Intermodal Transport Grows Amid COVID-19 ChaosBy Peter Appleby | Fri, 05/15/2020 - 18:39
Despite economic and social difficulties during 1Q20, there have been some success stories for logistics. One of those has been the growth of Mexico’s intermodal transport sector, which according to T21, saw a cargo increase of 13 percent in 1Q20.
Intermodal transport is a method of cargo transport involving multiple transportation modes, including trucks, ship and rail. It has experienced growth in recent years because it increases security and reduces losses due to the lesser needs for cargo handling and time spent on roads.
The Intermodal Association of North America (IANA) noted that in 1Q20, Mexico increased its intermodal handling from 422,942 units in 1Q19 to 479,654. Though Mexico only produces 11 percent of the intermodal traffic IANA surveyed, this still marks a strong growth for a still-developing sector. Like all global industries, intermodal transport is likely to see a sharp drop in 2Q20 reports as the impact of closures and restricted movement due to COVID-19 become apparent on the balance sheet.
Though some factories were placed under the “essential activities” banner and allowed to continue operation, others were closed or run on skeleton staff, leading to reduced output. Similarly, consumer behaviors changed. According to Forbes, products like canned beans and chilies have risen in popularity, while a wide selection of other stable foods, including canned fruit, frozen fish, chicken and vegetables and ready-made meals, have fallen in popularity. The platform Pabis Retail reported that basic food items had seen sales rise 134 percent in March, accompanied by a 90 percent rise in the sale of cleaning products.
However, Mexico’s intermodal network is also reliant on trade with its North American neighbors, the US and Canada. The uncertainty surrounding USMCA negotiations last year unsettled the industry, though with the increasingly connected automotive industry, transport should pick up again with the restarting of Mexico’s automotive factories.
However, speaking on a conference call with the Wilson Center, US Ambassador to Mexico Christopher Landau expressed his concerns about the supply chain between Mexico and the US. He said that Mexico’s “pretty narrow list of essential industries” had created a situation whereby the connectivity between US and Mexican factories within the USMCA agreement had been shown as critical. Because US automotive factories had continued working when their Mexican counterparts had not, US factories did not have all supplies they needed to produce.