South Korean flagship carrier HMM has joined other liner companies such as Ocean Network Express (ONE), COSCO, OOCL, and Mediterranean Shipping Company (MSC) in announcing a new service connecting China with emerging manufacturing powerhouse Mexico. This move reflects the rapid growth in container shipping volumes between China and Mexico, which set a record of 563,829 in January to May this year, representing a 28% increase compared to the same period last year. According to data from Container Trades Statistics, annual growth in container shipping between China and Mexico had already increased by 34.8% in 2023 compared to just 3.5% in 2022.
The rapid growth of trade between China and Mexico can be attributed to various factors, including importers using Mexico as a backdoor to the US to avoid tariffs on goods from China. Additionally, there is increasing investment in manufacturing in Mexico, which has contributed to the surge in demand for container shipping services.
Carriers have responded by announcing new services to meet this growing demand, and the available capacity on this trade has allowed spot rates to fall earlier and faster from the recent market spike compared to other fronthaul trades out of Asia. However, there are concerns about how port infrastructure in Mexico will be able to cope with this incredible growth long term.
The surge in Chinese investment in Mexico has also become a source of debate in the US presidential election campaign. Direct investment from Chinese companies into Mexico has grown significantly, rising from $38m in 2011 to $386m in 2021. This investment is primarily focused on the manufacturing sector and has become a major talking point on the campaign trail.
The Biden administration has imposed tariffs on steel and aluminum shipped from Mexico that were made elsewhere, an attempt to stop China from avoiding import taxes. Meanwhile, former president Donald Trump has threatened to impose tariffs on cars made in Mexico by Chinese companies. The US will likely increase measures aimed at curtailing the rise in Chinese exports and foreign direct investment flows to Mexico, according to a recent report from S&P Global.
Source: Splash 247
