Mexico Could Be Back Door For Chinese Imports Into US

Growth in demand for container shipping imports from China into Mexico in January 2024 increased by 60% compared to 12 months ago, further fuelling suspicions it has become a back door into the US.

According to analysts at Xeneta, 117,000 TEU was shipped in January of this year compared to 73,000 TEU in January 2023 (source: Container Trades Statistics). Sea Freight Door To Door

Mexico Could Be Back Door For Chinese Imports Into US

Annual growth in container shipping between China and Mexico had already increased by 34.8% in 2023 compared to just 3.5% in 2022.

Peter Sand, Xeneta Chief Analyst, believes the latest data may be further evidence of businesses attempting to circumvent tariffs on goods imported from China into the US, which have ramped up during the ongoing trade war between the nations.

“The strength in trade between China and Mexico was building during 2023 but the latest data for January 2024 reveals a massive increase. It is probably the fastest growing trade on planet Earth right now. A sizeable proportion of the goods arriving in Mexico by ocean will likely be trucked into the US, which gives rise to the suspicion that the increase in trade we are witnessing is due to importers trying to circumvent US tariffs.

“In a purely hypothetical scenario, if this growth rate continues, by the year 2031 there will be more containers imported from China into Mexico than the US West Coast. That demonstrates just how rapid the increasing rate of demand for ocean freight shipping has been.

“Only last year Mexico City opened a new cargo-only airport, which is another sign that imports are scaling up. I doubt this is happening due to increased demand in Mexico only, but more likely because it is a back door into the US.”

Importing into Mexico West Coast ports from China is seen as a viable alternative to goods arriving directly into the US West Coast, but importers will face a potentially volatile ocean freight shipping market as volumes continue to increase.

In April 2023, Xeneta data shows long term rates for ocean freight shipping from China to Mexico West Coast dropped below rates into the US West Coast at $2,110 per FEU and $2,190 per FEU respectively.

Since that point, long term rates have swapped over five times in terms of which trade is the more expensive before finally converging to almost the same level on 14 March this year at $1,887 per FEU into Mexico West Coast and $1,892 per FEU into the US West Coast.

Sand said: “A maturing trade is also a potentially volatile trade in terms of both the cost of ocean freight shipping rates and service reliability. If importers are choosing to switch ocean supply chains to the Mexico West Coast there are risks associated with it. This is a prime example of how the best option for shippers is likely to change over time as the market develops.”

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Mexico Could Be Back Door For Chinese Imports Into US

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