Making expansion plans of its automobile sector a cornerstone of its industrial growth, Mexico is fast becoming a major transportation hub in the Western Hemisphere. North American, Asian and European multinationals are focusing a large percentage of the vehicle assembly in Mexico, not only to supply Mexico’s growing middle class, but to export to foreign markets by sea, rail, and road.
While industrial growth was increasing at a rapid rate, Mexico’s port system was consistently lagging. To keep pace, the federal government announced in April 2015 that it planned to invest $5 billion in its network of 117 ports, including the construction of four new terminals in Veracruz.
Staying true to the 2015 investment strategy…
In early 2017 Mexico put the finishing touches on a semi-automated marine terminal at the Port of Lazaro Cardenas and the completion of a tunnel providing 24-hour containerized rail service at the Port of Manzanillo.
Additional port improvements slated this year include a construction project on the Gulf of Mexico, Veracruz, that is planned to increase its 900,000-TEU capacity five-fold by 2030 – one of the nation’s biggest infrastructure investments in 100 years.
Pointing to Prosperity?
Looking at these developments, it seems like all signs point to prosperity in this burgeoning country, but since the Trump administration has entered the mix with guns blazing, the outlook may not be so bright. As Trump aims to renegotiate NAFTA, implement tariffs on Mexican goods imported into the US, and dissuade US companies from investing in Mexican projects, a decrease in trade and container volumes may become the reality in 2017 and beyond.
Regardless of the US’s current stance on international trade, President Nieto remains committed to free trade and expanding Mexico’s products into overseas markets. Speaking at the launch of the new APM Terminals facility at Lazaro Cardenas, President Nieto noted the country was well on its way to doubling throughput from the 260 million tons a year handled at its ports at the start of his term in 2012.
While the physical infrastructure investments and improvements are a welcome sign to many industries, without considerable Mexico Customs infrastructure changes and investments, the perception of logistics improvements will be outweighed by the customs costs which are already at a premium and causing bottlenecks; how much greater will these bottlenecks be with increased volume and little to no customs infrastructure investment? This will be an interesting development to watch.