Mexican Transport Market:Challenges and Opportunities

Roberto Diaz – National President of CANACAR

Freight Movement by Transportation Mode

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Mexico is playing a leading role in global logistics.

498 million tonnes: 55.8%

112 million tonnes: 12.5 %

1 million tonnes: 0.1%

282 million tonnes: 31.6 %

Source: Own Elaboration based on Estadística Básica del Autotransporte Federal 2012,

Mexico:

Shares more than 3,000 km of border with the biggest world economy and has 9,600 km of

coasts in both, the Pacific and the Atlantic Ocean

Has 12 trade agreements with 44 countries and 9 Economic Complementation Agreements in

the framework of Latin American Integration Association (ALADI)

Currently in negotiations for Transpacific Agreement

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Goods Transport: Business Structure

4

“Truck Man”1 to 5 vehicle units

Permittees: 110,385 – 83.0% Vehicles: 203,219 – 28.4%

Small carrier6 to 30 vehicle units

Permittees: 19,544 – 14-7%

Vehicles: 220,676 – 30.8%

Medium carrier31 to 100 vehicle units

Permittees: 2,373 – 1.8%

Vehicles: 121,583 – 17.0%

Large carrierMore than 100 vehicle units

Permittees: 693 – 0.5% Vehicles: 170,205 – 23.8%

TOTAL

Permittees: 132,995

Vehicles: 715,683

Note: the total includes tractors and cranes.

Source: Own elaboration based on Estadística Básica del Autotransporte Federal 2012,

Mexican Vehicle Park by Services

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General cargo

Type of service Units

616,079

Specialised cargo: 99,604

Dangerous goods 80,689

Vehicle transportation 4,137

Transport of valuables 2,553

Truck pulling crane 8,852

Towing and rescue services

705

Abnormal loads 2,668

Total: 715,683

Source: Own Elaboration based on Estadística Básica del Autotransporte Federal 2012.

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Total tonnes transported:893 million tonnes (all modes)

By rail: 112 million tonnes

By road: 498 million tonnes

Importance of Road Transport in Mexico

Source: Own elaboration based on DGAF 2012 e INEGI

81.6 % of all land transportation

55.8 % of all transportation modes

Direct employment: 2,178,000

Indirect employment: 2,600,000

GDP (2013) participation: 2.8 %

Road Freights

Economy

Movements by mode

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USAYEAR

2009

2010

2011

2012

297,614

383,692

448,787

472,934

2013 486,790

CANADA

15,548

19,293

20,340

20,828

20,299

WORLD

464,167

599,955

700,218

741,666

761,398

NORTH AMERICA

313,162

402,985

469,127

493,762

507,089

%

67.5

67.2

67.0

66.6

66.6

NAFTA’s Economic Impact on Mexico(Trade figures in million of dollars)

Source: Own elaboration based on Secretaría de Economía information.

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Trade with USAYear Trade flow by land

297,6142009

383,6922010

2011 448,787

472,9342012

241,797

308,175

352,468

387,771

2013 486,790 405,334

%

64.1

64.0

64.1

63.8

63.9

Mexico - USA(Trade figures in million of dollars)

Source: Own elaboration based on Bureau of Transportation Statistics.

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ROAD

RAIL

TOTAL

MODE 20102009 2011 2012 2013

207,204 260,058 295,303 323,249 335,512

34,593 48,116 57,165 64,522 69,823

241,797 308,175 352,468 387,771 405,334

%

86

14

100

%

84

16

100

%

84

16

100

%

83

17

100

%

83

17

100

Mexico – USA. Trade flow by land.(Trade figures in million of dollars)

Source: Own elaboration based on Bureau of Transportation Statistics.

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Mexico – USABorder Crossings

During 2013, more than 16,465 trucks crossed the northern border daily.

Source: Own Elaboration based on SHCP figures. *Estimated information.

2011I/E

Import

Export

TOTAL

3,328,104

2,918,973

6,247,077

2012*

3,133,545

2,911,457

6,045,002

Monthly Average

257,100

236,850

493,950

2013

3,127,911

2,881,798

6,009,709

Growth2012 - 2013

-0.18%

-1.02%

-0.58%

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Mexican Road Transport Challenges

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Road Transport can and must be a leading actor for Mexico’s transformation process.

Legal framework

Legal Certainty

Vehicle Park Modernization

Infrastructure

Safety

The five main pillars upon which Road Transport Agenda for Mexico rests.

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Legal framework

Mexican politics remain unimodal instead multimodal. This obsolete culture must welcome new intermodal and multimodal public policies in order to develop a national system which integrates all transportation modes for a better performance of the value chain.

It is necessary to establish an International Logistics Development Council which defines and thrusts strategic routes for Road Transport.

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This pillar is vital for all transport sectors, considering the big investments they require.

The national entrepreneurs demand it for self international protection.

Principles of equity, reciprocity and most-favoured-nation treatment must always be applied.

No more simulations. Mexico must demand respect for the commitments other countries undertake with International Trade Agreements.

Legal Certainty

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Mexico needs a Vehicle Park Modernization for a secure, sustainable and competitive Road Transport sector.

This action will help to decrease the level of road accidents and reduce high levels of contamination, improving considerably Mexico’s competitiveness.

37% of the total vehicle units in Mexico have been more than 20 years in circulation; if we do not stop this practice, by the end of this six-year period, the number of units will be 13% increased.

Vehicle Park Modernization

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To revert this, Mexico needs its Government, transport operators, suppliers and all stakeholders to take rigorous and results-oriented actions:

Prevent the massive entry of obsolete, insecure and pollutant units from other countries.

Develop appropriate financial frameworks for micro and small transport operators.

Reactivate the Scrapping Program.

Create a Promoting Fund of Specialised Transportation

Implement a program of assurance and financing for micro and little transport operators.

Vehicle Park Modernization

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The reactivation of Scrapping Program must:

Regulate the model year of the imported vehicles and how many years they have been operating.

Update the fiscal stimulus package.

Provide fiscal stimulus for the transport operators who buy new or semi new vehicle units.

Vehicle Park Modernization

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Infrastructure

The transport technical standards should make feasible the balance between:

Safety – Sustainability – Competitiveness

A new National Program of Infrastructure must be created based on:

Logistics – Infrastructure – Transport

Federal and state roads

State

Roads by circulation rails

Two rails 128,320 Four or more rails13,,041

Roads by physical conditions

Pavement 141,361 Coating 148,782d

Improved gap 75,314. Unpaved road 8,805

State 80,774 Federal 49,102

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Safety

Road Safety

• Comprehensive review of Regulations and Standards in order to simplify its compliance and its supervision and monitoring processes.

• Promote self-regulation outlines in the transport sector to contribute with the respective authorities.

• Intensify campaigns for prevention of road accidents in order to raise awareness among road users.

• Introduce training programs for transport operators.

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Public Safety

• Develop a system that integrates all information of criminal acts like: critical areas, modus operandi, stolen goods and vehicles in order to create adequate security protocols.

• Reactivation of Road Transport National Security Program and Public Institutions that look after transport operators interests and rights.

Safety

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CANACAR MEXICOPachuca 158 – Bis. Condesa

Delegación Cuauhtémoc.Mexico City. 06140.

(00 52) 55 59 99 – 71 00presidencia@canacar.com.mx

http://www.canacar.com.mx/