Mexican port growth outpaces US, Canada

Mexican port growth outpaces US, Canada

A ship arrives at Manzanillo, Mexico's busiest port.


Cargo volumes through Mexican ports increased by 5.5 percent in 2016, outpacing its two North American Free Trade Agreement counterparts, despite the weakening peso, gas price hikes, and transportation-link blockades. Yet the year ahead may be even more difficult for Mexico, given the uncertainty over its trade with the United States, and will likely be far tougher than for its counterparts.

Mexican ports handled 4.1 million loaded twenty-foot-equivalent containers in 2016, up from 3.9 million TEUs in 2015, according to figures released by the Mexican Secretariat of Communications and Transport, which oversees the port system. That was slightly better than the 5.1 percent year-over-year increase in 2015.

It was also stronger than the 2016 performance of US ports, where the volume of loaded TEUs increased by 3.3 percent over 2016. Mexico also seems to have done better than Canada. Although national figures for Canadian ports are not available, laden volumes through four of the country’s largest ports — Vancouver, Montreal, Prince Rupert, and Port Saint John — grew by just over 0.5 percent.

The volume of loaded containers imported into Mexico, which accounts for about 60 percent of Mexico’s loaded container volume, increased by 5 percent year-over-year in 2016 as loaded exports increased by 6 percent. The figures were driven in part by strong volume growth at the largest Gulf Coast port, Altamira, and at Lazaro Cardenas on the Pacific Coast, while volume slowed at the nation’s busiest container port, Manzanillo.

Under normal circumstances, solid 2016 figures would mean Mexico’s logistics industry is entering 2017 with a promising hand, especially given the federal government’s vigorous commitment to spend $5 billion on upgrading the port system. Port improvements set to come online in the next 12 months include a new terminal built by APM Terminals that is set to open on Feb. 27 at the Port of Lazaro Cardenas; a new rail tunnel at Manzanillo to open by the end of the year; and a continuing construction project at the nation’s largest port on the Gulf of Mexico, Veracruz, that is planned to increase its 900,000-TEU capacity five-fold by 2030. Mexican officials recently called Veracruz the nation’s biggest infrastructure investment in 100 years.

Yet the industry instead begins the year facing the turmoil of the Trump administration’s threat to renegotiate NAFTA and put up tariffs on Mexican goods coming into the United States, and the administration’s pressure aimed at dissuading US companies from investing in Mexican projects. All of which could reduce trade and container volumes.

Of particular worry is President Donald Trump’s focus on the automobile industry, which has become the backbone of the Mexican manufacturing sector and now includes more than a dozen plants — among them for Ford, Chrysler, Fiat, and General Motors. Already, Ford — under pressure from Trump — has retreated from a plan to build a new factory in Mexico that would support 700 jobs, although it still plans to shift production of its Focus model from Michigan to Mexico.

“Most of the automotive production in our country is destined for export,” said Guillermo Deister Mateos, head of SCT’s maritime and port strategic planning unit. About 80 percent of the 3.4 million cars made in Mexico in 2016 were exported, including 1.1 million through the ports, he said.

Moreover, imports of car parts to be fitted into new cars were one reason for the increase of loaded container volumes through Altamira, he said. The volume of full TEUs through the port grew by 8.6 percent in 2016, over the previous year, including a 12 percent increase in imports, government figures show.

Mario Veraldo, managing director for the middle Americas, including Mexico, for Maersk Line, said it’s too early to speculate about Trump’s impact on the Mexican port industry in 2017 because so few details are known.

“Protection is very bad for all the countries involved,” he said, adding that Trump’s policies may provide impetus for Mexico to further diversify the customer base beyond the United States, which has started already.

On the export side, Mexico is increasingly “relevant” in the refrigerated business, catering to food producers, especially of bananas and avocados, who want an “end-to-end cold chain,” he said. “[Mexican] reefers are making their way into new markets like China, and, for example, bananas are going to Europe.” Likewise, the port of Lazaro Cardenas benefitted from a large volume of aluminum exported to Southeast Asia. On the import side, auto-parts are increasingly coming to Mexico from Asia, he said.

Veraldo said Maersk expected slightly bigger growth in Mexican cargo volumes in 2016, but the weak peso hurt the economy. The peso fell more than 20 percent against the dollar in 2016, making imports into Mexico more expensive and exports cheaper for foreign buyers, which likely contributed to the change in Mexico’s cargo volume patterns compared with 2015. The 5 percent increase in imported loaded TEUs was smaller than the 10 percent year-over-year increase in 2015, and the 6 percent increase in loaded export volumes was a strong improvement over the 1.5 percent decline year-over-year in 2015.

Along with the weakening peso, Mexico’s logistics industry in 2016 was affected by civil disturbances as a result of the government’s decision to raise fuel prices, which increased the price of diesel by 16 percent, boosting the cost of moving freight and prompting blockades of highways that temporarily affected the Port of Veracruz. In July, angry teachers mounted a blockade of freight rail lines into the ports of Lazaro Cardenas and Manzanillo, bringing the movement of thousands of containers to a standstill in a nationwide series of protests over education reforms.

Veraldo said those disturbances did not appear to have had much impact on Mexico’s annual terminal volumes. And port volumes were shaped by other local issues at each port.

The relative weakness of Manzanillo’s cargo volume, which grew by just 2.5 percent in 2016, and the strength of that in Lazaro Cardenas, which enjoyed a 10 percent increase, stemmed in part from Manzanillo’s status as the nation’s busiest port, Deister Mateos said.

“Manzanillo has always been an attractive port for cargo going to central and northern Mexico but also to the southern states of the United States that connect via railroad to the port,” he said. In 2016 “the port was saturated and had a serious lack of space.” As a result, some shippers decided to move their cargo to Lazaro Cardenas, Deister Mateos said.

The space shortage will soon be resolved by the construction of a new port, called Cuyutlan, which is in the planning stage and will be built next to the existing Manzanillo port, he said. And later this year Manzanillo will another long-running difficulty, the fact that the rail freight access to the port is limited to four times a day by having to run through the city center, Deister Mateos said. The new rail tunnel will provide 24-hour access to the port, he said.

Similarly, Mexico’s third-largest port, Veracruz, will experience a major development in 2017 with the relocation of the ICAVE Terminal, operated by Hutchison Port Holdings, from the old port to the new section under construction, he said.

Contact Hugh R. Morley at and follow him on Twitter: @HughRMorley_JOC.