Stuck in Traffic: Port Delays Disrupt Mexico's Automotive Sector

Mexico is dealing with delays and congestion at its major ports. The country's top three ports, Manzanillo, Lazaro Cardenas and Altamira, have experienced significant setbacks, disrupting the smooth flow of goods. The shortage of car haulers due to theft has exacerbated the situation, causing bottlenecks and impacting the automotive sector, a vital contributor to Mexico's economy.

The delays at ports are primarily attributed to the overwhelming demand for Asian cars, including popular brands like Hyundai, KIA, Mazda and Toyota, as the country is facing a structural shift where about 70% of all vehicle imports come from Asia. 

Among the top ports in Mexico, Manzanillo, Lazaro Cardenas and Altamira have been hit the hardest by delays. According to GoComet, Manzanillo has experienced a one-day delay, while Lazaro Cardenas has faced a two-day setback. However, the most severe delays have plagued Altamira, with shipments experiencing a staggering 15-day delay. This prolonged congestion has persisted for over three months, posing significant challenges to the automotive industry and its supply chain. This forced Toyota last May to explore alternative gateways.

The primary cause of the port delays can be attributed to the surging demand for new vehicles in Mexico. AMDA reports that the country has witnessed a remarkable sales of new zero-kilometer vehicles totaling 113,553 units, 25.7% more than those sold in June 2022. This surge has strained the transportation infrastructure, leading to a shortage of car haulers needed to transport these vehicles from the ports to dealerships across the country.

The shortage of car haulers can be linked to a rise in theft. The Mexican Association of Insurance Institutions (AMIS) reports a 26.54% increase in heavy equipment theft, with only 58% of the stolen items recovered. Car haulers have not been spared from this trend, experiencing a 24% increase in theft. These incidents have forced heavy vehicle distributors to cancel nighttime operations, further exacerbating the congestion and delivery bottlenecks.

The automotive sector has always played a major role in the Mexican economy, being the seventh-largest commercial vehicle producer globally and the largest in Latin America. Likewise, according to the Mexican Association of the Automotive Industry (AMIA), the automotive industry contributes 18% to Mexico's manufacturing sector GDP and 3.6% of the country's total GDP. Therefore, the port congestion crisis raises concerns about Mexico's capacity to handle the increasing flow of auto parts and other traffic, especially as the country is a prime candidate for nearshoring.