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Mexico fires on

Carriers are finding good volumes in Mexico, especially from the automotive industry, while perishables are also picking up. But poor infrastructure and airport congestion means that road feeder services are also in demand, as Ian Putzger discovers

Mexico has turned into something of a magnet for Cathay Pacific. Having entered this market with freighter flights via Los Angeles in the autumn of 2013, the Hong Kong-based airline has kept upping its footprint in the Latin American country. Over time, the twice weekly Boeing 747F flights grew
to five weekly frequencies, and Mexico City was added as a second destination besides Guadalajara.


Now Cathay is looking to allocate more capacity on its existing flights to Mexico. “We are now looking to cut the Los Angeles tag later in the year and operate maybe three of the five services direct: Hong Kong-Anchorage-Mexico City-Guadalajara,” remarks Mark Sutch, general manager of cargo sales and marketing.


Cathay has enjoyed strong demand for lift from Asia into Mexico, but traffic in the opposite direction is also on the rise. “Demand for flights out of Mexico is also improving. It seems that with time people are beginning to understand they don’t need to truck to LAX to get cargo to Asia,” Sutch notes, seeing room for further expansion. “We are committed to Mexico, and when resources permit we will get to six (frequencies) per week,” he states.


With airlines on the lookout for viable destinations for their freighters, Mexico has reeled in a number of new services, as well as witnessing others ramp up their capacity. Among the more recent entrants is Emirates, which mounted a weekly Dubai-Frankfurt-Mexico City operation last year, and Korean Air, which extends two of its LAX freighters to Guadalajara. Elsewhere, Lufthansa, Cargolux, Atlas Air, Qatar Airways and Avianca have either entered the market or boosted their existing presence in the country.


“We have seen growth from European and Asian carriers, plus more flights from the Middle East. The arrival of Cathay and other international carriers has been good for the industry,” remarks Robert Villamizar, head of air product capacity management – Americas at DHL Global Forwarding (DGF).


Forwarders and integrators are also beefing up their presence. DGF has consolidated its activities in a $2.7 million facility at Mexico City’s Benito Juarez airport. “We hope this will bring more synergies,” says Villamizar.


FedEx opened a 70,000ft2 distribution hub in 2014 to serve as its centre of operations for Mexico. The facility cost $48 million, which brought the integrator’s total investment in Mexico since 2011 to $160 million.


DB Schenker has chartered a 747-8F from Etihad for a weekly run from Hong Kong to Chicago and Houston. According to the logistics firm, it targets freight moving from southeast China to the US southwest, the Gulf of Mexico and northern Mexico.


DB Schenker does not fly to Mexico, but trucked airfreight from US gateways – chiefly Los Angeles and Dallas/Fort Worth – has been going strong. Mexpress, an RFS specialist that operates a special bonded trucking service across the US border, has registered double digit annual growth in recent years, according to Mike Gamel, its chairman and head of sales. He expects this momentum to continue in 2015 and 2016.


According to BMI Research, the Mexican economy’s momentum is poised to accelerate in the third quarter of this year, resulting in higher demand for all modes of transport. Air freight is expected to grow by 3.8% this year.


The chief engine of this growth has been the automotive industry, which is on a blistering expansion course in Mexico. Between 2013 and 2020 seven new auto plants are set to come on stream. Among the auto makers that are building new factories are Mazda, Honda, Audi and BMW.


“The auto business has been booming for the last three years,” says Villamizar, adding that the creation of new factories, and the expansion of existing ones, has produced strong demand for air freight, despite an overall push to move as much traffic as possible by ocean. In part, this is due to suppliers that have not yet wholly changed their supply chains.


“Ocean is more for heavier parts that could take longer lead times, but a huge amount of parts require just-in-time with air freight,” says Villamizar.


While much of the automotive flow is inbound, there is also a steady stream of parts made in Mexico that supply auto makers in other parts of the world, from Brazil and Germany to China and Korea, notes Villamizar. “Mexico is one of the countries with more balanced import and export trade among emerging markets,” he adds.


Automotive traffic is not the only sector that is pushing up Mexico’s air cargo volumes. “There is a lot of other stuff besides automotive,” confirms Gamel. >>

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