Image credits: Flickr, Taro
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News Article

Reopening Plan Should Give Boost to Logistics Chain

By Peter Appleby | Wed, 05/13/2020 - 17:51

The announcement by President Andrés Manuel López Obrador that Mexico will return to activities in “the new normal” has given industries across the country a definite starting point for work following national shutdowns during the COVID-19 pandemic.

Under to the government’s plan, which has been approved by Mexico’s General Health Council, the automotive, mining and construction industries will be the first to restart operations. According to El Economista, these industries make up some 10 percent of the country’s GDP. Though the decision is yet to be published in the government’s mouthpiece, the Official Gazette of the Federation, it is understood to have been confirmed, El Economista reports.

The plan for reopening will depend on the specific health situation within a given municipality and will be expressed through a traffic light system that moves through four colors: red, orange, yellow and green. When a municipality’s light is red, only essential activities will be allowed. As COVID-19 cases drop, the municipality will move through orange and yellow towards the green light, which signifies that no restrictions on movement nor work remain.

Director of the Institute for Industrial Development and Economic Growth José Luis de la Cruz told El Economista that “the three sectors are part of the heart of the industry that is in recession and they have the potential to boost another 100 industrial branches.”

The news will buoy industries that have suffered greatly due to work restrictions. As reported by Mexico Business News yesterday, Mexico’s automotive exports have fallen due to factory closures, weakening the logistics chain between Mexico, the US and Canada. The sale of tractor trailers, often used to transport autos, saw a 72 percent drop due to falling demand, said the National Association of Bus, Truck and Tractor Trailer Manufacturers (ANPACT).

However, while many companies in the logistics supply chain have suffered from the COVID-19’s transport dropoff, others have managed to grow. According to T21, Mexican firm Kensa Logistics grew its operations by 30 percent due to the diversification of the cargos it moved. According to the firm, the virus has caused a trend to emerge as companies importing goods into Mexico from Asia have begun to move their goods via cargo ships rather than planes. In this way, they take longer to reach the country, thereby avoiding associated costs like storage.

The economy’s reopening scheduled by the Mexican goverment, whether it is a sensible health move or not, will be welcomed by logistics companies across the country. Though there is no reverting to pre-COVID-19 activities, the new normal is better than no normal.

The data used in this article was sourced from:  
T21, El Economista, Mexico Business News
Photo by:   Flickr, Taro
Peter Appleby Peter Appleby Journalist and Industry Analyst