Excellent location and modern infrastructure
Mexico's strategic location as a central hub, connecting the south and north Pacific regions, as well as the borders of the United States and Panama, makes it highly appealing for production or distribution operations. Moreover, Mexico shares the same time zone as the United States, facilitating real-time communication and collaboration with nearshore partners.
In addition, Mexico's efficient transportation infrastructure, including modern highway systems and railways, allows for significantly shorter shipment times compared to those from China or the United States or European Union. This not only enhances logistical efficiency but also reduces supply chain risks.
Some Hard Facts
- 77 (international) airports
- 14 intermodal terminals
- 54 border crossings to the United States
- 15 days shipment to Europe
- 400,000 km of highways
- 27,000 km railway
- 117 seaports
- 11,000 trains pass the border every year
- 172,000 modern highway systems throughout the country
- 6,500,000 trucks passing the border Mexico – USA every year
Efficient supply chain thanks prime location
Selecting the most suitable manufacturing facilities and locations poses significant challenges and represents a critical decision for foreign companies, particularly in light of the profound impact of the coronavirus pandemic on the manufacturing industry. To overcome those challenges, companies must innovate flexible supply chain solutions.
Mexico emerges as an attractive destination for establishing production or distribution centers, not only due to its favorable geographical position but also thanks to its modern highways and efficient supply chain infrastructure. Its strategic location grants it easy access to one of the world's largest markets, the United States, with a population exceeding 320 million. This proximity provides Mexico with a substantial nearshoring advantage, allowing for swift transportation of goods within a few hours via trucking, further bolstering its appeal as a manufacturing hub.
Smooth Value Chain with USMCA Agreements
The USMCA Agreement (previous Nafta) encourages US companies to set up manufacturing facilities in Mexico. This allows free trade between the three major economies in North America. This is an advantage for US companies in an another way as well; due to the reason that Mexico has over 50 trade agreements with other countries, the United States can access multiple markets in other countries if they set up manufacturing in Mexico. This ensure again a smooth supply chain process whereas the recent trade war, political disagreements, and the pandemic have greatly affected US-China trade relations.Beside the shorter transit times than across the Pacific Ocean, another point in favor of Mexico towards China is that they are in the same time zone as the United States as well as the culture is very similar.
Modern Highways and proximity to the United States
Mexico has a total of over 55 customs crossings, but not all of them are suitable for trucks. The six most used border crossings between Mexico and the United States in the eastern part are Laredo (over 2 million trucks), in the north, El Paso (1 million trucks), Hidalgo and Nogales as well as Calexico and Otay, which belong to Tijuana. Accordingly, these customs corridors have the largest and most efficient facilities. Every day, over 452,000 vehicles cross the border, and 30,000 of them are cargo trucks.Due to the reason that Mexico is with its 1,972,550 km 2 five times bigger is than Germany, the different driving hours depend where are you located. Whereas it takes 3 hours from Monterrey to the border United States, it can take up to 9 hours from Mexico City respective 7 hours from Guadalajara.Thanks to the modern highways and the decent transportation costs (e.g. Veracruz to Guadalajara $1’500.- Dollars), the different tracks can be done within 1 - 2 days.
Moving by train to the United States
The railway network of Mexico consist of 17,360 kilometers trail tracks and includes 5 U.S.-Mexico gateways in San Diego, El Paso, Eagle Pass, Laredo and Brownsville. This gives the companies the ability to reach keymarkets throughout North America. According to the rail transport, 915 million tons were transported by rail in Mexico in 2018, an increase of 14% compared to 2017.There are various cargo transportations whereas the most well-known are Kansas City Southern de Mexico and Ferrocarril Mexicano.
The largest commodities by volume transported by rail are manufactured goods (47.6%), agricultural grains (25.1%), minerals (12.9%), and oil and its derivatives (8.1%). Broken down, the top products to be transported byrails are Corn (12%), Cement (8%), Steel Sheet (7%), Iron Ore, Vehicles, Wheat, Soya beans and Coal.There are 7 border crossings for freight trains:
- Brownsville-Matamoros
- Laredo-Nuevo Laredo
- Eagle Pass-Piedras Negras
- El Paso-Ciudad Juárez (2 crossings)
- Nogales-Nogales
- Calexico-Mexicali
- San Ysidro-Tijuana
Government investments Infrastructure
The government is continuously investing in their infrastructure of their highway and railway systems and can be easily used by international companies to transport its commodities from Mexico to the United States for example. Beside the geographical location, it is crucial to find a location with adequate amenities such as electricity, water, transport, etc. To develop Mexico as a global manufacturing hub, the government has invested alone in 2019 over $40 million in developing its infrastructure. This resulted in attracting new foreign direct investment from businesses and have drastically improved the manufacturing sector of the country.
Shipping to the EU and Asia
Mexico has over 100 ports and 15 terminals; 59 on the Gulf of Mexico and the Caribbean coast, and 58 on the Pacific coast. The most strategic ports for commercial cargo are Altamira, Veracruz, Manzanillo, and Lázaro Cárdenas, which together account for 95% of containerized cargo, 59% of bulk agricultural cargo, 34% of bulk minerals, and 40% of bulk general cargo 13. There are 182 shipping lines operating in Mexican ports, and about 15 percent of all cargo is handled in containers. Those ports are connected to the logistic infrastructure on which the logistics and supply chains are deployed in the area.
The government of Mexico announced to invest over US $322 million in Lázaro Cárdenas port to cope with nearshoring demand. Various automakers such as Ankai, Skywel, Karry, Chirey Brilliance, Zhong Tong Bus Yutong and Dongfeng, increased their movement by 40% at this port. In January 2023 alone, the port reported a movement of 56,983 units from Chinese automakers and brands like Toyota, Mazda, Suzuki, General Motors, Hyundai and BMW, among others. Most important ports for Europe is Veracruz; Shipments from strategically important European Ports such as Hamburg, London or Barcelona have weekly shipments to Veracruz and arrive within 15 days. On the other side, there are frequent shipments from Hongkong to Manzanillo which takes around 30 days.
Europe to Mexico
Asia to Mexico
