A report released by the World Bank analyzed the distance of Mexico‘s imports and exports from the country’s ports and airports.
In general, exporting companies in Mexico show an average distance to ports and airports that is more than 10 times greater in relation to importing companies, which points to the lack of investment in remote regions.
According to the Logistics Performance Index 2018, the average distance of exports to ports and airports in Mexico is 3,500 kilometers, reflecting the sheer size of the country and putting exporting companies at a great disadvantage compared to those from other countries. comparison countries.
If national supplies have to travel distances similar to the average for exports, it is convenient for companies participating in Global Value Chains (GVCs) to resort to imported supplies, which only have an average distance of 300 kilometers from the port/airport .
In particular, according to the report, it is crucial to ensure that good infrastructure not only benefits companies in export processing zones or those near the US border, but also extends to more remote areas. of the border.
In fact, the Mexican states that are more integrated into GVCs tend to have denser rail networks.
Mexico also has room to improve its logistics performance.
Mexico showed the lowest international logistics performance among comparison countries.
A more detailed analysis of different aspects of logistics performance reveals weaknesses in all major areas, in particular the quality of trade and transport infrastructure (infrastructure) and the competence and quality of logistics services–trucking, freight forwarding and clearance. customs (logistics quality).
For example, the cost of importing into Mexico after complying with the documentation is significantly higher than in other countries.
The results of an econometric model for 50 countries and 23 sectors suggest a positive role of lower import costs in increasing the positive relationship between participation in GVCs and domestic value added.
The cost of importing a container after completing the paperwork is $100 in Mexico, compared to less than $60 in Malaysia, Turkey and Thailand, and zero dollars in Poland.
In addition, Mexico also shows one of the longest times for imports after completing the documentation (18 days) and at the border (44 days), compared to only 1 and 0 days in Poland or 2 and 7 days in Turkey, respectively. .
Mexico’s high reliance on imported inputs for export production, despite their higher costs and import times, could reflect even greater disadvantages behind the border that make it worth paying the import “premium”.
Mexico performs slightly better in terms of cost and time to export.