INTERMODAL INTEGRATION

Mexico 2013 | TRANSPORT | REVIEW: TRANSPORT

Mexico seeks to make investments across the board to boost infrastructure for logistics and improve the experience of both domestic and international passengers.

In light of a variety of new investments being made by the Peña Nieto administration, the transportation sector is set to move more goods and passengers efficiently in 2013. In June, President Peña Nieto committed to investing at least $13.9 billion in the transportation sector in 2H2013, taking total spending for the year to $23.6 billion. Mexico will likely see the most improvement in its in roads, railways, coastal ports, and water transportation projects.

As more investors enter the country, the presence of the right logistics infrastructure has become paramount. To this end, Mexico has pushed forward one of the most ambitious infrastructure programs in its history, building a modern highway network of 133,000 kilometers, and 27,000 kilometers of railroad. Of the 117 maritime ports the country has also built, 68 handle containers. In addition, Mexico has established 76 airports, with 64 of them designed to accommodate international traffic. To support heavy passenger and cargo traffic, the transport links connect states on the Pacific coast with those on the Atlantic, as well as communities throughout the north, south, east, and west of the country.

In all segments of the transportation sector, Mexico represents significant opportunities for the private sector to work together with government to create public-private partnerships (PPPs). In recent years, investment in airport infrastructure reached approximately $300 million—32% of which was sourced from public funds, while 68% came from private hands. Much of the investment was allocated toward the expansion, restoration, or modernization of airports. In terms of port infrastructure, investment reached $670 million, with 61% and 39% sourced from public and private financing, respectively. Much of the work has been targeted at building new docks and terminals for passengers and cargo, as well as the expansion of facilities to accommodate larger, post-Panamax ships. Coming more into play is the intermodal logistics concept. Currently, Mexico has 20 intermodal terminals that are capable of providing accelerated service. The Mexican Association of Intermodal Transport (AMTI) exists to mediate relations between its more than 40 member companies from different areas of the intermodal transport chain and the authorities. “One of the major issues with the government agencies is that they need to make sure that all the merchandise that comes into Mexico complies with regulations," Fernando Ramos Casas, President of AMTI, explained to TBY. “That is where we enter as an association, and try make the process more efficient."

SEA FARING

Mexico's seaports and connections are key links in the chain that support the process of seamless transportation solutions for both passengers and cargo. Since 2007, about 16% of resources invested in Mexico's seaport system has gone to construction designed to connect the seaports with the country's road network and rail system. As centers for intermodal transport development, ports play a vital role in meeting consumer demand and the local production sector. In terms of cargo, Mexico's top ports handled over 37 million tons of cargo in 2012, with Altamira, Veracruz, and Lázaro Cárdenas a few of the leading hubs. In the past six years, there have been investments of nearly $3 billion in Mexican seaports. In total, 53% of the investments came from public funds. In 2011, funding for modernization projects such as specialized terminals and industrial plants reached $690 million. Now, materials such as sheet steel and copper, as well as fertilizer and fluids, are produced at many of Mexico's terminals, and more container-handling equipment has also been installed. Currently, the country handles over 2.1 million TEUs annually.

Commenting on the benefits of maritime cargo processing versus the traditional trucking method, the Senior Managing Director of Maritime Business at GRUPO TMM, Luis M. Ocejo explained, “The cost for repairing and making new roads is very high, and on water the maintenance of routes is free. There is also an advantage on the environmental side, because the contamination involved with the use of maritime vessels is much lower than using trucks." Weighing the advantages of maritime transportation against Mexico's other logistics options, the country's 100+ ports offer a myriad of benefits for investors and operators. In terms of passengers, the year 2012 saw 5.2 million international visitors arrive in Mexico by sea.

LATEST PROJECTS

A series of small-scale, high-impact projects characterizes recent trends in the transportation sector. Among them, making public transportation more widely available, designing new passenger transit routes, and improving road safety and efficiency are on the agenda in 2013.

According to the Mexican National Statistics, Geography, and Information Institute (INEGI), the typical Mexican family spends 18%-30% of its income on transportation. For that reason, the authorities have worked extensively to make public infrastructure and transportation convenient and widely accessible. In 2013, the government of Jalisco threw its support behind the Student Transport Support Program, which has been implemented to subsidize transportation services for 155,000 students in the state's 125 municipalities. The project required an investment of $16.5 million, and is a flagship initiative in ensuring that more of the local youth can make use of the country's infrastructure to attend higher education courses, which is seen as vital to the future of the Mexican economy.

In Monterrey, two ongoing projects are set for completion in the coming years. In May 2013, bidding for the construction contract to build Line 3 of the Monterrey Metro began. The 7.5-kilometer line will have eight stations, with work scheduled to begin in August 2014. In March, the Mexican government explained that it would provide 28.3% of the required funds for the project. An additional 37.4% would be funded by the state and the remaining 34.3% must be sourced from the private sector. In line with the city's ambition to be more “green," its eco-friendly bus system is nearing a completion date slated for July 15, 2013. The Ecovía system features 112 hybrid-engine, air-conditioned buses that stop at 39 climate-controlled stations throughout the city. It is the first of its kind in Mexico, powered exclusively by electricity and monitored by security cameras and kiosks along the route. According to a press report, the Ecovía lines will reduce the commuting time of over 160,000 people by 50%.

Meanwhile, Quintana Roo's main tourism hub, Cancún, is benefiting from an upgrade in its traffic system in summer 2013. To modernize the city's roads, 64 new “smart" traffic lights are being installed as part of the Quintana Roo 2011-2017 plan. Once installed, the lights will automatically change according to how much traffic is building up on the various sides of an intersection. The plan, designed to make the city more competitive and attractive for tourists who have experience with the Cancún's busy streets, was announced in April 2013.

RAIL & AIR: THE FUTURE

With more routes opening up for budget airlines and major carriers alike, as well as the potential of high-speed trains, Mexican citizens can expect a bright future in terms of getting from point-to-point faster and more comfortably. The country's nearly 2,000 airports and increasing expanding railways are being modified to serve a larger amount of passengers and cargo. Low-cost airline Interjet was founded in 2005 to provide services for middle- and lower-income groups. As opposed to competing with larger carriers such as Delta and Lufthansa, the company is building solid partnerships to develop Toluca City as a maintenance hub. In addition to serving 25 domestic routes and six international destinations, Interjet is now servicing planes from Argentina, the US, and a number of Central American countries.

The authorities are already studying a potential high-speed link between Toluca and Mexico City, which could be built in 2015. However, for people like Maximiliano Zurita Llaca, CEO of CAF Mexico, the installation of such a service cannot come fast enough. Referring to trains capable of traveling at between 180 and 230 kilometers per hour, he said, “We believe that in Mexico, due to its particular geography and long distances between the main cities, high-speed trains between could easily become a top means of transport." For areas such as Mexico City, where a large portion of the country's population is concentrated, it could be even more crucial. According to local municipal authorities, the cost of the Toluca-Mexico City mass transit project could be as much as $2.6 billion. In efforts to create another center of intermodal transport, the establishment of the line would directly benefit passengers disembarking from Benito Juárez Airport in Mexico City, which is being upgraded to accommodate 15 million passengers in the coming years. The Secretariat of Communications and Transport has also proposed other high-speed railway routes, including Mexico City-Guadalajara-Jalisco, with stops in the cities of Querétaro, Guanajuato, León, and Irapuato, and a connected line running from the port city of Manzanillo to Aguascalientes.

In terms of conventional rail, Kansas City Southern of Mexico (KSCM) is planning to invest over $125 million in 2013 to prepare for increased activity at Mexico's major ports. “In the port of Lázaro Cárdenas, we move close to 60% of the freight that comes and goes to the port." José Zozaya, President & Executive Representative of Kansas City Southern of Mexico, told TBY. “If the railroad does not have the right-sized infrastructure, the port could lose its potential. We want to be ready for that."