Mexico Logistics and Express Outlook

01 Jun 2011 • by Natalie Aster

Total automobile sales decreased by nearly 26.0% in 2009 as a result of the economic crisis. The government realized the importance of this sector, and helped support the industry during the crisis, deploying the Technical Strike Program and providing financing to the tune of nearly $2.2bn. Another measure instituted by the government was the gradual phase-out of the vehicle ownership tax, beginning with the ownership tax on the acquisition of new vehicles. Specifically, the government is going to support those that buy new cars by paying ownership tax of a value up to $20,320 for them. Lower logistics costs to the US have made Mexico a competitor to Asian countries in terms of cars and accessories. Additionally, lower labor costs and proximity make it a preferred choice in manufacturing automobiles and the necessary components. Taking note of this, leading car manufacturers have begun shifting manufacturing facilities to Mexico.

The report “Mexico Logistics and Express Outlook” by Datamonitor provides both an insight into the structure of the Mexican logistics sector and a detailed analysis of the size and modal splits for each market.

Nissan, one of the top car manufacturers, announced that it would be shifting some of its small car production from Japan to Mexico. In addition, in 2008 Nissan signed a three-year contract, which states that it will ship 100% of its vehicles for export by rail to Mexican ports, as well as directly to the US. It was the first original equipment manufacturer (OEM) in Mexico to use rail for a small number of cars for domestic distribution.

Report Details:

Mexico Logistics and Express Outlook
Published: December 2010
Pages: 52
Price: US$ 2,495.00

Report Sample Abstract

Mexico Logistics: Sector Profile


The Mexican logistics market was valued at $60.7bn in 2009, which amounts to almost 9% of the real GDP (In 2010, this has increased to $65.4bn). The performance of the Mexican logistics sector contributes largely towards the country's global competitiveness; however, the current scenario is not very encouraging. According to a report published by the World Economic Forum in 2010, Mexico received a score of 4.19 (out of a possible 5) and a ranking of 66 (among 150 nations). An old and inefficient infrastructure is the main reason for this state of affairs.

Historically, Mexico has been apathetic about investing in the logistics sector and growing the country's transport connections, but new government leadership is resulting in a more progressive and committed approach to driving infrastructure improvements, as well as intermodal partnerships and trade agreements with the US and other leading countries around the world. This increase in government focus has resulted in further development, with various projects being carried out by the government and private organizations that will greatly benefit both the overall infrastructure and the logistics sector of the nation.

As a part of this initiative, the Logistical Competitiveness Agenda 2008–2012, prepared by the Mexican Secretariat of Economy, identified multiple logistics challenges experienced by Mexican companies, some of which include:

An infrastructure generally lacking in quality:

  • There is a distinct lack of sufficient intermodal connections between maritime ports and inland distribution centers. The underdeveloped infrastructure of maritime ports makes efficient connections with railroad and truck transportation systems difficult if not impossible in places. In addition to this, the lack of efficiency in customs inspection means that the average stay of containers in Mexican ports is double the international average.
  • Trucking transportation dominates intermodal transportation in Mexico, but costs are expensive due to highway fees and the structure of the trucking industry. About 90.0% of truck transportation companies only have five or less vehicles, and the average age of 51.0% of those vehicles is 20 years.
  • The efficiency of the customs system is very low, reaching only 2.5 on a five-grade evaluation scale as judged by the World Bank.

Inefficient regulatory framework:

  • The lack of a border crossing agreement for trucks causes delays and inefficiency in import/export processes.
  • An abundance of import/export procedures, regulations, and required documentation make international trade very slow and costly.

Other factors:

  • The lack of trained staff means that companies cannot estimate correctly their inventory and cargo movements according to customer demand.

More information can be found in the report “Mexico Logistics and Express Outlook” by Datamonitor.

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