Despite NAFTA-related ambiguity, Mexico is proceeding with its ambitious plan of upgrading its ports and modernizing its infrastructure in the hopes that it can become one of the world’s most vital logistics hubs.
Trade,” says Jorge Lecona, “goes hand in hand with transport.” Mexico’s trade future looks bright, based on “signed free trade agreements with practically 90 percent of the world,” he notes. As the General Director for Latin America and the Caribbean for Hutchison Ports, Lecona has had a front-row seat to the growth of the Mexican economy. Even the shadow cast by U.S. President Donald Trump’s threats to pull out of NAFTA do not phase the veteran port operator. “In my opinion, NAFTA isn’t going to die—it will modernize.”
A STANDARD OF PRACTICE
The most influential trade event in modern Mexican history was the implementation of NAFTA in 1994. The Mexico–U.S.–Canada pact currently boasts a market of 457 million consumers, making it the world’s largest trading market. “NAFTA established distinct rules, which forced Mexico to standardize trade practices,” says Lecona.
Despite an uncertain future for the agreement, Mexico’s stalwart automotive industry continues to grow. It is now the fourth-largest automobile exporter in the world. In May 2017, the National Institute of Statistics and Geography (INEGI) reported that automotive exports in March rose by 18.7 percent over the same period last year, while all exports rose 14.1 percent.
Right now, just 32 percent of Mexico’s commercial traffic travels by sea, which is significantly less than that of the United States (44 percent) and Europe (48 percent).
CAN MEXICO KEEP UP?
Nonetheless, Mexico’s infrastructure ranks only 54th among all nations. Lecona says that “the subject of infrastructure is one of [the nation’s] pending tasks.” Manufacturers have expressed concern that, in the near future, the nation’s port system will not be sufficient to handle output. In response to such fears, in 2015 the federal government announced a US$5 billion initiative to upgrade its network of 117 ports. Port capacity is expected to reach 530 million tons a year by the end of 2018, or 32.5 percent higher than the 400 million-ton capacity at the beginning of 2016.