US Sanctions Spill Over? Costs of “Alternative Routes” for China-Mexico Cross-Border Logistics Double

Against the backdrop of deeply intertwined global supply chains, every move in geopolitical 博弈 can trigger a chain reaction. Since 2025, the United States has imposed a new round of sanctions on certain entities and logistics links related to China’s trade, with the impact quickly spreading to the China-Mexico cross-border logistics sector. Traditional logistics channels relying on the “China-U.S. Transit-Mexico” route have been disrupted, forcing a large number of shippers to switch to “U.S.-bypassing” alternative routes. However, the costs of these alternative routes have doubled compared to traditional routes, and the proportion of logistics costs for some high-value-added categories has even exceeded 20%, posing severe challenges to China-Mexico trade enterprises. How exactly do U.S. sanctions affect China-Mexico logistics? What are the cruxes behind the high costs of alternative routes? And how can enterprises break through this dilemma? This article will conduct an in-depth analysis of the entire chain reaction.

I. The Impact of U.S. Sanctions on Traditional China-Mexico Logistics Channels

Although the U.S. sanctions are not directly targeting China-Mexico trade, they have indirectly cut off multiple traditional China-Mexico logistics channels through measures such as the “Entity List” and “logistics link restrictions,” with the most significant impact on shippers relying on U.S. transit and cooperation with U.S. logistics enterprises.

1. “Restrictions” on U.S. Transit Channels Lead to Soaring Cargo Detention Rates

For a long time, the “China-U.S. West Coast Ports (Los Angeles/Long Beach)-Mexico Border Land Transport” route has been one of the core transit routes for China-Mexico trade. Chinese cargo is first transported to U.S. ports by sea, then shipped to Mexico via trucks or railways through U.S.-Mexico borders (such as Tijuana and El Paso). Leveraging the mature U.S. logistics network and short-distance land transport advantages, this route once accounted for 40% of the total volume of China-Mexico cross-border logistics.

However, in March 2025, the U.S. Department of the Treasury added three U.S. logistics enterprises providing transit services for China-Mexico trade to the “Entity List,” prohibiting them from cooperating with sanctioned Chinese entities. At the same time, U.S. ports were required to conduct additional security inspections on “suspected Chinese electronic products and auto parts destined for Mexico,” extending the inspection cycle from 1-2 days to 5-7 days. This policy directly led to two consequences: first, a large number of Chinese shippers relying on these three logistics enterprises were forced to terminate cooperation, resulting in cargo detention at U.S. ports; second, the efficiency of security inspections at U.S. ports declined. In the second quarter of 2025, the detention rate of cargo transiting through the U.S. to Mexico soared from 8% to 25%, and some electronic products missed the Mexican sales peak due to prolonged detention.

Take a Shenzhen-based mobile phone trading company as an example. In April 2025, the company shipped 1,000 mobile phones to Mexico, originally scheduled to transit through the Port of Long Beach in the U.S. However, due to the inclusion of its cooperative U.S. logistics enterprise in the “Entity List,” the cargo was detained at the Port of Long Beach for 12 days, incurring \(30,000 in demurrage and warehousing fees. Eventually, the company had to abandon the transit plan and switch to other routes, resulting in a 20-day delivery delay and \)50,000 in customer breach-of-contract damages.

2. “Disconnection” with U.S. Logistics Enterprises Narrows Cooperation Channels

In addition to the restrictions on transit channels, major U.S. logistics enterprises (such as FedEx and UPS) have also significantly scaled back their China-Mexico logistics cooperation with Chinese shippers due to sanctions pressure. According to the newly added provisions in the U.S. Export Administration Regulations (EAR), U.S. logistics enterprises must apply to the U.S. Department of Commerce for permits if they provide China-Mexico transportation services for “Chinese cargo that may involve sensitive technologies,” with an approval rate of less than 30%.

To avoid compliance risks, FedEx has adopted a “pre-audit before accepting orders” model for cargo from China to Mexico since May 2025. The audit scope includes whether the cargo contains sensitive components such as chips and batteries, with an audit cycle of 3-5 days, and only accepts orders from large enterprises with an annual transportation volume exceeding 1,000 tons. UPS, on the other hand, directly suspended its “China-Mexico” small-piece cargo transportation service, retaining only bulk cargo transportation and increasing freight rates by 30%.

This change has hit small and medium-sized shippers the hardest. A Guangzhou-based cross-border e-commerce enterprise mainly engaged in home goods exports previously shipped 500 small-piece cargo orders to Mexico via FedEx every week. After May 2025, due to failed audits, only 100 orders could be shipped each week, and the freight rate increased from \(20 to \)26 per order, raising logistics costs by 30%. As a result, the enterprise had to abandon some small Mexican orders.

II. Current Situation and Cost Dilemma of “Alternative Routes” for China-Mexico Cross-Border Logistics

Faced with disrupted traditional routes, China-Mexico shippers have been forced to switch to three main “alternative routes”: “China-Panama Canal-Mexico Direct Shipping,” “China-South American Port Transit-Mexico,” and “China-European Port Transit-Mexico.” However, these routes generally have problems such as “long voyage distances, multiple links, and high costs,” with total costs doubling compared to traditional routes, becoming a “heavy burden” for shippers.

1. Route 1: China-Panama Canal-Mexico Direct Shipping – High Costs and Tight Space

The “China-Panama Canal-Mexico Direct Shipping” route is currently the most mainstream alternative route, accounting for 60% of the total volume of China-Mexico alternative routes. Although this route does not require transit through the U.S., it faces two major pain points due to the drought at the Panama Canal (water levels at the canal continued to drop in 2025, reducing daily transit capacity from 32 ships to 20 ships): first, the increase in canal tolls. In 2025, the tolls for container ships at the Panama Canal increased by 40% year-on-year, with a single toll for a 4,000 TEU container ship rising from \(300,000 to \)420,000; second, tight shipping space. Due to the large number of shippers switching to direct shipping, the space utilization rate of the China-Mexico direct shipping route reached 98% in the second quarter of 2025. Shippers need to book space 2-3 months in advance, and some shipping companies also impose additional “Peak Season Surcharges (PSS),” with the surcharge for a 40-foot container increasing from \(500 to \)1,000.

Taking a 40-foot container shipped from China to the Port of Manzanillo in Mexico as an example, the total cost of the traditional route (transiting through the U.S.) was approximately \(3,500 in 2024, while the total cost of the direct shipping route rose to \)7,000 in 2025. Among them, the basic sea freight increased from \(2,000 to \)4,000, the allocated canal tolls increased from \(500 to \)1,200, and the surcharges increased from \(300 to \)800, doubling the total cost.

2. Route 2: China-South American Port Transit-Mexico – Multiple Links and Poor Timeliness

The “China-South American Port (Lima/Santiago) Transit-Mexico” route is a secondary alternative route, accounting for approximately 25%. This route requires first transporting cargo to South American ports, unloading, and then reloading onto ships bound for Mexico. Although it is not affected by U.S. sanctions or the drought at the Panama Canal, it has problems such as “multiple transit links and poor timeliness.”

In terms of costs, transit links incur additional expenses: first, the loading and unloading fees at South American ports, which are approximately \(800 per 40-foot container; second, the transit warehousing fees, with cargo staying at South American ports for an average of 3-5 days, and a daily warehousing fee of \)50; third, the transit loss, with the cargo damage rate increasing from 2% for direct shipping to 5% due to multiple loading and unloading, leading to higher claim costs. Comprehensive calculations show that the total cost of this route is 1.8 times higher than that of the traditional route, and the timeliness is extended from 30 days to 45-50 days.

Data from a Brazilian transit port shows that in May 2025, the volume of Chinese cargo transiting through this port to Mexico increased by 150% year-on-year. However, due to insufficient loading and unloading capacity, the average stay time of cargo extended from 3 days to 7 days. Some shippers had to pay “express loading and unloading fees” to shorten the stay time, incurring an additional $500 per container.

3. Route 3: China-European Port Transit-Mexico – Long Distance and High Risks

The “China-European Port (Rotterdam/Hamburg) Transit-Mexico” route is the least popular alternative route, accounting for only 15%, mainly used for high-value cargo with low timeliness requirements (such as large machinery). This route requires crossing the Atlantic Ocean and bypassing the southern tip of South America, with a voyage length of 60 days, twice that of the traditional route, and faces two major risks: first, geopolitical risks. Passing through sensitive sea areas such as the Red Sea and the Mediterranean, 3% of the cargo on this route was delayed due to regional conflicts in the first half of 2025; second, high fuel costs. The long voyage leads to fuel consumption 1.5 times that of direct shipping, and it is highly affected by fluctuations in international oil prices.

In terms of costs, the basic sea freight of this route is 2.2 times that of direct shipping, and the insurance premium increases by 50% due to high risks. The comprehensive total cost is 2.5 times higher than that of the traditional route. A Shanghai-based machinery enterprise shipped 10 machine tools to Mexico via this route in March 2025, with a total cost of \(250,000, \)150,000 more than the traditional route. Moreover, due to the long voyage, customers had to place orders 3 months in advance, affecting order flexibility.

III. In-Depth Reasons for Doubled Costs of Alternative Routes: Triple Pressure from Supply-Demand, Environment, and Policy

The doubled costs of alternative routes for China-Mexico cross-border logistics are not caused by a single factor, but by the superposition of three factors: “surge in demand driving up capacity prices,” “natural environment restricting channel efficiency,” and “geopolitical policies increasing compliance costs,” forming a vicious cycle of “cost increase-tight capacity-further price increase.”

1. “Supply-Demand Imbalance” Between Surge in Demand and Insufficient Capacity

After U.S. sanctions led to the diversion of traditional routes, the demand for alternative routes increased explosively in the short term. In the second quarter of 2025, the total demand for China-Mexico cross-border logistics increased by 20% year-on-year, but the capacity of alternative routes only increased by 5%, resulting in a 15% supply-demand gap. This imbalance directly drove up capacity prices:

• Sea Freight Space: The space price of the China-Mexico direct shipping route increased from \(2,000 per 40-foot container in 2024 to \)4,000 in 2025, a 100% increase. Some shipping companies also raised prices through “space auctions,” with the auction price of space during peak periods reaching $6,000.
• Land Transport Resources: Land transport resources in Mexico also became tight due to the increase in direct shipping cargo. The truck freight from the Port of Manzanillo to Mexico City increased from \(500 per vehicle in 2024 to \)1,000 per vehicle in 2025, a 100% increase, and vehicles need to be booked 1 week in advance.

The root cause of insufficient capacity lies in the lag in capacity investment in alternative routes by shipping companies and logistics enterprises. Due to the sudden nature of U.S. sanctions, shipping companies could not increase direct shipping ships in the short term (the ship construction cycle takes 2-3 years). In 2025, only COSCO Shipping and Maersk each added 1 direct shipping ship, and the new capacity could only meet 10% of the demand growth.

2. “External Constraints” from Natural Environment and Infrastructure

The deterioration of the natural environment has further intensified the cost pressure of alternative routes, with the drought at the Panama Canal and congestion at Mexican ports being the most prominent:

• Panama Canal Drought: The rainfall at the Panama Canal in 2025 was 30% less than the average of previous years, and the water level dropped to a historical low. The Panama Canal Authority had to restrict the draft depth of ships (from 15.2 meters to 13.5 meters), reducing the cargo capacity of each ship by 20%. To maintain revenue, shipping companies had to increase the freight rate per unit of cargo and impose a “water shortage surcharge” of $300 per 40-foot container.
• Mexican Port Congestion: The infrastructure of major Mexican ports (Port of Manzanillo, Port of Veracruz) is outdated, with loading and unloading efficiency only 50% of that of Chinese ports. In 2025, due to the increase in direct shipping cargo, the container throughput of the Port of Manzanillo increased by 35% year-on-year, exceeding the port’s handling capacity. The average stay time of ships at the port extended from 7 days to 12 days, and the demurrage fee increased from \(50 per container per day to \)100 per container per day.

In addition, the road and railway infrastructure in Mexico is weak, and some sections are severely damaged due to the rainy season, leading to an increase in land transport delay rates from 10% to 18%. Shippers need to pay “express fees” to ensure on-time delivery, further driving up costs.

3. “Hidden Increase” in Compliance Costs Due to Geopolitical Policies

U.S. sanctions not only directly block traditional routes but also increase the hidden costs of alternative routes through “compliance audits.” To avoid violating U.S. sanctions, Chinese shippers and logistics enterprises need to invest more resources in compliance management:

• Cargo Certification: For cargo containing electronic components and mechanical parts, additional “non-sensitive technology certificates” need to be provided, certified by third-party institutions. Each certificate costs approximately $500, and the certification cycle takes 3-5 days.
• Logistics Enterprise Screening: Shippers need to check whether their cooperative logistics enterprises are associated with the U.S. “Entity List,” and some enterprises also need to hire professional lawyers for compliance audits, with a one-time audit fee of \(10,000-\)20,000.
• Insurance Coverage Enhancement: Due to the higher geopolitical and transport risks of alternative routes, shippers generally increase insurance coverage. The insurance rate increased from 0.5% of the cargo value to 1.2%. For \(1 million worth of cargo, the insurance premium increased from \)5,000 to $12,000.

Although these hidden costs are not directly reflected in freight rates, they significantly increase the comprehensive costs of shippers. A Shenzhen-based electronic enterprise calculated that its compliance costs for China-Mexico logistics increased by 80% year-on-year in 2025, accounting for 15% of the total logistics costs.

IV. The Path to Breaking Through: Response Strategies for Enterprises and the Industry

Faced with the cost dilemma of China-Mexico cross-border logistics, shippers, logistics enterprises, and governments need to work together to find solutions from the three dimensions of “optimizing routes, improving efficiency, and reducing risks” to alleviate cost pressure.

1. Shippers: Diversified Layout and Cost Control

• Route Combination Optimization: Adopt a combined “direct shipping + transit” route based on the timeliness requirements and value of the cargo. For example, high-timeliness and high-value cargo (such as mobile phones and computers) can take the direct shipping route, while low-timeliness and low-value cargo (such as home goods) can take the South American transit route to balance costs and timeliness.
• Long-Term Agreements to Lock in Costs: Sign 1-2 year long-term space booking agreements with shipping companies to lock in space and freight rates, avoiding the impact of short-term price fluctuations on costs. In 2025, 30% of large shippers have adopted this method, with an average freight rate 15% lower than the spot price.
• Localized Inventory Layout: Establish overseas warehouses in Mexico to reserve 3-6 months of inventory in advance, reducing reliance on real-time logistics. For example, the overseas warehouse established by Xiaomi in Mexico City helped it reduce logistics costs by 30% in 2025 and shortened the delivery timeliness from 30 days to 2-3 days.