“World Cup mania” has gained momentum in Mexico, but the hidden story for the nation may really be its resurgence as a trade powerhouse, says A.P. Moller-Maersk.
In its recently-released Mexico Trade Report – 20118 Q1, analysts note that total Asian and European imports and exports grew a strong 6% year on year. Overall, total imports increased 8% lifted by a 11% gain in Asian imports. In contrast, total Asian and European exports declined 1%.
“World Cup mania has gripped Mexico as imports in sports goods, toys and electronics accelerate but the second half of 2018 will have a tough time in keeping up the same pace as Asian exports weaken, the presidential elections loom on the horizon and rising bunker fuel costs hurt shipping lines,” states the report.
Mario Veraldo, Maersk’s Managing Director for Mexico and Middle America Cluster Mexico City, adds that retailers and manufacturers are making the most of the World Cup mania with football shirts, sneakers, electronics goods from bigger TVs to video consoles.
“This is a great moment but we are cautiously optimistic about 2018 as there are many moving parts to the Mexico story this year,” he says.
In an interview with LM, he noted that while U.S. shippers may be cautious about using Mexico as an export platform pending the outcome for the North American Free Trade Agreement (NAFTA), negotiations, the nation remains well positioned in the global marketplace.
“NAFTA is only one accord that works well in international trade,” he said. “There are other developments within the hemisphere that must also be taken into consideration.”
He points to the fact, for example, that Mexico became the first country among 11 Pacific nations to ratify its Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) last April after the Senate approved the free trade pact. As soon as other nations ratify the accord, Mexican exporters will be able to start to take advantage of a near zeroing of tariffs across a $12.6 trillion market.
“This will enable Asian nations to extend their supply chains through Mexico to reach the U.S. marketplace,” he says.
At the same time Mexico’s infrastructure has been undergoing a dramatic transformation, he says.
“The Port of Lázaro Cárdenas has been growing its volumes exponentially over the past few years,” he says, “and it should serve as a ‘wake-up call’ for U.S. shippers overly reliant on West Coast ports.”