Tamaulipas-South Texas, key logistics hub for Nearshoring

The Rio Grande Valley is a vast plain that covers the border between Texas and the Mexican states of Chihuahua, Coahuila, Nuevo León and Tamaulipas along 2,018 km. It is an economically key region for both countries due to its logistical nature, which has generated a thriving commercial and industrial activity. 

At the southern end of this region, there is an area called Rio South Texas , which basically includes the extension of the border with Tamaulipas, that is, an approximate distance of 538 km, but where much of the border activity between Mexico and the United States is concentrated. , as it is the natural link between the eastern United States and the Pacific on the southwestern coast of Mexico, crossing the most important industrial poles of both countries, especially if we add the mid-west area .

Río South Texas is made up of five counties in Texas and 10 municipalities in Tamaulipas, along which there are 10 international trade bridges and eight international bridges for vehicular traffic, which connect four seaports (one in Mexico and three in United States) and nine airports (three in Tamaulipas and six in Texas).

Economic activity is spread out in 81 industrial parks on the Texan side and 37 on Mexican soil, in which various types of industry take place, mainly automotive, but also aerospace, energy and agriculture. 

The logistics vocation of the Río South Texas region is largely due to its strategic location and is a key point for trade and distribution of goods between the two countries. The region has an extensive transport network that includes highways, railways, which allows the fast and efficient movement of merchandise throughout the region and its connection with other centers of commerce.

In Río South Texas, various logistics centers have been developed as part of its industrial park infrastructure that provide storage, distribution and value-added services to companies. These logistics centers are strategically located near the ports of entry and have state-of-the-art facilities and technology to meet the needs of logistics and transportation companies.

The region is also home to specialized industrial clusters in sectors such as manufacturing, agriculture, energy and petrochemicals. These ecosystems encourage collaboration between companies in the same sector and facilitate the integration of the supply chain and the optimization of logistics processes.

PLANNING, RESPONSE TO NEARSHORING
With the growing initiatives to relocate manufacturing, an effect known as nearshoring, the region has been experiencing considerable growth in the arrival of companies, investments, and also in the flow of goods to the south and north of the border. 

Rick Carrera, director of Economic Development at COSTEP ( Council for South Texas Economic Progress ), comments that although the nearshoring issue is not necessarily something new, it has caused companies in the region to develop planning schemes that allow them to face the growth to come. 

“The pandemic and the consequent supply chain problem exacerbated it and now it is becoming a bigger issue,” says the regional development expert. “Our region is going to play an important role with basically logistics, capacity in storage centers, agility in crossing border bridges, rail and highway expansion. As long as nearshoring continues, we will continue to see growth in cargo transportation from one side of the border to the other."

COSTEP is an organization whose objective is to promote the development of the Río South Texas region, taking advantage of its strategic character, both logistical and human, based on the advantages provided by its binational character, both in the sense of economic and cultural structure.

From a planning point of view, companies in the region have been watching the nearshoring phenomenon for some time now, but it is difficult to determine if the projects that are already built are enough to meet the growth demand of the region. .

But this is natural, “projects, companies and people will surely arrive in the region, and the infrastructure will not always be ready, because construction always takes time. But definitely, in terms of planning, the growth to come is clear”, explains Carrera.

THE PRECISE INVENTORY COSTEP 
's strategy consists of ensuring communication between the different economic actors in the region, because although the various sectors have their own events and information mechanisms, it is important to maintain intersectoral communication mechanisms as well that help take advantage of opportunities. 

“We have the reference of several companies that seek to expand in the coming years, so the real estate inventory becomes crucial. It is not only the properties, but the infrastructure that accompanies it, such as the electrical network, or the fiber for connectivity and, of course, the expansion of streets and highways,” Carrera points out. 

It is clear that a building cannot be built overnight, so anticipation and development is key to always have inventory availability, as well as the correct information about it for the entire community in the region.

Adam Gonzalez, CEO of COSTEP , comments that to attract additional investment and encourage investors to pay attention to the region, it is important to continue building industrial parks, but in a well- calculated way. "Creating infrastructure of this size requires a lot of capital and is always risky for investors, which is why we can't speculate ." 

Gonzalez adds that for now there are buildings available and also land, where industrial parks are being built that, in the future, will gradually be occupied. “We are prepared and we have good planning”, Erick Carrera reiterates in this regard.

TALENT VS DEMAND 
Another important point is the development of human capital. As logistics demand increases, training and talent development also need to be strengthened. 

At Rio South Texas they know that they have to train people based on the correct careers, that is, those professions that are currently in demand by the local industry. “It is essential to ensure that graduates find work in the region and thus avoid brain drain. On the other hand, we have to ensure that we can fill the available positions here, without having to go out and look for the right people in other parts of the country,” warns Gonzalez.

COSTEP also supports the Rio South Texas Education and Community Development Foundation (RSTEF), founded in 1974, whose mission is to ensure that residents gain the skills and knowledge to access economic opportunities that enable them to pursue prosperous careers and lives in the region. 

The RSTEF seeks to encourage Universities to "promote the careers that are most in demand in the region and those that, in the future, are expected to be the most in demand for local economic development, even if they are not yet so required" González explains.

The logistics capacity of the region made up of the cities near the border between Tamaulipas and Texas could be the one with the highest growth derived from the current industrial relocation initiatives. Organizations such as COSTEP work to support the development of the entire region as a whole to achieve homogeneous growth. “We carry out liaison and communication efforts so that populations that do not have so many resources can also take advantage of the economic development of nearshoring”, warns Erick Carrera.

With the successful development of the logistics infrastructure in this region, the efforts of nearshoring and commercial development based on the USMCA will be capitalized more quickly and efficiently.

At first glance, it would appear that Rio South Texas is a small region with its own independent economic development. But the reality is that it is a fundamental strategic link for trade between Mexico and the United States to continue to grow successfully.