Mexico Shipping Report Q3 2011
Includes 3 FREE quarterly updates
At present, Mexican economic activity looks strong, but with the consumer story not yet convincing and high oil prices likely to dampen demand for exports, we are happy to stick to what is now a belowconsensus real GDP growth projection of 4.1% for 2011. A recent survey of private sector economists conducted by Banamex showed average growth forecasts of 4.4% for this year, and even Mexico's finance ministry is now forecasting growth to hit 4.2-4.3%. Yet while there is certainly justification for a more optimistic sentiment, with the Mexican consumer yet to join the party and the oil price trajectory posing its own downside risks, for now we resist the temptation for another upward revision to our growth projections.
Consumer confidence has made a pretty solid recovery in recent months, but we still see a large divergence between external and domestic demand performance. This trend has been reflected in other sectors of the economy, with Wal-Mart de México reporting a 1.1% y-o-y decline in same-store sales in March this year, after a tepid 1.8% expansion in February. With the bulk of new private sector credit still going to corporations rather than consumers, and remittances far off historic highs in nominal terms, at present there is little to like about the health of private consumption in Mexico.
Headline Industry Data
Port of Manzanillo total tonnage growth in 2011 is estimated to hit 6.55%, with average annual growth of 9.11% during our forecast period.
Port of Veracruz total tonnage growth in 2011 is estimated to hit 3.93%, with average annual growth of 5.71% during our forecast period.
Port of Manzanillo container throughput growth in 2011 is estimated to hit 9.83%, with average annual growth of 12.97% during our forecast period.
Port of Veracruz container throughput growth in 2011 is estimated to hit 5.37%, with average annual growth of 7.52% during our forecast period.
Key Trends And Developments
Recovery Continues In Mexican Port Sector - BMI believes that 2011 should see Mexican ports continuing their recovery from 2009's global downturn, which saw container throughput at the country's main ports nosedive. The figures for container throughput at the country's ports for the first two months of 2011 show strong year-on-year (y-o-y) growth, reflecting the positive throughput figures we have seen in the US over the same period. We caution, however, that Mexico's economic dependency on the US means it is highly exposed to any slowdown in the recovery there.
But Downside Risks Remain - We caution that downside risks for the Mexican port sector remain. While the country's close proximity to the US, and its NAFTA membership, give it an important advantage when trading in the US market, the fact that Mexico's economy remains largely tied to economic prospects in the US is a cause for concern given the still cautious outlook for the US consumer over the next few years. Furthermore, Asian, especially Chinese, competition in the key US export market remains a worry for the sector.
Risks To Outlook
On the upside, our outlook for US consumers is now slightly more positive than initially expected. According to the US National Retail Federation (NRF), retail industry sales (which exclude automobiles, gas stations and restaurants) for January increased 0.2% on a seasonally adjusted basis from December and 3.5% unadjusted y-o-y. 'In spite of the economic uncertainties that still exist, consumers are clearly demonstrating their desire to spend on discretionary items once again', said NRF President and CEO Matthew Shay.
On the downside, our outlook for Mexican consumers remains sluggish. Consumer confidence surveys suggest that the Mexican consumer remains very wary, although there has been a slight improvement in this indicator over the past few months. Over the long term we believe Mexican consumer demand will continue to be undermined by the lack of competitiveness in key sectors, lack of fiscal reform and overdependence on the US economic cycle.
At present, Mexican economic activity looks strong, but with the consumer story not yet convincing and high oil prices likely to dampen demand for exports, we are happy to stick to what is now a belowconsensus real GDP growth projection of 4.1% for 2011. A recent survey of private sector economists conducted by Banamex showed average growth forecasts of 4.4% for this year, and even Mexico's finance ministry is now forecasting growth to hit 4.2-4.3%. Yet while there is certainly justification for a more optimistic sentiment, with the Mexican consumer yet to join the party and the oil price trajectory posing its own downside risks, for now we resist the temptation for another upward revision to our growth projections.
Consumer confidence has made a pretty solid recovery in recent months, but we still see a large divergence between external and domestic demand performance. This trend has been reflected in other sectors of the economy, with Wal-Mart de México reporting a 1.1% y-o-y decline in same-store sales in March this year, after a tepid 1.8% expansion in February. With the bulk of new private sector credit still going to corporations rather than consumers, and remittances far off historic highs in nominal terms, at present there is little to like about the health of private consumption in Mexico.
Headline Industry Data
Port of Manzanillo total tonnage growth in 2011 is estimated to hit 6.55%, with average annual growth of 9.11% during our forecast period.
Port of Veracruz total tonnage growth in 2011 is estimated to hit 3.93%, with average annual growth of 5.71% during our forecast period.
Port of Manzanillo container throughput growth in 2011 is estimated to hit 9.83%, with average annual growth of 12.97% during our forecast period.
Port of Veracruz container throughput growth in 2011 is estimated to hit 5.37%, with average annual growth of 7.52% during our forecast period.
Key Trends And Developments
Recovery Continues In Mexican Port Sector - BMI believes that 2011 should see Mexican ports continuing their recovery from 2009's global downturn, which saw container throughput at the country's main ports nosedive. The figures for container throughput at the country's ports for the first two months of 2011 show strong year-on-year (y-o-y) growth, reflecting the positive throughput figures we have seen in the US over the same period. We caution, however, that Mexico's economic dependency on the US means it is highly exposed to any slowdown in the recovery there.
But Downside Risks Remain - We caution that downside risks for the Mexican port sector remain. While the country's close proximity to the US, and its NAFTA membership, give it an important advantage when trading in the US market, the fact that Mexico's economy remains largely tied to economic prospects in the US is a cause for concern given the still cautious outlook for the US consumer over the next few years. Furthermore, Asian, especially Chinese, competition in the key US export market remains a worry for the sector.
Risks To Outlook
On the upside, our outlook for US consumers is now slightly more positive than initially expected. According to the US National Retail Federation (NRF), retail industry sales (which exclude automobiles, gas stations and restaurants) for January increased 0.2% on a seasonally adjusted basis from December and 3.5% unadjusted y-o-y. 'In spite of the economic uncertainties that still exist, consumers are clearly demonstrating their desire to spend on discretionary items once again', said NRF President and CEO Matthew Shay.
On the downside, our outlook for Mexican consumers remains sluggish. Consumer confidence surveys suggest that the Mexican consumer remains very wary, although there has been a slight improvement in this indicator over the past few months. Over the long term we believe Mexican consumer demand will continue to be undermined by the lack of competitiveness in key sectors, lack of fiscal reform and overdependence on the US economic cycle.
Contents
Executive SummaryGlobal Overview
Container Industry Overview
Drivers
Bellwethers
Rates
Players
Dry Bulk Shipping Overview
Drivers
Capacity
Rates
Liquid Bulk Shipping Overview
Drivers
Capacity
Rates
Players
Geopolitical Developments
Industry Trends and Developments
Market Overview
Port of Manzanillo
Overview
Terminals, Storage And Equipment
Expansions And Developments
Multi-Modal Links
Port of Veracruz
Overview
Terminals, Storage And Equipment
Expansions And Developments
Multi-Modal Links
Industry Forecast
Table: Major Port Data
Table: Trade Overview
Table: Key Trade Indicators
Table: Main Import Partners
Table: Main Export Partners
Company Profiles
Maersk Line
Mediterranean Shipping Company (MSC)
CMA CGM
Hapag-Lloyd
Evergreen Line
APL
CSAV
COSCO Container Lines Company Limited (COSCON)
Hanjin Shipping (Container Operations)
China Shipping (CSCL) .. 80 Skip to top