Major ocean carriers are launching direct services along the Asia-to-Mexico trade lane as China makes a concerted push into the Latin American market.
Since April, Mediterranean Shipping Company (MSC), CMA CGM and Cosco Shipping subsidiary Orient Overseas Container Line Limited (OOCL) have all announced new service lines that will see container ships travel from several stops across China and South Korea to multiple ports on Mexico’s West Coast.
Starting May 15, MSC is launching a loop shuttle service connecting Asia to Mexico, with the MSC Apollo sailing on its first voyage out of China’s Port of Qingdao. MSC’s port rotation includes Chinese port cities Qingdao, Ningbo and Shanghai; Busan, South Korea; and the Ports of Manzanillo and Lazaro Cardenas in Mexico.
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According to MSC, the loop will provide additional coverage and frequency between Asia and Mexico compared to its four other services that make stops throughout the South American West Coast.
Cosco/OOCL’s Transpacific Latin Pacific 5 (TLP5) service already started out of Ningbo May 6, and estimates a sailing time of 15 and 20 days from Qingdao to Mexico’s Ensenada and Manzanillo respectively. Additional cities in the port rotation include Shanghai and another Chinese port city, Dalian; Busan; as well as a stop in Yokohama, Japan.
TLP5 is designed to complement its TLP1, TLP2 and TLP3 services, all of which make several stops in South America as well as Hong Kong.
CMA CGM will debut the new Mexico Express (M2X) service on May 11. Eight ships will be dedicated to the M2X port rotation, which includes Qingdao, Busan, Yokohama, Ensenada, Manzanillo and Lazaro Cardenas—as well as another China-based port in Tianjin. The ANL Wangaratta vessel will depart from Busan in the first voyage.
The M2X initiative “aligns with market dynamics in the region,” according to CMA CGM.
The dynamics the French ocean carrier speaks of likely refer to the growth in demand for container shipping imports from China into Mexico in January 2024, which skyrocketed 60 percent compared to just 12 months prior, according to data from Container Trades Statistics. The 117,000 20-foot equivalent units (TEUs) shipped that month come in well ahead of 73,000 TEU in January 2023.
Annual growth in container shipping between China and Mexico had already increased by 34.8 percent in 2023 compared to just 3.5 percent in 2022, CTS said.
And Mexico’s Port of Manzanillo, the country’s largest port which handles roughly 40 percent of containerized imports, has seen 14.4 percent growth in imported goods across the first four months of the year. The port has attributed the increase in tonnage to more commercial flow out of Asia.
Peter Sand, chief analyst at ocean freight and air freight benchmarking platform Xeneta, said in a blog post that China to Mexico is “probably the fastest growing trade on planet Earth right now.”
“A sizeable proportion of the goods arriving in Mexico by ocean will likely be trucked into the U.S., which gives rise to the suspicion that the increase in trade we are witnessing is due to importers trying to circumvent U.S. tariffs,” Sand said.
In such scenarios, Chinese businesses looking to skirt tariffs initially implemented by President Trump and maintained by President Biden can build their own warehouses in Mexico and use raw materials from China, but avoid the taxes since the production process takes place in Mexico.
Another more commonly used circumvention technique is the de minimis provision, in which shippers importing packages worth $800 or less don’t have to pay taxes or fees on the imported parcels.
Mexico-to-U.S. trade is increasing along these lines, with logistics giant C.H. Robinson calculating that shipments out of Mexico into the U.S. increased 7.7 percent year over year during the first two months of 2024. This number jumped to an ever higher 12 percent for February.
Other logistics companies are looking to capitalize on the nearshoring boom, with Ryder System, Inc. opening up a second multi-client logistics warehouse near the U.S.-Mexico border over the span of three months in April.
Located in El Paso, Texas, the 50,000-square-foot facility provides cross-dock services, including consolidation and de-consolidation, as well as ambient storage for imports and exports and 24/7 yard operations. The new building has 20 dock doors and room for 350 trailers.
The warehouse is stationed near the Ysleta Port of Entry, which remains the second-largest gateway for U.S.-Mexico trade at 9.6 percent of total value of goods transported across the first three months of the year, according to U.S. Census Bureau data.
In February, Ryder opened a 228,000-square-foot warehouse and cross dock in cross-border trade hub Laredo, Texas, which oversees 39 percent of total transported goods across the border.
