New trade deal would shake up US-Mexico air freight flows

On 27 August, the United States and Mexico reached a preliminary trade deal that will affect the future of complex North American manufacturing supply chains. Under the current North American Free Trade Agreement (NAFTA), automobile manufacturing in North America has become increasingly integrated, accounting for about $135 billion in total trade between Canada, Mexico, and the US – and air freight plays an important role in transporting key parts and subassemblies that keep the assembly lines moving.

If the proposed US-Mexico trade deal goes ahead, the national content and labor wage provisions will not only change both express and specialty cross-border air logistics as automakers shift production to adapt, but will also potentially raise the sticker price of cars sold in North American, thus reducing sales volumes.

We at Cargo Facts Consulting looked at the key airports and airlines that specialize in non-express freight carried on freighter aircraft between the US and Mexico. Total air freight tonnage between the US and Mexico in 2017 was 447,000 tons (406,000 tonnes). Of this, what we are calling “specialty” cross-border air freight makes up only 2.5%. However small a percentage of the whole, without this crucial link of both scheduled and charter service, the automotive and other industries that benefit from the single North American market could not function.

For all US-Mexico cross-border air freight carried by freighter aircraft, Los Angeles (LAX) and Memphis (MEM) dominate US gateways with a 49% share. In Mexico, a lion’s share of 76% of US-Mexico cross-border air freight aboard freighters originates or is destined for busy Mexico City (MEX) or Guadalajara (GDL). However, you may not have heard of many of the largest US and Mexico specialty air freight airports included in the table below:

Both Texas airports on this list play an important role in cross-border intermodal logistics, while Willow Run is only thirty-five miles from Detroit – the traditional center of the US auto industry – and Greenville/Spartanburg is the home of the largest BMW factory in the world. Meanwhile, in the early 2000s, the auto industry in Mexico become increasingly concentrated in the areas of Coahuila, Guanajuato, and Puebla, explaining the prominence of the Mexican specialty airports above.

Of course, the major integrators DHL, FedEx, and UPS, as well as all-cargo airlines like Atlas and AeroUnion, play a role in moving freight in a number of cross-border industry verticals, including automotive. The carriers listed below also continue to play a crucial specialty role:

Alan Hedge joined Cargo Facts Consulting in 2006 as a Senior Analyst and now serves as its Senior Director. Mr. Hedge has more than 20 years of experience in the airline industry in a variety of financial and consulting roles from fleet analysis to international regulatory and competition analysis. He started his aviation career in 1989 at American Airlines. He left in 1999 to become Research Director at The Campbell-Hill Aviation Group in the Washington, DC area. He holds a BS in Electrical Engineering from Stanford University and an MBA from the University of North Carolina.