World Cup mania ushers in Mexican import boom

World Cup mania ushers in Mexican import boom
The Mexican national football team will play at the World Cup

Maersk Line Mexico has reported an 8% rise in imports from Asia and Europe in 2018’s first quarter, with World Cup fervour generating demand for sports goods.

The FIFA World Cup kicks off in June, with Mexico one of 32 teams involved, and football shirts, trainers, video consoles, and other football-related media are more in demand as the competition looms.

Jaap de Mots, trade and marketing manager at Maersk Line Mexico, told CM: “From the consumer point of view, the Mexicans are crazy when it comes to football.

“Consumption is boosted by such a big event like this. Specifically if teams win and progress to subsequent rounds, then we see that it also continues.”

One key factor is a surge in Asian and European electronic imports, which grew by 22% and 24%, with the demand for TV sets driving growth.

De Mots said: “From a manufacturing point of view, there has been an impact on the TV manufacturers in Mexico. Of course a big chunk goes to the US for the Super Bowl, but TVs are being produced for the domestic market, and we see that there’s a lot of pull for imports out of Asia for that.”

The World Cup-driven surge is expected to slow once the competition begins, but Maersk is currently enjoying growth in other areas, such as exports to Europe, which grew by 10%.

The carrier reported large increases in fruit and vegetable exports, such as bananas and avocados, as well as manufactured goods.

De Mots said: “Now that Mexico and the EU have concluded an updated version of their free trade agreement, we see that some additional sectors will benefit in the next couple of years from the opening of the European and Mexican markets.”

“Whereas in some parts of the world there might be some increased protectionist forces, when it comes to Mexico and the EU, they actually doubled down on open trade.”

Products such as juices from Mexico and cheese from Europe will particularly benefit from the updated free trade agreement, but it is unlikely an immediate impact will be seen this year.

Unlike exports to Europe, exports with Asia struggled in the first quarter and dropped by 13%.

China’s suspension of import licenses for recyclable goods such as paper and plastic bottles, which it did to reduce pollution, was the main reason behind this fall. For example, textile waste fell by 55% and paper plunged by 60%.

De Mots said: “We cannot expect the environmental regulations that China is imposing to become more lenient. The Mexican waste exporters need to find a way around that.

“Either they need to find new markets – in Southeast Asia or India – or improve the quality of the recyclable products they’re exporting. There’s ways of cleaning and upgrading the quality of the waste products such as plastic scrap or metal scrap”

Coming the other way, Asian imports of automobile related goods made a strong start to 2018, with Maersk highlighting the auto sector as a key driver of underlying growth.

For example, Asian vehicle imports were up 13% while leather imports for car seats rose by 34%. Mexico is home to a number of car manufacturers who export to other countries, primarily the US.

De Mots said: “The auto sector is one of the most intricate supply chains that you can see amongst manufacturing companies. There’s a lot of raw materials and semi finished goods that continue to flow across borders and also in containers.

“We see that containerised volumes related to the automotive sector have increased quite significantly for many years and it’s very much linked to the export of the finished cars.”

Maersk recently introduced a bunker surcharge to combat rising oil prices, which have risen to US$440 per tonne in Europe, and de Mots said the rise is related to the current issues surrounding Iran.

He said: “We haven’t seen these levels for the last four years, and it’s impacting us quite. In May bunker costs increased by 20% compared to the beginning of 2018. We did not expect this at the beginning of the year.”