What We Learned from the New Mexico Shipping Routes

An image of a containership off the coast of Mexico.

Everyone seems to have Mexico on top of their minds. Shipping companies are now the most recent example, increasing the total number of premiere Mexico shipping routes by 10%.

Let’s start with the facts. Earlier this month, Cosco, MSC, and CMA CGM—three of the     largest maritime transportation conglomerates—announced new routes headed towards Mexico. In total, the companies will open six new shipping lines—three headed to Mexico and three headed out of Mexico. The announcement itself should be read as a confidence vote in the country, since these three companies together hold roughly 21.5% of the world’s containerships and are only second to APM-Maersk.

This adds to recent interest in Mexico, after the country surpassed China as the largest trade partner to the US and Foreign Direct Investment continues in an upwards trajectory. In great part, this is all due to the phenomena known as nearshoring: the strategic relocation of supply chains closer to a desired market. As political tensions have grown in China, Mexico has experienced a surge in interest from Western companies seeking to decouple from their long-standing Asian trade partner: a phenomenon we’ve been closely monitoring at Auba.

Yet there is a mild twist in the recent announcements from Cosco, MSC, and  CMA CGM. Instead of connecting Mexico with the Western world by increasing trade with Europe and/or the US, these new shipping lines focus exclusively on Asia. More specifically, with China which, given a rise in US tariffs, has recently turned its attention towards Mexico as a safe passage into the US market. Not surprisingly, Mexico responded by imposing its own set of tariffs—although, at Auba, we found conflicting evidence regarding their impact.

We wanted to further understand the impact of these new shipping lines in Mexico, so, at Auba, we underwent a thorough examination of the major maritime trade routes connecting Mexican ports with the rest of the world (for more on ports, make sure to read our report on the topic). 

To do this, we looked through the official trade routes of the four largest shipping companies in the world: Maersk, MSC, CMA CGM, and Cosco. While this, by no means, represents the totality of all shipping routes in the country, it does provide an initial effort to fully map Mexico’s maritime trade—not to mention that the four companies together represent over a third of all containerships in the world.

In total, we were able to account for 60 different shipping routes prior to the recent announcement that included Mexico in some way or another. Since, in our efforts, we also recorded every port covered by said shipping routes, we also accounted for 101 unique ports that are connected to Mexico by commercial routes—all of which we represent in the map below.

International Ports by Number of Routes Shared with Mexican Ports

A map of the world showing all the ports that are connected to Mexican ports by a shipping line from one of the four largest shipping lines. The size of each circle represents the number of routes shared.
(Data from Auba Research)

The first conclusion from this exercise is that the recent announcement from Cosco, MSC, and  CMA CGM does have a concrete impact on Mexico’s maritime connectivity. By increasing in six the number of shipping routes, this represents a 10% growth from the 60 we had accounted for previously.

If, in turn, we look at these routes in the aggregate, we will also notice an important pattern. In general, one can categorize Mexico’s shipping lines in three broad categories: (1) those connecting Mexico to Europe, (2) those connecting Mexico to Asia, and (3) those connecting Mexico with broader trade routes across the American continent. Not surprising, AMerican shipping routes were the most common in our sample (45%), followed by Asian routes (28.3%) and European routes (26.7%). Yet these recent announcements move the distribution heavily towards Asia, expanding the share of Asian shipping routes to 34.8%—a 35% increase.

Mexico’s Trade Routes with Major Regions (Pre-announcement)

A pie graph showing the ports connected to Mexico by region before the recent announcement from CMA CGM, Cosco, and MSC. The regions shown are: America, Asia, and Europe
(Data from Auba Research)

Mexico’s Trade Routes with Major Regions (Pre-announcement)

A pie graph showing the ports connected to Mexico by region after the recent announcement from CMA CGM, Cosco, and MSC. The regions shown are: America, Asia, and Europe
(Data from Auba Research)

There is also a minor, albeit worth noting effect on a Mexico-exclusive focus. Intuition would suggest that most maritime trade happens in a straightforward manner, sending goods from one country to another. Yet given the costs of fuel and the large size of commercial containerships, this logic is often flawed. More commonly, shipping companies organize complex transnational routes that cover various companies in a single month-long voyage. In fact, we found that 53.2% of all trade routes amongst top shippers have Mexico as a middle point in their routes. The remaining 46.7% had Mexico either as a start or an end point to the route. When accounting for the new shipping lines, Mexico-centric voyages—defined as those with Mexico as the start or end of a route—grew to 50.7%, overtaking non-Mexico-centric paths to trade.

But perhaps the most important effect of these routes comes in reducing the distance between Mexico and Asia. Since we were able to gather the exact routes used by premier shippers when sending goods to Mexico, we were also able to measure the distance to Mexico itself. For 53 out of the 60 shipping lines considered, we were able to find the total time devoted to a single route, with an average of 37.2 days across routes including Mexico—although the standard deviation was a high of 22.1 days. Although, this reflects the length of the total trip and not just the distance to Mexico.

Focus on Mexico by Major Shipping Lines (Pre-announcement)

A pie graph showing the share of shipping routes that have Mexico as the first port on the route, the last port on the route or somewhere along the middle. The figure only considers the four largest shipping lines: Maersk, CMA CGM, Cosco, and MSC
(Data from Auba Research)

To solve this problem, we decided to use a different metric for distance. Namely, we looked at the total number of ports between one point and the closest Mexican port in every  shipping route. The logic was straight forward. Think of a route that has only four ports in it and follows this order: Saint John-New York-Houston-Altamira. Altamira is the only Mexican port in question, so we use it as a metric to determine the number of ports away from the other ports in this list. For this example, indexing at one, we say that Houston is one port away from Mexico, New York is two ports away, and Saint John is three ports away. We did this for every port considered across all shipping lines, giving us an average distance from every port to Mexico. Intuitively, as the figure below shows, ports in southern US and Central America had the shortest distances from Mexican ports (many of them being connected directly by shared shipping routes). European ports like Civitavecchia, were 9 ports away from Mexico.

Average Number of Ports Away from Mexico

A bar graph showing the average number of ports separating 101 cities from Mexico via the maritime trade routes of the four largest shipping countries.
(Data from Auba Research)

All six of the new shipping lines announced are direct connections between Mexico and Asia, aiming to cross the Pacific in 15-20 days—shorter than the current average for the country. Furthemore, the distance between Mexican ports and their Asian counterparts will be significantly lowered by these new shipping routes, since none include further stops in the US or other Latin American countries. If we take a regional perspective we soon notice that the average Asian port is 4.1 ports away from Mexico—namely, a container ship must make over three stops before reaching Mexico. Yet the routes proposed by shipping companies have an average distance from Mexico of just 2.38 ports—ie, making one or two stops along the way. 

Average Number of Ports Away from Mexico by Region

A bar graph showing the average number of ports separating European, Asian, Latin American, and North American ports from Mexican Ports via the maritime trade routes of the four largest shipping countries.
(Data from Auba Research)

All the above suggests that these six new shipping lines will have a concrete effect in Mexico’s trade profile. As a whole, they will increase the number of shipping lines amongst top companies by 10%, while also putting a heavier focus on Mexico-exclusive trade. Yet, most importantly, they have the potential to significantly lower the distance between Mexican and Asian ports from a current average of 4.1 ports of distance, to their proposed 2.38 ports. It may be the case that nearshoring began as a Western-focused phenomenon. But, in recent months, Asia has been quick to take advantage of it as well.