons in weight.
Surface transportation modes, primarily trucking and rail, dominated North American commerce, with trucking accounting for 60.1% of total flows with Canada and 72.2% with Mexico, while rail contributed 15.7% with Canada and 12.3% with Mexico.
Trend in U.S. - North American Freight
Source: U.S. Bureau of Transportation Statistics, accessed from: https://data.bts.gov/stories/s/myhq-rm6q
U.S. - North American Freight Facts (2023)
- Total transborder freight: $ 1.57 trillion of transborder freight moved by all modes of transportation, 0.0% change compared to 2022
- Freight between the U.S. and Canada: $773.9 billion, down 2.4% from 2022
- Freight between the U.S. and Mexico: $798.8 billion, up 2.5% from 2022
- Trucks moved $996.4 billion of freight, up 5.1% compared to 2022
- Railways moved $209.2 billion of freight, down 0.5% compared to 2022
Nearshoring Supply Chains in North America
As global supply chains evolve, strategies like nearshoring and friendshoring have emerged as crucial methods for mitigating risks and bolstering national security. By relocating manufacturing closer to home, nearshoring reduces dependency on distant markets, shortens lead times, and strengthens regional ties. Friendshoring complements this strategy by prioritizing trade partnerships with politically and economically aligned nations, enhancing supply chain resilience while promoting shared values.
For North America, nearshoring and friendshoring have particular relevance for commodities of national interest. Key sectors such as automotive, electronics, energy, and agriculture benefit significantly from a regional supply chain model that reduces reliance on external sources while leveraging the natural strengths of each country within the USMCA. This is evidenced by Mexico's recent overtaking of China as the top trade partner to the United States in general, but also specifically in the advanced technology sector as well.
By strategically positioning the production of essential goods closer to home, nearshoring supports economic growth and stability, safeguarding access to critical resources and materials vital for manufacturing, infrastructure, and consumer markets across Canada, the United States, and Mexico. - Emilio Cadena, The Nearshoring Expert
This approach not only fuels North America’s competitiveness but also builds a foundation for sustainable, secure trade in key industries integral to the region’s economic future.
Top Commodities Traded in North America
Source: U.S. Bureau of Transportation Statistics, accessed from: https://data.bts.gov/stories/s/myhq-rm6q
From the pandemic lows in April 2020 to December 2023, freight by truck with Canada has increased from $17.8 billion to $32.1 billion while freight by truck with Mexico has grown from $20.8 billion to $41.1 billion.
Source: U.S. Bureau of Transportation Statistics, accessed from: https://data.bts.gov/stories/s/myhq-rm6q
Rising trade volumes and heightened demand for freight transportation have placed significant pressure on North America’s transport corridors. The collaborative efforts of the USMCA countries, particularly in cross-border regions, along with strategic public-private partnerships, have been essential in strengthening the infrastructure and economic frameworks needed to support current demand. This trilateral cooperation not only addresses today’s logistics challenges but also positions North America for sustainable growth and increased competitiveness in the global economy.
The Role of Transport Corridors in Regional Connectivity
Transport corridors are often considered the backbone of national and regional transportation networks. They serve as critical links between major gateways and hubs, facilitating the smooth flow of freight and passenger traffic. Corridors such as these lie at the intersection of economic, demographic, and geographic processes, evolving over time from simple transportation routes to sophisticated trade and logistics corridors.
In their most developed forms, they promote economic growth in the communities they pass through by attracting new businesses, creating jobs, and supporting local industries.
The development and optimization of transport corridors often depend on grassroots efforts and partnerships between public and private sectors. These collaborative efforts ensure that the necessary infrastructure, funding, and policies are in place to support continuous improvement. The NAFTA Superhighway is no exception, with various stakeholders working together to maintain and enhance its capacity, safety, and efficiency. This corridor has not only facilitated trade but has also fostered economic development across North America, creating a network that benefits businesses and communities alike.
The NAFTA Superhighway
The NAFTA Superhighway, also known as the NAFTA Corridor or I-35 Corridor, is a key artery for North American manufacturing and trade. Connecting crucial supply chains throughout Canada, the United States, and Mexico, this corridor plays an essential role in facilitating the movement of goods across borders and supporting regional economic integration. The NAFTA Superhighway is considered to be the primary transportation corridor that spans all three countries in a fully-connected route.
Sharing infrastructure with the historic Pan-American Highway, the purpose of the route was proposed in 1937 as an alternative to railroad infrastructure. In fact, Mexico became the first country of the pact to complete their portion of the highway from Laredo to Mexico City. Some sections of the Pan-American Highway never came to fruition, but little by little other arteries were connected and more and more companies took advantage to develop their companies along the route.
Although many transportation systems contribute to the North American trade network, the NAFTA Superhighway stands out as the primary corridor, encompassing other critical routes like the Lázaro Cardenas-Kansas City Transportation Corridor, the Trans-Texas Corridor, and the Quebec-Chicago Corridor. Key components include U.S. interstates 29, 94, and 35, with Laredo, Texas, and Detroit, Michigan, as two of the most significant entry points, marking the highest numbers of semi-truck crossings each year (Bureau of Transportation Statistics, 2023). The significance of this corridor reflects the deeply interconnected supply chains that bind the region’s economies together.
The recent merger of Canadian Pacific and Kansas City Southern railroads in 2023 further emphasizes the growing importance of seamless transportation networks. This merger created CPKC, the first and only single-line railway connecting Canada, the U.S., and Mexico, a milestone that strengthens the efficiency and competitiveness of regional supply chains. “We stand ready to bring new competition into the North American rail industry at a time when our supply chains have never needed it more,” stated CPKC President and CEO Keith Creel. As cross-border manufacturing grows, the demand for optimized transportation corridors continues to rise, underscoring the importance of infrastructure that can support complex, interwoven supply chains across North America.
Ten Major Trade Hubs along the NAFTA Corridor
The major trade hubs along the NAFTA Superhighway are critical nodes that facilitate the movement of goods between Canada, the United States, and Mexico. These hubs are located in key cities along the route, and they serve as important centers for logistics, manufacturing, and distribution. Here are some of the primary trade hubs along the NAFTA Superhighway:
Mexico City (Mexico)
- Role: As the capital and largest city of Mexico, Mexico City serves as a major financial and logistical hub for trade and commerce.
- Significance: Mexico City’s extensive transportation infrastructure, including its international airport and proximity to major highways, and large logistics corridor, facilitate both domestic distribution and international trade.
Monterrey, Nuevo León (Mexico)
- Role: Monterrey is one of Mexico’s leading industrial and manufacturing centers, particularly in the automotive, aerospace, and electronics sectors.
- Significance: Situated near the U.S. border, Monterrey is a strategic location for nearshoring and serves as a significant node in North America’s manufacturing and logistics networks.
Laredo, Texas
- Role: The largest inland port on the U.S.-Mexico border and a crucial entry point for goods moving between Mexico and the United States.
- Significance: Laredo handles a significant volume of truck crossings and is a major hub for automotive, electronics, and other manufactured goods moving between the two countries.
San Antonio, Texas
- Role: A major logistics and distribution center for goods moving north and south along the I-35 corridor.
- Significance: San Antonio benefits from its strategic location near the U.S.-Mexico border and serves as a base for various industries, including automotive, aerospace, and technology.
Dallas-Fort Worth, Texas
- Role: One of the largest metropolitan areas along the corridor, with extensive warehousing, distribution, and logistics facilities.
- Significance: Dallas-Fort Worth International Airport and the area’s strong rail and highway connections make it a significant hub for both domestic and international trade, facilitating the movement of goods across North America.
Kansas City, Missouri
- Role: A central hub for intermodal transportation with extensive rail, highway, and logistics infrastructure.
- Significance: With the merger of Canadian Pacific and Kansas City Southern to form CPKC, Kansas City became a pivotal rail hub connecting Canada, the United States, and Mexico on a single rail line, strengthening its role in North American trade.
Omaha, Nebraska
- Role: A growing trade and logistics center along the corridor with strong rail and road connections.
- Significance: Omaha’s position along the corridor and near agricultural production regions makes it an important distribution center for agricultural goods and other commodities moving throughout North America.
Minneapolis-St. Paul, Minnesota
- Role: A major hub in the northern U.S., providing connections to Canadian trade routes.
- Significance: The Minneapolis-St. Paul area supports trade with Canada and serves as a significant logistics and distribution center for various industries, including food and beverage, agriculture, and manufacturing.
Winnipeg, Manitoba (Canada)
- Role: The primary Canadian hub along the corridor, serving as a key entry point for trade between Canada and the United States.
- Significance: Winnipeg is a vital logistics and distribution center in Canada with strong rail and road connections to the U.S., facilitating the flow of goods between the two countries.
Detroit, Michigan
- Role: Although slightly east of the I-35 corridor, Detroit is a major trade hub along the broader NAFTA trade network, particularly for automotive manufacturing.
- Significance: The Detroit-Windsor border crossing is one of the busiest between the U.S. and Canada, handling a large volume of cross-border automotive parts and finished vehicles, making it a key hub for the North American automotive supply chain.
Logistics Proximity of North America
North America’s logistics proximity offers unparalleled advantages for manufacturers and their regional supply chains. With closely interconnected markets, the region facilitates seamless cross-border trade between the U.S., Mexico, and Canada, enabling just-in-time delivery and reducing transportation costs.
Ongoing and Proposed Infrastructure Improvements
As urban centers along the NAFTA Superhighway continue to grow, congestion has become an increasing challenge. In response, there are numerous ongoing and proposed efforts to improve sections of the highway, ensuring it can meet the demands of modern trade. For example, the U.S. Department of Transportation and the Texas Department of Transportation (TxDOT) are collaborating on the I-35 Connected Work Zone project. This initiative is part of the larger Texas Connected Triangle project, which also includes I-45 and I-10, linking major cities like Houston, Dallas, and Austin. Additionally, there are significant I-35 infrastructure improvement projects underway in Kansas, aiming to enhance road capacity, reduce bottlenecks, and improve overall safety.
These upgrades reflect a broader trend toward smarter, more connected transportation infrastructure. Projects like the Connected Work Zone seek to leverage technology to create safer, more efficient roadways, supporting the smooth and rapid movement of goods along this critical trade corridor. As trade volumes increase, such initiatives are essential for maintaining North America’s economic competitiveness and ensuring that the region’s supply chains remain resilient and responsive.
Addressing Environmental and Safety Concerns
While the NAFTA Superhighway has been instrumental in supporting North American trade, it also raises environmental and safety concerns that need to be addressed. As a heavily trafficked route, the highway contributes to emissions and congestion, particularly near major urban centers and border crossings. To mitigate these impacts, many ports of entry along the corridor have undergone expansions and technological upgrades, which are part of the U.S. Customs and Border Protection’s 21st Century Customs Framework. This framework aims to modernize and secure trade, making the movement of goods faster, safer, and more environmentally friendly.
Technology initiatives under this framework include advanced screening tools, automated systems for cargo inspection, and enhanced data-sharing protocols that streamline the customs process. These improvements not only increase the efficiency of trade but also reduce delays and lower emissions associated with idling trucks at border crossings. As regional stakeholders continue to invest in infrastructure and technology, there is an opportunity to make the NAFTA Superhighway not only a model of trade efficiency but also a corridor that prioritizes sustainability and safety.
The Future of North American Trade and the NAFTA Superhighway
The NAFTA Superhighway is more than just a transportation route; it is a symbol of North American economic integration and a crucial enabler of trilateral cooperation. As the region faces growing global competition, the continued development and optimization of this corridor are essential for maintaining North America’s economic strength and resilience. Investments in infrastructure, technology, and sustainability along the NAFTA Superhighway not only support trade but also create a foundation for future growth.
As we look to the future, the NAFTA Superhighway will play an increasingly important role in supporting North America’s position in the global economy. By enhancing the efficiency and safety of this corridor, the region can ensure that it remains competitive, responsive to market demands, and aligned with climate goals. For businesses, policymakers, and communities across the continent, the NAFTA Superhighway represents a pathway to economic prosperity and a more integrated North American economy.
