July 15, 2010
Q210 saw hopes of an end to a long-running dispute between Mexico and the US after the latter's cancellation of a cross-border trucking programme between the two countries. The programme, which allowed Mexican trucks to operate freely on US roads, was introduced by the US Congress in September 2007 before being withdrawn in March 2009. Calls by Mexico's government to reinstate the agreement have so far fallen on deaf ears; however, in May 2010 The US Department of Transportation pushed Congress to reconsider the plan in the run-up to Mexican president Felipe Calderón's state visit to Washington.
Although there has yet to be any announcement on the outcome of the meeting, a reprieve for the trucking programme would provide a considerable boost to Mexico's freight transport sector which, in 2009, suffered a heavy slump in volumes, largely as a result of a contraction in demand from the US market. Since the formation of the North American Free Trade Agreement (NAFTA) in 1994, the industry's fortunes have become increasingly aligned with the fortunes of its neighbour and largest export partner, the US, which is currently the recipient of more than 80% of Mexican exports and the source of 50% of its imports.
An underperforming export sector has negative implications for Mexico's trade balance and its economy; since 1996, Mexico has run a persistent trade deficit and while the start of 2010 has witnessed a rapid rebound in export-led domestic economic activity, we doubt the trade balance will head back to surplus anytime soon. We expect the impact of fiscal and monetary stimulus in the US will run out of steam in H210 and into 2011.
With these risks in mind, we are projecting a recovery for Mexico's freight transport sector in 2010 while remaining wary of a further slowdown in growth in 2011. The country's port sector is expected to provide one of the industry's main growth stories this year with the country's two major terminals Manzanillo and Veracruz both forecast to register double-digit increases in throughput. At Manzanillo, we project tonnage to grow by 18.2% to 21.56mn tonnes, offsetting the contraction by the same amount in 2009. At Veracruz, growth is forecast at a slightly slower 12.3% year-on-year (y-o-y) which will see the port handle 16.03mn tonnes and reverse 2009's 7% contraction.
Mexico's air freight sector is also on course for a sizeable rebound in 2010 after cargo volumes decreased by 28.9% last year in freight tonne-km terms. In 2010, we forecast volumes to grow by 28.1% y-o-y to 233.1mn freight tonne-km.
Road and rail freight, meanwhile, are expected to experience a more marginal growth in keeping with relatively narrow contraction in volumes experienced in 2009. We forecast rail freight volumes to increase by 2.5% y-o-y to 31.18bn freight tonne-km after a fall of 3.7% last year. Road freight, having contracted by 4.9% in 2009 is predicted to grow by 2.6% in 2010 to 208.8bn freight tonne-km. The recovery in Mexico's freight transport sector should be underpinned by a robust uptick in the country's total trade which in 2009 decreased by 16.6% in real terms. This year, we forecast total trade to grow by 16.2% in volume terms with imports and exports set to increase by 16% and 16.5% respectively. The rate of growth in Mexico's trade is expected to slow from 2011 with an average annual growth of 6.6% projected over our 2011-2014 forecast period.
Mexico Freight Transport Report Q3 2010:
http://www.companiesandmarkets.com/r.ashx?id=88N60F954318736&prk=90ce921d48b7dcba3674f6ff7d3c9601
