Hyderabad, Jan. 19, 2023 (GLOBE NEWSWIRE) -- The Mexico road freight transportation market witnessed a CAGR growth of around 7% during the review period (2016-2021). However, with the spread of COVID-19, the entire economy witnessed a decline with GDP dropping by 3.02% YoY reaching USD 1.4 million in 2020. Moreover, in 2020 the road freight transport market also witnessed a decline due to trade restrictions reaching USD 41.6 billion. However, since 2021, the economy has substantially recovered reaching USD 44.6 billion.
In 2021, the manufacturing sector captured more than 50% of the road freight market in Mexico, supported by the textile and apparel industry with a 19.86% YoY growth in the contribution share of the manufacturing sector. Moreover, the manufacturing sector contributed around 16.20% to the country’s GDP in 2021. Manufacturing is an essential pillar of the Mexican economy The reason behind this is many consumer products companies have moved their manufacturing operations to Mexico. As manufacturing costs continue to rise in China, manufacturers are moving their operations to Mexico for a variety of cost-efficient reasons. In 2021, the food and beverages manufacturing segment had the highest market share value of around 4.77%, followed by the electrical and electronic products manufacturing segment, with a 2.20% market share. Moreover, the FDI in the manufacturing sector in Mexico amounted to approximately USD 11.57 billion in 2021. In the study period, FDI in Mexican manufacturing was the highest in 2016, with around USD 18.06 billion. As of November 2021, the manufacturing sector attracted the highest share of FDI in Mexico, accounting for nearly 45% of all the investments received by the country.
The various other growth factors driving the market demand include the rising development of road infrastructure with the length of the road reaching 802,574 Km in 2021. This is facilitating the smoother supply chain along with a decrease in the turn-around time of trucks leading to increased deliveries in the same amount of time as in 2020. Furthermore, Mexico’s Secretariat of Infrastructure, Communications, and Transportation (SICT) has outlined priorities for 2022 that involve the construction, modernization, and maintenance of the federal road network. Through this plan, the ministry aims to pave 114 roads, of which 104 will be municipality roads, five for municipal agencies, and five for indigenous communities. The major projects are the peso refurbishment and widening of the Mitla-Tehuantepec route, a 169km road linking the central valley of Oaxaca to the Pacific coast, and the peso construction of the Barranca Larga-Ventanilla toll road, a 169km highway linking the city of Oaxaca with Puerto Escondido. Additionally, majority of transportation entities seek out the most cutting-edge technologies such as drone services for automated deliveries, and GPS tracking system to improve their services, increase customer satisfaction, assure cargo security, and promote an efficient transportation system that supports Mexico’s competitiveness in a global economy. These trends have resulted in increased demand for all kinds of trucks and equipment in the industry with truck sales reaching 31,283 units in 2021. Furthermore, it can help increase the efficiency of the transportation and logistical sector in Mexico.
Overall, the scope and opportunities in the market are being driven by the initiatives undertaken by the country to curtail environmental pollution. The Mexico City Government has a strategic plan to improve mobility by replacing local transportation with zero-emission vehicles. Mexican consumers receive government incentives such as exemption of local taxes and emission control verifications. In addition, rising prices for gasoline and pollution alerts that ban vehicles in transit have motivated sales of EV and hybrid vehicles in Mexico.As of 2022, 5,577 electric vehicles were sold in Mexico. However, due to the upcoming initiatives, electric vehicle sales are expected to boom in the future leading to the growth of the market during the forecast period (2022-2027) at a CAGR of 23.94%. In addition, the E-commerce industry has been driving the last mile domestic delivery segment since the implementation of social distancing norms and work-from-home scenarios in 2020. In 2021 alone, 35% YoY growth has been registered and is expected to grow at a CAGR of 14.74% in the forecast period (2022-2028).
