Insights by Auba (Oct 25th): Mexican Port Saturation

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The Busiest Ports in Mexico

As Mexico becomes an increasingly important player in global trade, there is one key source of concern for logistics operators: the potential for Mexican port saturation. This, in great part, comes from the rise of Mexico as a global destination for manufacturing, as nearshoring pushes Western countries towards friendlier nations. In this context, Mexico has emerged as a major supply chain destination, even surpassing China as the largest trade partner to the U.S.

But, with this increased attention, one could reasonably ask if there is reason to believe that the country’s ports could handle the growth in activity? Mexico is now in the middle of an upwards trajectory that could bring dozens of factories and millions of dollars in investment. Yet, is it ready to handle the heat?

At Auba, we wanted to help answer the question by doing what we do best: leveraging data to find key insights that operators can act upon. So we looked at historical data from the four largest ports in Mexico: Manzanillo, Lázaro Cárdenas, Veracruz, and Altamira.

As an initial metric of port activity, we calculated the average trade activity handled in a port on any given day across the five year period considered by the IMF. Namely, after adding the values for imports and exports, we found the average trade handled at each port in Mexico. Thereafter, we identified if days fell above or below that average to get an idea of how busy Mexico’s ports tend to be.

Read more below:

The Week in Short

?? Air freight demand briefly surged as companies diverted cargo to avoid the short-lived Longshoremen's strike, but the market is normalizing as ports resume operations. However, with the January 15 master contract deadline approaching, experts suggest shippers prepare for potential disruptions by strategizing dual-port approaches (more on Supply Chain Dive).??

?? Container spot freight rates from China continue to decline on the transpacific and Asia-Europe routes, with the Shanghai-Rotterdam rate dropping 7% to $3,123 per 40ft and the Shanghai-Los Angeles leg down 3% to $4,814 per 40ft. However, transatlantic rates spiked, with a 28% increase (more on Load Star).?

?? Uber Freight expanded its operations in Mexico, opening a new office in Nuevo Laredo and increasing its workforce by 300 employees this year, bringing the total to over 1,300. With 77% growth in U.S.-Mexico cross-border business last year, the company aims to capitalize on nearshoring trends (more on Freight Waves).

???? The Korea Development Bank (KDB) and Korea Ocean Business Corp (KOBC) increased their stake in HMM to 67.05% by converting KRW660bn ($478.25m) of convertible bonds into shares. This move raises questions about the government's plans to privatize HMM, which has been under state control since 2016 (more on Load Star).?

???? Panama issued Executive Decree 512, enabling the immediate deregistration of vessels under its flag that are sanctioned by the U.S., EU, or the UN. This move, ahead of the President's trip to Europe, streamlines the process for removing vessels from the registry, which previously could take months (more on Sea Trade Maritime).?

?? U.S. weekly rail traffic saw a 1.1% increase for the week ending Oct. 19, 2024, with 510,730 carloads and intermodal units. Carload volume dropped 4.6%, but intermodal units rose 6%. Year-to-date, U.S. rail traffic is up 3.1% (more on Freight Waves).?

?? Two of the largest freight forwarders ( DSV and Kuehne + Nagel) reported pressures on margins during Q3, though K+N's sea freight division saw a notable 31.7% revenue increase, helping offset weaker performance in air and road (more on Load Star.??

That is all for this week, but make sure to follow Auba to stay up to date on all things supply chain and logistics