In early May, CMA CGM announced a new trans-Pacific container service for shipments from the Asia-Pacific region to the west coast of Mexico.

The fixed-day, weekly service, which utilizes eight dedicated vessels, moves from Tianjin via Qingdao and Busan to Ensenada, Manzanillo and Lazaro Cardenas before returning across the Pacific to Tianjin via Yokohama and Busan.

The new service targets a sector that has seen rampant growth. According to Xeneta, containerized exports from China to Mexico were up 60% in January.

Trade between China and Mexico accelerated from 3.5% growth in 2022 to 34.8% last year. Mexico has been one of the major winners of the nearshoring trend that has seen North American and European companies look to diversify their procurement by sourcing a larger portion closer to home.

Apart from U.S. and multinational companies setting up production facilities in Mexico, this has also attracted Asian producers eager to maintain or strengthen their access to the U.S. market.

As a result, the port of Los Angeles lost its crown as the largest gateway for U.S. imports to Laredo, courtesy of cargo rolling north from Mexico on rail and trucks. Container flows through Mexican ports have gone through the roof.

Manzanillo, the nation’s largest import gateway, registered a 7.3% increase in throughput in the first quarter, fuelled by a 17.7% surge in container traffic.

Imports were up 15.7%. Lazaro Cardenas, the second-biggest port on Mexico’s Pacific coast, posted a 35% boost in container throughput in February, following 40% growth in January.

Containerized imports were up 33%, while exports soared 53%. The tidal wave of traffic is threatening to overwhelm the ports. Manzanillo has operated at capacity for some time.

This prompted some container lines to drop calls at the port in February. They offered customers a choice of rail transport from Lazaro Cardenas or a later vessel connection out of the second-ranking Mexican west coast gateway.

The ports have been scrambling to overcome congestion. Already last year the port of Manzanillo teamed up with CMA CGM Contecon Manzanillo, a subsidiary of International Container Terminal Services, to launch a block train service to Valle de Mexico.

This was followed by a similar service to Monterrey.

In January, their rail tonnage was up 68% from a year earlier. Contecon is planning to double its rail capacity by expanding rail tracks and bringing in new loading equipment.

At Lazaro Cardenas the expansion of APM Terminals’s container facility went into its second phase last fall. This is a US$140 million project aiming to double capacity to 2.2 million TEUs and upgrade APM’s operating system. This year Hutchison Ports will expand its Specialized Container Terminal 1 at the port, a US$220 million undertaking to boost quay and yard space at the gateway. There is broad agreement – from industry to government – that Mexico’s entire logistics infrastructure needs upgrading, from ports and warehousing to rail and trucking.

According to Rogelio Jimenez Pons, undersecretary for transport in the Secretariat of Infrastructure, Communication and Transport, the trucking sector is struggling with a driver shortage and ageing equipment. About 50,000 additional drivers are needed, and the average age of trucks is 20 years.

Rail capacity is similarly strained and too costly.

The cost of rail transport in Mexico is around 70 cents per tonne-kilometer, more than double the 30 cents average in the U.S., he remarked, adding that new rail lines have to be created. The direct route to the U.S. market may not always be the fastest.

Last year, flows at major border crossings slowed to a crawl several times as U.S. Customs & Border Protection shifted personnel to other points in order to assist in dealing with large waves of undocumented immigrants heading for or arriving at the border.

This was aggravated by truck inspections staged by the Texas Department of Public Safety, on orders of the state governor, which served to increase wait times for trucks and forced shippers with urgent traffic to take lengthy detours.

Some were reportedly considering charters to move their urgent shipments. The necessary upgrade of Mexico’s infrastructure to cope with projected growth is going to be costly.

A number of sectors besides transport require upgrades, including energy, industrial parks and water, Jimenez said.

He reckons that altogether, about US$400 billion in infrastructure funding will be required until 2032.

By Ian Putzger

Correspondent | Toronto