• Monday, August 19th, 2013

Air Cargo World Logo

- See more at: http://www.aircargoworld.com/Air-Cargo-News/2013/07/mexico%E2%80%99s-economy-sprouts-wings/3014703#sthash.or6wPYKG.dpuf

By Adina Solomon
Mexico’s economy is evolving. Its GDP has risen over the past few years, and its people are becoming wealthier. Within five years, Mexican factories could produce up to US$60 billion in output annually, according to the Boston Consulting Group.The business strategy adviser also reported that in 2012, average manufacturing costs in Mexico, adjusted for productivity, dropped below those of China – and are set to keep dropping. Mexico has 44 free-trade agreements, more than any other country.Butch Hensley, president of Amado Trucking in Arizona, knows what Mexico’s growth looks like.

“Today I’m seeing freeways built where there were cattle trails 10 years ago,” Hensley says.

Amado, which trucks to airports in the Southwestern U.S. and Mexico, is the exclusive Mexican handler for ShipHaus, a freight forwarder based at Phoenix-Mesa Gateway Airport in Mesa, Ariz.

“It’s incredible,” Hensley says. “There’s excess of 100 million consumers in Mexico, and that’s about 30 percent of what we have in the U.S., so it’s a tremendous market.”

Tell that to Aeromexico or Lufthansa, American Airlines or United Airlines. These carriers move thousands of tonnes a year between Mexico and the rest of the world.

“If you look at what we’re shipping from Mexico, it really runs the gambit,” Tony Randgaard, manager of cargo marketing at United Airlines, says. This includes pet and human remains services into and out of Mexico.

The airlines and forwarders interviewed move much of the same cargo to and from Mexico: textiles, consumer electronics, automotive parts, luxury goods and perishables. Many electronics come from Guadalajara, whose nickname is the Silicon Valley of Mexico.

In the last few years, major U.S. manufacturers have been providing the raw materials for electronics to China-based companies, who do part of the manufacturing, Hensley explains. Then the parts come back to the U.S. and go to Mexican companies, who complete the value-added features. The electronics then return to the U.S. under the North American Free Trade Agreement.

Perishables frequently shipped include mangos, lemons, avocados, limes, papaya, herbs and seafood.

“Agribusiness has just grown at an insane rate over the last 10 years,” Hensley says.

The array of products goes to places such as Germany, Japan, the U.S. and Canada. Curt Fischer, regional manager for Mexico and Central America for Lufthansa Cargo, says three times as much Lufthansa cargo – 90,000 tonnes a year – goes from Europe to Mexico than vice-versa.

This is because Mexico has a strong import market whereas much of the export industry targets nearby markets in North and South America, says Fischer, who is based in Mexico.

Lufthansa has worked on ramping up its service in the country, serving Mexico City and Guadalajara to Frankfurt.

“Mexico is always full of surprises,” Fischer says when asked of hurdles in transporting airfreight.

Benito Juárez International Airport in Mexico City is already crowded and cannot grow any further.

“Meanwhile, the city has grown all around it,” Fischer says. “Mexico City is one of the largest cities in the world, and the airport, which used to be out of the city at one time, is now in the middle, more or less. So there’s no way to go any further. There’s no way to put in any additional runways, but also within the warehouse area, there is no space for growth.”

Fischer says Mexico’s drug cartel problem presents security challenges for airlines and shippers.

“Additional security measures always will hinder the free flow of air cargo. So this is something we have to cope with,” he says. “Especially also our customers that have to cope with longer handling times.”

Antonio Gomez Elorduy, Aeromexico Cargo vice president for the U.S., Asia and Canada, says competition from other carriers and rising fuel costs hurt the airline. He also highlights Aeromexico’s move toward E-freight.

“One of the issues that we have is the customs side,” Gomez Elorduy says. “There’s a lot of things that in Mexico are done with a lot of paper and involving a lot of people in imports and exports, so I think that now that we are one step ahead with the government to try to develop that process with their help. I think it’s going to be an improvement in Mexico because we’re a little bit late in that – let’s say it that way – against the other carriers.”

Randgaard of United says the Mexican air cargo market “hasn’t jumped into E-freight.” He also points out the importance of having specific and precise documentation.

“There’s not a lot of tolerance in shipping to and from Mexico. You really have to ensure that your import documents, your pet or your human remains permits or certificates, are exact, and you really need a lot of precision, or you’re going to experience delays, and our customers are not going to be happy with that,” he says. “I think that there’s a number of countries around the world that you need to make sure that you’ve got all your ducks in a row, and certainly Mexico is one of those.”

Carmen Taylor, American Airlines managing director for cargo sales for Latin America, and Hensley of Amado Trucking say if you have experience and the proper documentation, it’s a fluid process.

“Do I hear about the Mexican Customs holding an important shipment for days and days like I hear in other countries? I haven’t heard that in many years,” Taylor says. “It’s because we have learned to do business.”

Mike Barclay, owner and director of business development at ShipHaus, says with the increased flow of goods into and out of Mexico, aircraft will have capacity issues. Some freight will need to sit and wait for additional flights. Barclay and Hensley’s plan is to truck freight from northern Mexico to fly out of U.S. airports.

Mexico is a country on the rise – and the airfreight industry knows it. American is looking at Mexico-Seoul service. A few years ago, Lufthansa was flying two freighters into Mexico; now that number has tripled.

“Investments in Mexico are very strong, and they are bound to grow,” Fischer says. “We want to be there also to offer air cargo capacity and services as it comes.”

Category: China, Mexico
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Leave a Reply