AMERICAS: Mexico freight sector to falter if US slows

A new freight transport report on Mexico has noted that 2010 has been a year of recovery, in which many Mexican freight operators have returned to profitability. For example, Mexicana de Aviacion was saved from bankruptcy when it was bought out by the Mexican consortium Tendora K. However, BMI believes the rebound in the US […]


A new freight transport report on Mexico has noted that 2010 has been a year of recovery, in which many Mexican freight operators have returned to profitability. For example, Mexicana de Aviacion was saved from bankruptcy when it was bought out by the Mexican consortium Tendora K. However, BMI believes the rebound in the US economy will falter in 2011 and this will cause a slowdown in Mexico. The BMI report said the air freight sector was one of the strongest areas of growth within Mexico’s freight transport sector in 2010, with 20.5 per cent growth to reach 108,000 tonnes after a decrease of -18.2 per cent in 2009. A key industry trend was the number of multinationals increasing their services into Mexico during the last quarter which according to BMI suggests that some businesses are taking a long-term view that Mexico is the gateway into the new emerging economies of Latin America. In terms of the air cargo and logistics sector, CEVA increased its freight service from Mexico to Canada by adding a service between the Gulf Coast and Alberta in August. Pilot Freight Services opened a station in Texas in early August, near the border with Mexico to capture trade there as well and Pan American Airways are restarting an air freight service that will initially focus on Mexico. A key risk to the economic outlook is the growth level in US after the sudden rebound from the depths of the crisis in 2009. This growth is likely to fall, which will also affect Mexico’s GDP growth and freight demand. Although Mexico’s export-led recovery has been impressive, strong export growth did not have a positive impact on domestic demand, BMI said. “With the export outlook looking weaker, we reaffirm our view that growth will slow through 2011; BMI estimates real GDP growth of 4.4 per cent and 3.2 per cent for 2010 and 2011 respectively. A faster-than-expected US slowdown will have a negative impact on our freight forecasts. The other major threat is political risk at home and the possibility of the Mexican government becoming deadlocked in congress due to the strengthened PRI opposition party. This could affect investor sentiment and delay new freight projects,” the report said.