The transportation sector is one of the most dynamic and promising in Mexico and will offer many opportunities to do business for suppliers of transportation equipment and services. That’s the word from the U.S. Commercial Service.

      Newly elected Mexican President Felipe Calderón says his government will undertake the necessary actions/projects to have an efficient transportation sector, with modern infrastructure and equipment, and services that compete at the international level. Meanwhile, The U.S. government is relaxing rules governing Mexican truckers in the United States. The U.S. government has also adopted new rules for its ports that impact maquilas that import material through U.S. ports.

      According to the U.S. Commercial Service, private sector organizations have expressed that a combined investment, from private and public sectors, of at least $20 $30 billion per year, will be required to support the infrastructure and equipment needed by Mexicans in the next six-10 years. As resources are limited compared to requirements, the Mexican government will give priority to projects with high impact on efficiency and social/economic development.

      In 2007, Mexico will invest $1.2 billion for road infrastructure, $132 million to improve digital communication networks, $81 million for airport security improvement, and about $190 million in port infrastructure and dredging.

      Other projects already announced for this presidential period include:

      •Building a new port in Punta Colonet, at an estimated cost of $1.5 billion.

      •Building the necessary transportation and urban infrastructure for Punta Colonet Port operation. Estimated cost $2-3 billion.

      •Developing an intermodal corridor between the ports of Salina Cruz, Oaxaca and Coatzacoalcos, Veracruz to offer an alternative for inter-oceanic traffic now using the Panama Canal. Estimated cost is $1.5 billion.

      •Expansion of the Port of Veracruz at an estimated cost of $500 million.

      •Construction of several suburban trains in the Mexico City Metropolitan area, at an estimated cost of $5.5 billion.

      •Construction of new high specification highways, under the concession concept, with an estimated investment of $2.7 billion.

      •Ferromex Railroads will invest $310 million in new locomotives.

Intermodal imports

      Imports of equipment for intermodal transportation have increased significantly in the last three years. The import market will continue growing at two-digit percentages, at least for the next three to four years.

      Domestic production comprises low-tech equipment (such as front loaders, non-sophisticated traffic control systems, open and closed freight cars, and rail track fixtures) and a strong production of trucks and trailers. International corporations such as Daimler Chrysler, Freightliner, Mercedes Benz, International and Kenworth manufactured more than 66,000 trucks during January-September 2006 and are exporting around 50 percent of their production. All high capacity cranes, railroad and lifting equipment are imported. Under NAFTA, most equipment for intermodal transportation manufactured in the United States can be imported duty free.

      Products having the best prospects in this market include: frame mobile and rotary cranes, self-propelled cranes on tires, front loaders with capacity over seven tons., mobile platforms, traffic control equipment, diesel electric locomotives, railway maintenance service vehicles, rail and tramway freight cars, automatic unloading wagons, covered and closed cars, assemblies for railway vehicles, containers, chassis, and trailers.

      In 2005, the U.S. companies supplied 76 percent of total imports. This share could be increased if American firms take more advantage of NAFTA conditions and become more aggressive in this sector.

Rail development

      New Mexico Governor Bill Richardson and Union Pacific Corporation President and CEO Jim Young recently announced an agreement that will relocate 285 jobs to a new $150 million terminal facility at Strauss, N.M., about 4 miles west of Santa Teresa. In addition, Union Pacific has also agreed to begin construction of a new intermodal ramp at this location no later than 2015. Once operational, the ramp is expected to process a minimum of 100,000 container units annually.

      The project will include a main line locomotive fueling station, a train inspection area and a rail yard.

      How existing Santa Teresa companies would benefit from the UP facility in Strauss:

      •Companies would be able to import product into Santa Teresa in greater bulk quantities.

      •Companies could realize freight savings of up to 40 percent by using rail vs. truck.

      •The rail fits into Santa Teresa’s distribution advantages, based on its new infrastructure that skirts the congested Juárez/El Paso region.

      •Additional freight forwarding companies would move into Santa Teresa, thus adding to the critical mass of these types of companies in the region.

      •Up to 400 Electrolux trucks per day could potentially use the UP facility. This would greatly increase the port’s truck traffic, thus helping to make permanent the extension of commercial port hours to 10 p.m., Monday through Friday.

      How maquilas would benefit from the UP facility in Strauss:

      •Companies such as Ford, Vientek, Electrolux and others that produce big, bulky products could begin using the Santa Teresa Port of Entry for their shipments. This would increase commercial crossings at this port.

      •Santa Teresa would become a preferred point of export for many maquilas that are shipping in bulk and not currently using this port of entry.

      •Maquilas could import their production inputs in bulk, directly from their suppliers in the United States to their plant in Juárez.

      •The freight savings and efficiencies in logistics would accrue to the maquilas’ bottom line, thus enabling them to remain competitive in the global market.

      •The Strauss facility would attract maquila users from farther south into Mexico, many of which are using other rail crossings at other ports such as Laredo. 

Airports

      Mexico has the most developed airport infrastructure in Latin America. Every city of more than 50,000 inhabitants benefits from airport services. The Mexico City airport is the largest in Latin America in terms of number of passengers and operations.

      In 1998, the Mexican government started a process to privatize the operation of the national airport system through concessions granted through a public bid process. Airports to be privatized were grouped into three groups by geographical regions: Pacific region, North region and South region. Some airports kept operated by federal or state agencies. As a result, now three private groups operate 44 airports in Mexico and 22 airports are operated by government agencies. Of these airports, 40 are international and 26 operate only domestic flights.

      In the 1990s, the number of passengers doubled and transported freight tripled, provoking a chronic saturation of Mexican airports. Facing this rapid increase, the government has decided to restructure the airport network.

      The strategy is focused on developing a metropolitan system of airports to decentralize the operations of the Mexico City airport, using four peripheral airports: Toluca, Puebla, Cuernavaca and Querétaro. Other airports will also receive investment to increase capacity and improve cargo and passenger services. At the same time, most Mexican airlines have programs to renovate or increase their fleets.

      Some important announced investments are:

      •The federal government will invest $227 million in 2007 to continue with the expansion of the Mexico City airport.

      •Grupo Aeroportuario del Pacífico will invest $110 million to increase infrastructure in the 12 airports operated by the group, including doubling capacity of the facilities in Los Cabos and Puerto Vallarta.

      •Puebla airport will continue expanding passenger facilities and will start the construction of cargo facilities.

      •The airports in Guadalajara and Monterrey will be expanded to include cargo hubs connecting with other domestic and international airports.

      •A cargo terminal will be built at the Aguascalientes airport at an estimated cost of $2 billion.

      •Toluca airport will expand facilities for corporate/private aviation and for Express Delivery Services (EDS).

      •The EDS firm Estafeta will purchase four new aircrafts to increase its fleet.

      •Aeroméxico will invest $600 million to renovate its fleet, bringing their fleet up to 66 aircraft by the end of 2011.

      Mexico has also developed an aerospace industry and important international corporations have established plants in 13 Mexican states. Some companies manufacturing or assembling in Mexico are Honeywell Aerospace, Lockheed Martin. Volare Engineering, Bombardier, Tyco Electronics, Horizon Sport Technologies, General Dynamics, Teleflex Aerospace, General Electric, and GKN Aerospace. Aerospace industry groups have announced investments totaling about $379 million in the next few years.

      The Mexican airport network will offer huge opportunities for suppliers of all kind of equipment and services for airport planning, building, operating and aviation control.

Mexico-U.S. Trucking

      Truck safety inspectors working for the U.S. Federal Motor Carrier Safety Administration will be able to travel to Mexico to conduct extensive safety audits on companies interested in hauling cargo into and out of the United States as part of a new program announced by U.S. Secretary of Transportation Mary E. Peters.

      Peters, who visited a local trucking company in Monterrey, N.L. to announce the program with Mexican Secretary of Communications and Transportation Luis Téllez, said this step is needed before the United States can allow trucks from Mexico to operate beyond the currently existing border commercial zones that include cities like San Diego and El Paso.

      “This program will make trade with Mexico easier and keep our roads safe at the same time,” Peters said.

      Peters also noted U.S. inspection teams will now be able to visit Mexican trucking companies to ensure their trucks and drivers meet the same safety, insurance and licensing requirements that apply to all U.S. truckers. She added the inspectors will evaluate truck maintenance and driver testing for compliance with U.S. requirements.

      The inspection teams also will check that drivers have a valid commercial driver’s license, have a current medical certificate, and can comply with U.S. hours-of-service rules. The teams will review driving histories for each driver the company plans to use to operate within the U.S. and verify the company is insured by U.S.-licensed firms. Finally, each inspection team will verify that every U.S.-bound truck has passed a comprehensive safety inspection. Trucks lacking required documentation will be subject to a “hood to tail-lamps” inspection by the teams.

      “With this new program, we prove that safety and economic growth are compatible,” Peters said.

Port safety

      The U.S. Congress recently enacted SAFE Port Act, affords plenty of opportunity to help shape supply chain security. Now it’s up to shippers and transportation providers to get involved. That was the message delivered recently by a leading container shipping security expert.

      “We need to be outspoken on the topic of security policy,” said Earl Agron, vice president of security for APL, the world’s eighth-largest container steamship line. “We need to be policy influencers and shapers – not couch potatoes.” Agron delivered his call to action to 120 shippers at the American Apparel and Footwear Association annual conference in Memphis, Tenn.

      Characterizing the SAFE Port Act as the most significant port security legislation in the past five years, Agron urged his audience to work with lawmakers, government officials and their own trade association on issues ranging from container security standards to radiation scanning in foreign ports.

      “We have to ensure we get the most out of each security dollar we spend,” he said.

      The SAFE Port Act signed by President Bush last October addresses issues including:

      •Stimulating development of new technology to improve port security.

      •Providing legislative authority for key elements of U.S. supply chain security strategy such as C-TPAT (Customs-Trade Partnership Against Terrorism).

      •Creating a trade resumption plan in case of an attack on U.S. ports or waterways.

      Agron, a member of the Customs Advisory Committee on Commercial Operations (COAC), called the SAFE Port Act “an intelligent approach to complicated issues.” He hailed provisions in the act requiring the Department of Homeland Security to collaborate with the private sector in the development of supply chain security programs. But he cautioned that several issues under study warrant careful scrutiny.

      Chief among those issues, he said, is container security standards. Agron told shippers to be wary of proposals requiring electronic seals or other security devices on containers. They won’t be effective in securing containers and could provide a false sense of security, Agron said, adding that a secure seal or container security device does not equal a secure container.

      Likewise, Agron opposed 100 percent scanning of cargo containers before entering U.S. ports. There isn’t enough money, manpower or technology to make the proposal feasible, he said.

      Agron advised shippers to weigh in on these and other issues to ensure that supply chain security is improved and the free flow of trade protected.

      “Volunteer, become a contributor,” he urged. “Work with your service providers in presenting common positions. The Safe Port Act provides us with opportunities to affect port security. We can’t let the opportunity pass by.”