Diversification is key for Mexico

Mexico is expected to deliver a healthy trade performance in 2017 despite uncertainty on the current political-economic backdrop for the region.

Mexico diversification

The other side of the port gate

In the city of Lázaro Cárdenas on Mexico’s Pacific coast, a charity is providing much-needed education and nutrition to disadvantaged children. With the support of APM Terminals, which has recently opened a new port there, it is providing a foundation for their future lives.

Doubts about the future of the North American Free Trade Agreement (NAFTA) are making it hard to predict how Mexican trade will fare in 2017.

For now, A.P. Moller - Maersk forecasts imports growth of around 7% and exports at about 3%, following robust finish to 2016.

If producers and manufacturers look to new markets, however, Mexico can still maintain its ranking in global trade and keep growing.

Exploring new markets
“Diversification is key. It is necessary to dig deeper than ever before. Mexican producers have an opportunity to explore new markets as there are numerous elements in their favour,” explains Mario Veraldo, Managing Director for Maersk Line in Mexico and Middle America.

Mexico has bilateral accords with about 50 countries, a weak currency, a strong producer and finished goods manufacturing base that allows the country to open new markets and reduce the country’s trade reliance on the US.

“Diversification is a sound business paradigm that allows companies to expand their client bases, maximize opportunities, boost margins and spur revenue growth as well as jobs by having the flexibility to change markets quickly. Global multinationals use this model successfully,” Veraldo adds.

There is a real opportunity for Mexico to expand even in an adverse environment, establish new markets, carving out an important role in world trade.

Mario

MARIO VERALDO, MANAGING DIRECTOR FOR MAERSK LINE IN MEXICO AND MIDDLE AMERICA

Open for business

Mexico has emerged as one of the world’s top 15 manufacturing economies

Mexico has four core industries that represent excellent expansion opportunities that would help local companies further deepen their presence globally; thus, creating new and more qualified jobs for Mexicans too.

These industries include petrochemicals, minerals, beverages and agriculture, in particular, fruits. Eastern Europe, Luxembourg, Austria, South Korea, Vietnam and China all represent possible new destinations.

“There is a real opportunity for Mexico to expand even in an adverse environment, establish new markets, carving out an important role in world trade. A new pro-active culture focused on finding new markets needs to arise so that any potential negative impacts from the north of the border are avoided in an orderly fashion,” Veraldo says.

Building the future

To fuel growth, further build out of infrastructure is necessary in Mexico to continue to support millions of jobs that already depend on trade with Asia and the US as well as provide solutions to continuing foreign direct investment into manufacturing, which is increasingly focused on the automotive sector.

“More efficient and up-to-date intermodal infrastructure is needed in Mexico to provide efficient supply chain alternatives to manufacturers, producers and consumers to support the nation’s long-term growth story,” says Jose Rueda, Managing Director for APM Terminals in Mexico.

“The country is currently underserved; being able to maintain or improve competitiveness is key. There is room for more investments and with more terminals, the necessity to build more highways, airports and railways across Mexico will also increase to avoid potential bottlenecks and reduce costs for consumers whilst generating more jobs too,” he adds.

Helping provide an alternative solution is APM Terminals’ TEC II USD 900 million semi-automated terminal at Lazaro Cardenas, which started operations in February and which received its first-ever ship, the Maersk Salalah of 9,662 TEUs, on 27 February, bringing goods from Asia.