MEXICO MOVING ON UP

 

Mexico covers an area of nearly two million km2, and its capital city is Mexico City. When compared, Mexico is almost four times the size of Spain or nearly three times the size of the State of Texas in the United States (US).

With an estimated population of 126.4 million people (2022), Mexico is the third-most populous country in Latin America after Brazil and Argentina, and the most populous Spanish-speaking country in the world. Mexico is a country with a variety of ethnic groups, where Mexican Mestizo (people of mixed ancestry, mostly Amerindian and European) are the largest group, followed by predominantly Amerindians (Native Americans), Caucasian (people of European or Middle Eastern ancestries) and Afro-Mexicans.

Mexico belongs geographically to North America; however, the country’s cultural heritage is in Latin America. According to some estimates, there are 18 million people living in the metropolitan area of Mexico City, which would make it the most populated city in the western hemisphere.

Another significant milestone on the road to Mexico’s rich sports culture with its diversity of the population is the country that will jointly host the FIFA World Cup 2026 along with Canada and the United States (US). Among the sixteen cities in three North American countries, Guadalajara, Mexico City and Monterrey are the cities to host World Cup matches. This is the third time Mexico has been chosen to host the FIFA World Cup since 1970 and 1986.

GREEN POWERHOUSE PLAN

Mexico is ideally positioned to become a clean energy powerhouse given its world-class renewable energy resource potential and the low cost of renewable energy generation. Thanks to its favourable geographical conditions, the country enjoys around 300 days of sunlight each year, and with over 9,000 km of coastline, there is significant potential for growth across other renewable energy forms.

Rapid growth in renewable energy deployment in Mexico could generate high levels of investment, increase energy access, reduce costs to consumers, and—together with other actions—improve the reliability and resilience of Mexico’s power system.

Mexico’s energy transition law established a target for meeting at least 35 percent of its electricity generation from clean energy sources by 2024. In 2021, Mexico generated 86.3 Terawatt-hour (TWh) or 26.7 percent of its electricity from clean energy resources. By 2024, electricity demand is expected to grow 12.7 percent. (Source: PRODESEN 2021)

 

Clean energy generation in Mexico is also necessary to power the electrification of the transport sector, which would improve air quality. Mexico’s large and diverse renewable energy resource base could support significant growth in clean generation capacity – all combined, enough to meet the country’s electricity needs a hundred times over.

It is expected that Mexico’s renewable energy industry to play an important role in the decarbonisation of the economy and to support the electrification of rural areas as well as the country’s transport system.

MEXICO’S REMARKABLE ECONOMIC RISE

Mexico’s rise to become one of the world’s leading economies is a remarkable feat, currently the 16th largest economy, the country has overcome global headwinds including COVID-19 linked supply chain disruptions, inflation, and geopolitical instability.

This year Mexico’s economy is expected to achieve moderate levels of growth and beyond, driven by strong export demand as the trading recovers after the pandemic.

The US is the country’s second largest leading trading partner and two-way trade in goods and services between the US and Mexico totalled US$725.7 billion in 2021, according to statistics published by the US Government’s International Trade Administration.

As a logistics hub in the Latin America, Mexico is one of the most important trade countries in the region. Mexico has built several logistics hubs which link North America with Central and South America, strategically located between these large trading regions, the country has invested in its infrastructure to become both a conduit for trade, but also to a thriving domestic manufacturing sector.

The Mexican logistics network is made up of 117 seaports, 393,471 kilometres of highways, 27,000 kilometres of rail lines, 76 airports, 46 customs points and 66 intermodal terminals, according to TECMA, a leading Mexico based supply chain company.

MEXICO’S MAIN LOGISTICS HUBS

During the last twenty years Mexico has signed twelve Free Trade Agreements with 46 different countries, and as a result the number of logistics hubs has expanded to many states.

The states that are benefiting from industrial and manufacturing growth are Tijuana, Baja California, Ciudad Juárez and Chihuahua as the states of Guanajuato and Monterrey have established themselves as the most prominent cities that attract the attention of foreign investors.

CONNECTING COASTS ACROSS THE ISTHMUS

As part of the National Development Plan, in 2019, the Mexican Government initiated the Isthmus of Tehuantepec Development Plan. The planned Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) will include a rail link train and the opening of ten industrial parks and a gas pipeline in the area that includes the states of Oaxaca and Veracruz.

As part of this project, the Government seeks to modernise the Isthmus of Tehuantepec railway; expand cargo handling and storage capacity in the ports of Coatzacoalcos, Veracruz and Salina Cruz, Oaxaca; expand the highway from two to four lanes; improve the Minatitlán and Ixtepec airports; establish a fibre optic telecommunications connection and cellular data connectivity; and build a gas pipeline for commercial and private use.

Along the route between the two oceans, ten development centres will be created to nearshoring investment from the private sector.

As part of this programme, the 76 municipalities of Oaxaca and Veracruz involved will reduce their value added tax (VAT) and income tax rates, in addition to offering oil at reduced prices.

NAFTA AND BEYOND

Today, Mexico has many free trade agreements, the first began in 1990 when negotiations were underway between the US, Canada and Mexico. In late 1993, the North American Free Trade Agreement (NAFTA) was signed.

It was the largest free-trade agreement in the world, since then, there have been massive increases in exports in industries such as agriculture, vehicles, and natural resources.

The United States-Mexico-Canada Agreement (USMCA) which replaced NAFTA in 2020, offers an improved economic integration between the three countries with a zero-tariff environment for most agricultural products and has lowered many barriers to trade.

With a US$1.29 trillion GDP in 2021, Mexico is the second largest in Latin America, and remains an upper–middle-income member of the G20 and The Organization for Economic Cooperation and Development (OECD) with a per capita GDP of US$9,926, according to data.worldbank.org.

Over the last twenty years, the US and Mexican supply chains have become increasingly integrated, and practice production sharing.

US-MEXICO TO IMPROVE CROSS BORDER CUSTOMS CLEARANCE

The governments of Mexico and the US are investing to modernise the border infrastructure through technology which will improve the customs system via twenty key infrastructure projects. The combined investment amounts to US$4.2 billion, of which US$700 million has already been approved for spending.

The border between the two countries is among the busiest in the world and both have different technology which is not connected to both sides of the border. The plans are to increase production capacity in many areas including medical equipment, pharmaceuticals, semiconductors and electromobility, according to a story in Mexico Business News.

NATIONAL PORT INVESTMENT PLAN

As part of a national port integration strategy, the Mexican government is implementing a port infrastructure investment and development plan, which with US$1.24 billion in resources during the next two years. The Government restructuring plan for ports was completed in 2021 and coordination of Mexico’s sixteen Port Authorities (ASIPONAs), are now operating under the Ministry of the Navy.

The plan is to integrate planning and infrastructure development of Mexico’s ports authorities under one umbrella to better utilise resources.

MEXICO SERVING THE WORLD THROUGH ITS PORT SECTOR

Mexico is ideally located to accommodate cargo moving from all regions of the world and Hutchison Ports investments during the last two decades have helped play a key role in the country’s rise as a leading regional and global shipping logistics hub.

Hutchison Ports investment in Mexico’s port sector began in 2001 when the Group developed and operated three ports across the country.

The Port of Veracruz is strategically located in the middle of the Gulf of Mexico, offering sea cargo services connecting to the main ports of Northern Europe, the Mediterranean, the US, South America and the Caribbean, in addition to intermodal transportation services locally.

Hutchison Ports ICAVE (Internacional de Contenedores Asociados de Veracruz) terminal is located in the Port of Veracruz and is established as the main container port operator in Mexico.

In December 2019, Hutchison Ports ICAVE officially completed the migration of all the terminal equipment and port technology from the old facility to its new container terminal in North Bay. The investment to the new terminal exceeded US$450 million to upgrade facilities and offer better customer service. The move to a new terminal after 24 years of operations and consolidated services were completed successfully without any disruption. The new Port of Veracruz is one of the most important port infrastructure projects in Mexico, in recent times.

Currently, ICAVE handles nearly 80 percent of all containers in the new Port of Veracruz, which represents 20 percent of all containers handled in the country.

The Port of Manzanillo is ideally situated in the State of Colima, its ideal location promotes trading between Asia via the Pacific Ocean and towards local cities like Guadalajara in Mexico. The port is also well connected to the highly industrialised states of Jalisco, Guanajuato and Queretaro.

Hutchison Ports TIMSA (Terminal Internacional de Manzanillo), taking advantage of its strategic location attracts advanced hi-tech and heavy industries such as automotive, aerospace, information and communication, electronic equipment, biotechnology and health care, it is also known as “The Silicon Valley of Mexico”.

TIMSA offers a wide range of services besides container cargo handling, such as non-containerised cargo services like mineral bulk, steel rolls, pipes, wire rod rolls, as well as project cargo for automotive industry. The proximity to the highly industrialised agricultural area of El Bajio, makes TIMSA a highly attractive terminal for discharging and loading fertilizer, sulphur and seeds.

On the west coast of Mexico, Hutchison Ports EIT (Ensenada International Terminal), facing the Pacific Coast, provides a new alternative in handling containerised cargo to and from Asia, central and south America for the northwest of Mexico, and southwest of the US. Located just 110 km south of the US border along the coast of the Pacific Ocean of the Baja California state, the terminal offers an alternative shipping route to the ports in Southern California.

Hence, EIT has high influential commercial advantages to agriculture and commercial activities to the state of Tijuana, Mexicali, Tecate and the San Quintin Valley in Baja California.

The terminal provides an import and export gateway to manufacturing facilities and assembly plants, due to its strategic location near major highways and the ports of San Diego, Long Beach and Los Angeles. It is also considered as the logistics centre for markets like the US, Central and South America and the Middle East.

Opposite EIT is Hutchison Ports ECV (Ensenada Cruiseport Village), a cruise terminal aimed at attracting tourists. According to the World Tourism Organization reports, Mexico is the Latin American country with the highest number of international visitors and is ranked 10th worldwide. This comes as no surprise given the extraordinary diversity Mexico has to offer as a warm-welcoming culture, vast nature destinations and gastronomy. 32 locations in the country have been awarded World Cultural Heritage by The United Nations Educational, Scientific and Cultural Organization (UNESCO). Once again, Mexico leads the ranking in the American Continent in this category as well being placed sixth worldwide. (Source: WMP Mexico Advisors)

The growing number of visitors strengthens the position of ECV as one of the major cruise destinations in Mexico with four cruise lines and is the busiest port on the coast of the Mexican Pacific. It also offers a marina with over 190 operating mooring places and an area of 350 feet for mega-yachts.

CREATE MORE TRADE

To create synergy and increase influence towards the trade industry in Mexico, Hutchison Ports held a partial transfer contract of rights to operate a new terminal in the Port of Lazaro Cardenas in 2003. The port is located 272 kilometres from the state capital Morelia connected to the Siglo XXI highway and is the largest port in the Mexican Pacific.

Hutchison Ports LCT (Lazaro Cardenas Terminal Portuaria de Contenedores) is situated in the state of Michoacan, on the west coast of Mexico, facing the most important Pacific trade routes. It is a high potential port for cargo concentration and distribution from foreign trade operations between Asia, Australia, Mexico and the US.

Facilitating demand for non-containerised cargo, Hutchison Ports developed a multipurpose terminal, Hutchison Ports LCMT (Lazaro Cardenas Multipurpose Terminal), which includes an area of 21 hectares with a waterfront of 286 metres in which different types of cargo can currently be operated, such as mineral, general cargo, cars and buses, steel plate rods and sheet rolls among others.

Last year the Port of Lazaro Cardenas achieved a new record when the facility handled approximately 1.7 million TEU, container volumes increased by 60 percent. As ports on the US west coast were plagued by congestion, carriers sought after alternative routes for their cargo and the Port of Lazaro Cardenas turned out to be one of the best options among other ports in the Americas.

Hutchison Ports LCT took advantage of the opportunity and had an astonishing year in 2021 with volumes jumping by 89 percent to over 1 million TEU mainly due to diverted cargo to LCT from Los Angeles, Long Beach where congestion caused lengthy delays for carriers.

Looking ahead, LCT is keen to develop container handling services to connect with Hutchison Ports TILH (Terminal Intermodal Logistica de Hidalgo), a logistics facility in the central valley of Mexico in Hidalgo, comprising 53 hectares within a Logistics Activity Zone.

TILH is well connected to the national transport network, including rail lines from different destinations around the country and Mexico’s network of modern interstate highways.

In 2006, Hutchison Ports and Corporate UNNE constituted a strategic alliance to carry out the development in logistics and transportation for the Valley of Mexico and its Metropolitan area, located in the state of Hidalgo.

TILH is well positioned at Atotonilco de Tula, Hidalgo, was conceived as a strategic logistics node of road and rail connections for the major waterways and the northern border.

Hutchison Ports developed its strategic inland rail facility to meet demands from the intermodal sector at the most dynamic economic zone of the country, also known as the ‘Valley of Mexico’.

TILH was strategically planned and developed to provide a competitive edge over competitors as it consolidates and creates vertical integration practices. TILH enabled an extension beyond the port by implementing integrated logistics services to outreach customers within their natural hinterland.

Hutchison Ports also acquired Hutchison Ports TNG (Talleres Navales del Golfo) to provide repair and maintenance services for vessels, rigs, barges and all types of maritime structures and equipment offering full marine service to its customers and shippers.

TNG through its professional staff, experience, infrastructure, and state-of-the-art equipment provides a plethora of high-quality services, including ship repair, offshore structures fabrication and conversions.

AI DRIVING SMARTPORT ACROSS MEXICO

Throughout the diverse investment and development by Hutchison Ports in Mexico, it has transformed the country’s terminal operations and services to the next level. Hutchison Ports Mexico has currently introduced a new technological solution through a single platform called SMARTPORT, powered by artificial intelligence (AI), it encompasses digitalisation for daily terminal operations, providing a more efficient and transparent user experience to customers.

Cargo Release, a blockchain-enabled application offering a paperless, efficient and transparent solutions is being rolled out at ports across Mexico, connecting shipping lines, consignees, their agents, and terminals for imported cargo.

This product cuts the time for cargo to be document-ready for release from days to hours.

Mexico and Panama were selected due to their proximity to North and Latin American markets, and important ports for global trade.

The latest announcement marks the first anniversary of Cargo Release which was first rolled out across China by GSBN in 2021 and has since followed successful deployment across Southeast Asia, Europe and most recently Latin America, serving over 10,000 customers to date. Involved in the roll out are COSCO SHIPPING Lines, OOCL and Hutchison Ports.

With a population of almost 130 million, a rich cultural history and diversity, injection of the latest technology and communication network, abundant green energy resources, a relatively young and energetic workforce, new infrastructure development plans by policy makers and the support of the local government, Mexico has strong macroeconomic institutions, and it is open to more trade activities than ever.

The Mexican economy grew by 4.8 percent in 2021, after an 8.2 percent fall the previous year due to the COVID-19 pandemic. Its recovery is underway, albeit slowly: the economy forecast is to grow by 2.1 percent this year and 2.1 percent in 2023. (Source: The World Bank)

 

Mexico’s growth is supported by its trade openness, a strong export manufacturing base connected to global value chains integrated with the US, and a stable macroeconomic framework. Although there are already routes that function appropriately as logistics hubs in the Mexican southeast, the goal is to unfold the potential of developing additional hubs that would give dynamism to the different modes of transportation in the country that attracts the attention to more foreign investors.

DID YOU KNOW? THE WORLD’S LARGEST PYRAMID…IS IN MEXICO

If you think about pyramids most people think of Egypt. In fact, Sudan, Guatemala and Iraq all have their own pyramids but the world’s largest is in Cholula, Mexico.

The Great Pyramid of Cholula, also known as Tlachihualtepetl, is 54 metres tall and its base covers 45 acres — making it the largest monument ever constructed by any civilization on the planet, just 80 miles from Mexico City.

The Great Pyramid was an important religious and mythical centre in pre-Hispanic times. Over a period of a thousand years prior to the Spanish Conquest, consecutive construction phases gradually built up the bulk of the pyramid until it became the largest in Mexico by volume.

According to the Guinness Book of Records, it is, in fact, the largest pyramid as well as the largest monument ever constructed anywhere in the world, with a total volume estimated at over 4.45 million cubic metres, even larger than that of the taller Great Pyramid of Giza in Egypt, which is about 2.5 million cubic metres.