Adolfo Marrodan
President and CEO
Maritime Consulting
View from the Top

Energy Reform Heralds Strengthening of Shipping Industry

Wed, 01/21/2015 - 13:29

Q: What led to the recovery of Mexico’s shipping industry since the market’s dramatic downturn in 2012-2013?

A: Besides the global shipping downturn that occurred in 2012–2013, the Mexican shipping industry had been affected by a combination of events over the past few years. The global recession did not hurt the already depressed national oil and gas industry as much as the offshore maritime sector. The problems in the Mexican maritime industry were caused by unfair taxation regimes for ship-owners and poor competitiveness due to missed opportunities in various trade agreements set up during the 1990s. The shipping industry depends on the demand for the transportation of goods, so it is crucial for Mexico to have a booster element that triggers a constant need for ships. The Energy Reform is crucial to this industry, as it will lead to a new and positive cycle. If Mexican companies understood the opportunities that are there for the taking, they would immediately act to profit from them. The shipping industry in Mexico has tremendous growth potential, but it needs to use the Energy Reform as a driver to transcend its limitations.

Q: What are the main differences between Mexican and international vessels in terms of technology and cost- effectiveness?

A: Mexican vessels still have to undergo a number of modifications in order to compete with class-A ships. The shipbuilding industry in Mexico needs to change its focus from assembly to manufacturing. Currently, 70- 80% of the necessary equipment to manufacture vessels in the country is imported. This obviously complicates the logistics and increases production costs. Mexico needs to start concentrating on developing its own equipment and technologies in order to become competitive in the global shipping industry. This is very feasible given the engineering capacity that exists in the country. The Energy Reform should serve as an incentive for companies to start developing their own equipment. If these companies can manage to satisfy the growing need for large vessels with higher tonnage capacities, they will certainly be able to consolidate themselves as one-stop shops for oilfield operators.

Q: What are your ambitions to facilitate the establishment of offshore companies in Mexico?

A: New offshore developments will involve a complex multi-stage process, which will demand entirely new chain management to support offshore infrastructure. Developing deepwater fields will be a particularly great challenge, since the infrastructure needed to support these operations does not exist yet. The great number of business possibilities stemming from this will lead to the creation of new companies or of new subsidiaries of established groups. Maritime Consulting can offer these companies a comprehensive portfolio of services ranging from marine engineering and maritime regulatory affairs consultancy to business development and shipping financing. We offer integrated solutions to assemble and support their entire business structure and supply chain in line with their corporate governance, risk management, and compliance programs.

Q: What role will the ports on the Gulf coast play in the future of the shipping industry in Mexico?

A: Ciudad del Carmen is the capital of the Mexican offshore industry and will remain in this position as long as there is enough demand for shipping services from the offshore fields in this region, regardless of exploration projects taking place in the northeast. Once these deepwater exploration projects move into the production phase, we will see some sort of industrial decentralization as new infrastructure is developed along the Gulf coast in the northern part of Mexico. Veracruz and Tampico will slowly take on a more important role within this sector. In fact, many local providers are already preparing themselves to support the industry in the states of Veracruz and Tamaulipas. It is possible that we will see the creation of new maritime ports and other types of infrastructure in these states dedicated to servicing the Mexican oil industry. These new locations will most likely offer services such as procurement, provisions, marine engineering, logistics, and vessel charters. This will definitely be a challenge for suppliers since they will have to expand to continue delivering a timely and efficient service. The shipping industry will have to be reshaped in order to support these new offshore fields. We foresee a strong increase in demand for oil rigs, platform support vessels, exploration and seismic vessels, passenger vessels, barges, and FPSOs. The shipping industry will grow, but only the companies with the right corporate structure and financial health will be able to capitalize on this opportunity.