Mexico - Transport and Logistics: Growth driven by increasing trade volumes (Strategy, Performance and Risk Analysis)
Mexico is besieged by the growing clout of drug cartels, as a result of which lawlessness prevails in several areas. The prevailing lawlessness has severely undermined confidence in the government as a result of which the country has a high-risk political environment. However, vital reforms, such as the opening up of the oil sector to private competitors, breaking up private monopolies in the telecom industry, and overhauling the financial system to strengthen competition and lower borrowing costs have established conditions for economic development and have mitigated the risk posed by an unfavorable political climate.
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Increasing trade to drive road freight traffic
Road transport freight traffic in Mexico recorded a CAGR of 2.0%, rising from 235.4 billion ton km in 2012 to 260.4 billion ton km, and is anticipated to post a CAGR of 2.0%, from 265.8 billion ton km in 2018 to 288.0 billion ton km in 2022. Growth will be driven in part by trade between the US and Mexico due to the economic improvements.
Warehousing and storage GVA to increase
In Mexico, warehousing and storage GVA recorded a CAGR of 0.2%, rising from US$878.3m in 2012 to US$888.9m in 2017. Trade and the popularity of e-commerce will drive the growth, which is anticipated to post a CAGR of 7.3%, from US$951.5m in 2018 to US$1,260.7m in 2022.
Other transportation GVA to increase in the forecast period
GVA for other transportation in Mexico registered a CAGR of -0.4%, falling from US$8,198.3m in 2012 to US$8,041.9m in 2017. However, due to an increase in demand for support services - maintenance due to the rise in road freight volumes and the increasing number of road passengers - other transportation GVA is anticipated to post a CAGR of 8.7%, from US$8,696.5m in 2018 to US$12,134.9m in 2022.