The current global situation accelerated changes in supply chains planned by major North American industries to move production lines from China to Mexico, and transportation and service companies believe that the increase in manufacturing exports will increase their business opportunities and revenues.
According to Carlos Zegarra, Lead Management Consulting Partner at PwC Mexico, export transport companies will be the first to benefit, since the products they transport are made for the United States, not for the domestic market. They will be followed by the service firms that deal with these companies and have flourished over the past 20 years as a result of the growing automotive sector.
In terms of transport, it should be noted that all modes of transport (maritime, air and land) will benefit from the aforementioned situation, although land transport (truck and rail) will benefit more as it is the most used by companies in the country.
Transport companies are now aware of the Foreign Direct Investment (FDI) coming to Mexico, which means an increase in production and business opportunities.
According to data from the Rail Transport Regulatory Agency (ARTF), 74.4% of the cargo moved by land from Mexico is by highway, while the remaining 25.6% is by rail. However, this is an improvement for rail transport: 10 years ago, it was 24.6% and two decades ago 20.4%.
Transport management systems are often geared towards trucks as the natural mode, which means that the railroad has to function in a simple way to do business and that there are no obstacles to its operation.
Transport and land logistics companies that perform cross-border transportation will also benefit, moving goods from inside the country to the border to continue their journey through the United States.
In addition, transport companies recorded an increase during the COVID-19 pandemic, especially for package delivery.
Furthermore, Human Resource management, cleaning, accounting and law firms will be the ones to gain experience and benefit from an increase in the country’s productive capacity by meeting the needs of export sectors such as the automotive industry.
Carlos Zegarra believes that second- and third-tier manufacturing industry suppliers, which are usually Small and Medium-sized Enterprises (SME), could also benefit from companies relocating from China to Mexico, since there are firms that currently have the experience but not the capacity to meet such needs, however they could develop if the business opportunities arise.
In addition, some companies have begun to expand their supply and procurement activities outside of China with new manufacturing capacities in Vietnam, Mexico and India, giving them a competitive advantage in terms of capacity.
According to Michael Cuesta, UPS Marketing Director, due to the economic crisis caused by the COVID-19 pandemic, Small and Medium-sized Enterprises must join the logistics services to grow through the digitalization of commerce, growth of up to 25% and reach new horizons.
SMEs must enter international markets to take advantage of the new conditions offered by the USMCA, which has a chapter just for them.
Oradel Industrial Center offers the best location for logistics and manufacturing companies in the Mexico US northeast border. It has industrial buildings, with or without rail service, ready for occupation as well as buildings built to suit the needs of the industries.