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Mexico Shipping Report Q1 2012
Business Monitor International, Jan 2012, Pages: 124
Business Monitor International's Mexico Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's shipping industry.
BMI remains optimistic on the Mexican port sector. It is forecasting real GDP growth of 3.1% for Mexico in 2012 in response to slowing global growth which it believes will reverse nascent private consumption and investment growth. While BMI has been pleasantly surprised by the strong export growth over the past 18 months, it notes that it has not translated into strong private consumption, which remains significantly off its pre-crisis highs. BMI believes that for private consumption to fully recover, the economy needs at least a few more quarters of strong US demand to bolster jobs growth and disposable income.
Mexican export growth has clearly been bolstered by the recovery in the US economy since mid-2009, but the pace of growth - averaging 19.9% year-on-year (y-o-y) between January and August 2011, following 30% growth in 2010 - has surprised us. Although BMI forecasts Mexico's primary trading partner, the US, to see sluggish GDP growth over the next few years, it believes that Mexican exports will expand by an average annual pace of almost 10% over the next five to 10 years on the back of vehicles and machinery exports and extractive exports, such as silver and copper, boosting port throughput.
Headline Industry Data:
- Port of Manzanillo total tonnage growth in 2012 is estimated to hit 3.8%, with average annual growth of 6.06% during our forecast period.
- Port of Veracruz total tonnage growth in 2012 is estimated to hit 6.35%, with average annual growth of 7.6% during our forecast period.
Key Trends And Developments:
Drop-Off In US Demand Raises Fears For Lázaro Cárdenas' Throughput with US and Mexican consumer demand remaining sluggish
BMI believes throughput volumes at the Gulf Coast port of Lázaro Cárdenas are under threat. As such, BMI is unsure of how much international interest two new tenders to develop and operate terminals at the port will attract.
Risks To Outlook:
On the downside, our outlook for Mexican consumers remains sluggish. Consumer confidence surveys suggest that the Mexican consumer remains very wary. Over the long term BMI believes Mexican consumer demand will continue to be undermined by the lack of competitiveness in key sectors, lack of fiscal reform and overdependence on the US economic cycle.
Further downside risk to throughput at Mexican ports is presented in the form of sluggish US consumer sentiment. With 80% of exports still destined for the US market, growth is clearly dependent on the US economy not falling back into recession.
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