It’s the time of the year when the year-ahead reports roll out.
They mostly go straight into the virtual trash but at times they contain some great tidbits. TD’s latest highlights the resurgence of US manufacturing with some comments from a railway executive.
“One shortline panelist at TD Cowen’s Annual Transportation Conference cited nearshoring as the largest long-term growth opportunity for their business, with more than 500 industrial development projects in their pipeline compared to a 300-project baseline during pre-COVID years, and hit rates on pipeline projects are expected to trend at 15 per cent plus compared to just 10-per-cent pre-COVID. Eastern Class I NSC echoed bullish sentiment on nearshoring, citing 600 projects in its pipeline, primarily located in the Southeast and Midwest, while stating that new factory construction in the U.S. is running at about three times average levels in the 2010-2020 timeframe.”
That’s a result of the IRA and CHIPS Act, along with worries about China and capacity post-covid. It will remain a major US tailwind in 2024 but it’s also a tailwind for the Mexican peso.
TD notes that Port of Lázaro Cárdenas — the largest Mexican port — has seen Q3 volumes were up 42% y/y.
If Mexico could ever put an end to cartels and corruption it would be the beginning of an economic miracle.