In Logistics, Volatility Raises the Value of Reliability

Q: How is Hapag-Lloyd using AI and internal digital tools to automate repetitive processes, protect sensitive operational data, and improve response times during disruptions?

A: Technology, including AI, is becoming an important tool for us at Hapag-Lloyd, especially to improve productivity, efficiency, and response times when disruptions happen. We are already using AI in several internal processes, mainly for repetitive tasks and process automation. That helps our teams work faster and focus more on decision-making rather than manual work. 

Because we handle sensitive business information, we do not use public AI platforms for operational data. Instead, we work with closed internal systems and secure tools developed within the company. This is an ongoing process. Some solutions are already in place, but there is still a lot to develop. AI will not replace everything, but it can significantly improve many routine processes.

We are advancing through different IT centers across the world, and the approach is very practical: our teams identify what they need, what can be improved, and what tools should be developed. Innovation is not only driven by IT; it also comes from the operational users.

Q: How does Hapag-Lloyd use AI for planning and automation while managing the limits of AI in a volatile shipping market?

A: AI is useful for many things in shipping, especially for automation, analytics, and supporting planning decisions, but it has clear limits in a highly volatile market like ocean freight. A good example is this year’s pre-Chinese New Year period. Normally, that is a peak season. But this year, that pattern did not happen. Demand was unusually weak, there was no real rush, and the market faced excess capacity. That imbalance immediately put strong pressure on short-term freight rates. In some cases, rates fell to levels below cost. For a trade like Asia–Mexico, where the import leg is the dominant leg, that is a major issue because those revenues also need to cover the cost of repositioning empty containers back to Asia. If rates collapse on the import leg, the economics of the round trip deteriorate very quickly.

This is where AI has limits. AI can learn historical patterns, but it cannot always anticipate abnormal market behavior that has no clear precedent. In this case, it did not predict the absence of the usual pre-Chinese New Year surge. AI is valuable and we use it for many decisions, including math and data-based planning, but not for everything. In shipping, human judgment is still essential to interpret what is happening in real time and make the right commercial and operational decisions.

Q: How did tariff headlines and trade policy uncertainty change booking patterns for Mexico, did you see front-loading, rerouting, or shifts in sourcing?

A: Tariff headlines and trade policy uncertainty have clearly affected booking behavior, sourcing decisions, and customer planning for Mexico. After the pandemic, we saw unusually strong import growth into Mexico, especially from Asia. Volumes increased at abnormal rates in 2023 and 2024, and part of that growth also included Chinese vehicles being moved in containers because car-carrier capacity was tight. That dynamic has since changed: car-carrier availability improved, and at the same time Mexico introduced new duties, including higher tariffs on Chinese products and vehicles, which has changed the economics of those flows.

These measures may protect domestic industry, but they also add cost and complexity. Combined with Mexico’s existing logistics inefficiencies, they can reduce competitiveness for importers and investors. An example was the customs disruption in Manzanillo, when the removal of customs officials triggered a severe clearance bottleneck. That created a chain reaction that caused terminal congestion, delays in unloading and loading, vessel schedule disruptions, and knock-on impacts not only in Manzanillo and Lazaro Cardenas, but across services continuing to Central and South America. It showed how a single port disruption in Mexico can affect an entire regional network.

Q: How did the market behave in 2025, and what were the main trends shaping the sector?

A: Volumes normalized in 2025. After high growth in 2023 and 2024, we saw a more stable market with lower import volumes, which was actually healthier from an operational standpoint. But the customs disruption offset part of that normalization by creating major instability. On investment and sourcing, uncertainty remains the main issue. Nearshoring momentum has slowed, and much of the foreign direct investment we see is reinvestment by companies already operating in Mexico, rather than a strong wave of new entrants. Customers are facing rising costs, changing rules, and unclear implementation requirements, which makes planning difficult.

One of the biggest challenges is that regulations are sometimes introduced before operational responsibilities are clearly defined across customs, importers, brokers, and shipping lines. We are seeing cases where rules are announced, then delayed, because stakeholders still need to agree on how they can actually be implemented. That creates uncertainty and slows decision-making.

We have seen changes in booking patterns and customer behavior, but more than simple front-loading or rerouting, what we see is caution. Companies are delaying decisions, reassessing sourcing, and operating with shorter planning visibility because tariff risk, regulatory changes, and geopolitical uncertainty can shift very quickly.

Q: Where do you see the biggest opportunities in Mexico, and what would need to improve for Hapag-Lloyd and its customers to invest and grow with more confidence?

A: Despite the challenges, we still see Mexico as an attractive market with strong long-term potential. Mexico continues to be strategically positioned as a manufacturing platform for the United States. Its geographic proximity, lower labor costs versus the United States and Canada, and labor availability remain major structural advantages. That fundamental logic has not changed, and it is why Mexico will remain a key part of North American supply chains.

What has changed is the speed of investment. The opportunity is still there, but growth has slowed because investors need more certainty before committing long-term capital. If a company is planning to invest US$1 billion in a production facility, it needs visibility on rules, legal certainty, and operating conditions for the next 10 years. Concerns around security, infrastructure, customs processes, and broader institutional predictability are affecting that confidence.

Mexico will continue to grow, just at a slower pace in the near term. The United States also needs solutions for supply-chain relocation and regional production. If companies want alternatives to Asia, Mexico remains the most practical option because of proximity and integration with the US market.

For Hapag-Lloyd, that means Mexico remains a strategic market, but one that is becoming more complex. One key challenge is the growing imbalance between imports and exports. Imports into Mexico have grown strongly, while exports by sea have declined for three consecutive years. The market went from around 1.3 million TEUs of exports to below 1 million TEUs, while imports are now close to 3 million TEUs. That imbalance matters operationally and commercially, because import revenues must also support the cost of repositioning empty containers back to origin for the next cycle. So, the opportunity in Mexico is real, but profitability depends on managing that imbalance efficiently.

Q: What specific conditions made you confident enough to resume Red Sea/Suez transit through the Gemini Cooperation? 

A: The Gemini Cooperation is a major step for us, especially because it is built around schedule reliability. On East-West trades, Gemini has been delivering over 90% schedule integrity, which is significantly higher than the levels typically seen across other alliance services. That reliability is a key part of the value proposition, even if it can come at a higher operating cost.

On the Red Sea/Suez decision, the main factor was that the route we are resuming had one of the biggest detours in our network due to the security situation. The IMX service, which connects the Middle East with the Eastern and Western Mediterranean, had to reroute around the Cape of Good Hope, adding a major deviation in distance and transit time. Resuming limited Suez transit on that service is therefore a targeted step where the operational benefit is very clear: shorter transit times and a more efficient connection between the Middle East and Mediterranean markets.

That said, this is still a risk-managed decision, not a full return to normal. The security situation remains uncertain, and the route depends on conditions holding. If the risk environment deteriorates again, we are prepared to revert to the Africa routing, as the industry has done.

Q: How would you grade Hapag-Lloyd Mexico’s 2025 performance across volume, service quality, customer satisfaction, and inland execution? 

A:2025 was a solid year for Hapag-Lloyd Mexico in a more difficult market environment. On exports, the market contracted, so growth was naturally limited. In that context, our priority was to defend our position, and we did that: we retained our market share and maintained our strong position in Mexican export volumes. We did not lose share in a declining market.

On imports, we also saw softer volumes, but we were able to broadly maintain our volume levels. Our import market share remains smaller than our export share, partly because we did not expand capacity aggressively during the 2023–2024 growth period as some competitors did. Our approach was more disciplined: capacity stayed broadly stable, with only limited additional space through Gemini services calling at Lazaro Cardenas.

Toward the end of the year, market conditions became more challenging, especially on the Asia–Mexico trade. Starting in October and continuing through November, December, and into the pre-Chinese New Year period, rates came under heavy pressure due to overcapacity. Spot rates fell to unsustainably low levels in some cases. That is now forcing a market correction, with carriers reducing or rearranging capacity to restore more sustainable rate levels. In that sense, 2025 ended with increasing pressure, but our overall performance in Mexico remained stable.

Q: What should customers expect most from Hapag-Lloyd Mexico in 2026 in terms of demand trends, rate conditions, and the biggest risks that could disrupt service?

A: In 2026, customers should expect continuity in our core strategy. We will continue to protect service quality, retain market share, and expand inland solutions that improve reliability and total logistics performance. Our priority is to remain a top-quality carrier in Mexico for both imports and exports. In a market where demand may soften, the focus is not simply on chasing volume at any price, but on defending market share with a reliable product. That is especially important on exports, where rates are already very low and margins are limited.

On demand and rate conditions, the market is still under pressure, particularly in trades with excess capacity. That means customers should expect continued competition and rate volatility, especially in the short term. At the same time, carriers cannot operate below cost indefinitely, so we expect ongoing capacity adjustments across the market to stabilize conditions.

A major focus for us in 2026 is inland execution under carrier haulage, both by truck and rail. We want to move more containers under Hapag-Lloyd-controlled inland transport because that gives customers better visibility, more predictable execution, and, in many cases, better overall performance than unmanaged handoffs.

Rail is a key opportunity. We have developed a dedicated product from Lazaro Cardenas to Monterrey with six weekly departures, which is performing well. One major advantage is that rail can avoid some of the appointment bottlenecks that affect truck pickup at terminals. Once customs clearance is completed and we receive the move instruction, we can load within 24 hours and move the container quickly into the rail flow. This product has already been well accepted, including by major customers and even some automotive shippers with demanding timing requirements. We also see strong potential for rail from Lazaro Cardenas to the Mexico City area. In Manzanillo, we are working on improvements as well, but operational conditions are more complex and there is still significant work to do with stakeholders to improve fluidity.

Another major step in 2026 is digitalization of inland operations in Mexico. We are implementing a new IT system specifically for inland execution with a high level of automation. Combined with GPS-enabled containers, this will give customers better real-time visibility of their cargo when they contract carrier haulage with us, including regular location updates through our platform.

Hapag-Lloyd is a global leader in container shipping. It provides transportation, security, reefer, and custom clearance services, among other services.