Solid year is expected for the Mexican Commerce in 2019 after growth of 3% in 2018

Mexican trade is expected to accelerate throughout 2019, after a slower-than-expected start to the year.

China’s weak industrial performance in January and February contributed to less growth in Mexican trade in the first quarter, although recent government stimulus measures in the world’s second largest economy are now taking effect and volumes for Mexico go to rise again. This is because Mexican retailers also refrained from stockpiling inventories in the first quarter after a solid finish in 2018.

“Mexico’s trade volumes in the first quarter were slow from what we had initially anticipated, but now we see solid growth for the rest of the year,” said Alexandra Loboda, Managing Director of Maersk for Mexico and Central America. “The Chinese economy is accelerating again and, although it is expected that the growth of the Mexican economy will grow more slowly than expected at the beginning in 2019, it is also backed by strong US consumption. However, trade tensions between China and the United States remain a concern, “he added.

This occurs after the Chinese industrial gains decreased in January and February compared to the same period of the previous year, which represents the biggest drop in more than a decade, however, industrial production increased by 8.5% in March, which contributed to a significant rebound in the first quarter. China’s GDP grew faster than expected, with 6.4% in the first quarter after the government unveiled a major package of tax cuts to boost economic growth. Contributing to this improvement, the US decision entered. to stop the implementation of higher tariff rates for Chinese imports as of March 1.

“We have seen a slow start of imports in 2019, but very strong growth in exports,” said Morgan Edwards, Maersk’s Commercial Director for Mexico. Traditionally, the shipping industry would see ships fill up after Chinese New Year in February, but volumes are only beginning to improve for the industry in this second quarter, “he added. By 2019, Mexico’s commercial performance will be affected in a positive and negative way by a series of different factors, such as the expectations of a modest growth for the Mexican automotive industry, the increase in the exports of beverages, the delays in the border between Mexico and the United States, the increasing volumes of capacity of transport and the increasing volumes, thanks to the commercial agreement of Pacific nations CPTPP.

“We expect volumes to continue growing and reach their peak in the third quarter, before Christmas orders, as retailers fill their shelves for the festive season,” said Jaap de Mots, Product Management Director of Maersk in Mexico.

Maersk forecasts that commercial container imports from Europe and Asia will increase by 4% in 2019. It is predicted that total European and Asian exports will increase by 10% and total European and Asian imports will increase by more than 5%.

This occurs after total imports and exports to Europe and Asia increased by 3% in 2018, compared to 12% in 2017. The 2018 performance was lower than expected after exports produced a surprising result. Asian and European imports increased 6.5% in 2018 year-on-year, while Asian and European exports decreased 9% last year.

An important factor that affected exports last year was China, which grew to 6.6% the slowest GDP performance in the nation in almost 30 years. The commercial tensions with the American Union and the high Chinese debt impacted the result of the Asian giant’s GDP. For example, Mexican exports of metals, vehicles, plastics and rubber decreased, respectively, by 33%, 22% and 8% in the fourth quarter of the year.

China’s restriction on recyclable products also affected Mexican exports, which led to a significantly lower performance in waste products in 2018. In the fourth quarter, for example, mineral waste and ash were 39% lower year with year.

CARS, BEVERAGES AND CPTPP.

Meanwhile, for the Mexican automotive industry, a modest year of low one-digit growth is expected.

“We have seen a really strong growth in the last two years, but now we see that consumers, for example, from the United States, are showing a greater preference for the heavier pick-up trucks that are produced in that country,” Mots said. . Sales of light vehicles will fall below 17 million units in 2019, raising questions about whether the boom in car sales in the United States is coming to an end.

The pressure of the fall on the prices of new cars is also expected for this year. “The boom in car sales in the United States is declining, everything will be reduced to replacement rates in the United States,” he added. Maersk forecasts that commercial volumes of the Mexican auto industry will grow a modest 2% or more in 2019. Approximately 85% of all Mexican car sales go to the United States, while the remaining 15% is sent to Europe, Asia and South America.

In contrast, the beverage industry is expected to experience double-digit trade growth in 2019, as Mexico’s beer demand grows in popularity abroad in Asia and Europe, as well as in countries such as Australia, New Zealand and the United States. In the fourth quarter of 2018, exports to Europe decreased by 36%.

Separately, the CPTPP agreement among the Pacific nations is expected to contribute to Mexico’s import and export trade volumes in 2019.

MEXICO-EU BORDER, RAILROAD AND INTRAMERICAS TRADE.

Delays of up to 24 hours at the US border along with the growing demand for cargo truck capacity are causing exporters to increasingly use maritime cargo lines as a more secure and reliable means of transport to the United States. . In the fourth quarter, for example, Mexican exports to the rest of North America increased 58% year-on-year. Traditionally, 80% of all Mexican exports go to the United States by truck.

“Short sea shipping solutions are already mitigating delays in cross-border operations,” according to Patricia Pérez Salazar, General Manager of SeaLand in Mexico. “Recently, several clients activated contingency plans and adjusted the supply chains to incorporate the shipment into their supply chain. We believe that such actions represent a responsible approach to help companies thrive in a challenging environment, “he added.

Avocado is one of the many sectors in which producers are turning to shipping lines as an alternative mode of transport, given the need to move refrigerated cargo quickly at a time when the prices of products are also increasing.

The latest delays at the border add to an interruption in rail freight transportation between January and February, when teachers went on strike over labor issues, causing traffic jams in the ports and billions of losses in Mexican pesos.

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