Mexico is becoming a global hub for trade. As the U.S. and other Western nations seek to replace China as a direct provider, the Latin American nation has become a key destination for foreign capital—a process commonly known as nearshoring. 

A great part of this change has come with an increased number of trade routes that connect Mexico with other developing economies across the globe. Most prominently, with Asia, which recently went from accounting 28.3% of major shipping routes to and from the country to nearly 35%. But just how much does it cost for foreign goods to enter Mexico and what’s the cheapest alternative to do so?

In this essay, we go deeper into understanding how Mexican trade works—how expensive it is and which are the key strategies to make your global operations in Mexico cheaper. We use Asia as a case study since it is both the fastest growing trade corridor for Mexico outside the US border, and one for which maritime data is readily available. This allowed us to aggregate a great number of financial data points to accurately depict the cost of shipping from Asia to Mexico.

More specifically, we are focusing on five ports in particular: Shanghai, Ningbo, Qingdao, Busan, and Hong Kong. These five ports account for a considerable portion of Mexico’s ocean routes. In fact, in a previous research piece for Desteia, we found that Busan was the most connected port to Mexico with 26 routes leading to Mexican ports. Shanghai was the fourth most connected with 19 routes. Adding the other three ports considered in this analysis, we get a total of 83 connections to Mexico via ocean trade.

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Taking these five ports as a reference, we then looked at the current market rates from thirteen ocean carriers. In particular, we looked at the cost of shipping different types of containers to the two largest ports in Mexico: Lazaro Cardenas and Manzanillo. In total, we considered 210 shipping routes connecting these five ports to Mexico. As shown in the diagram below, there was a clear tendency of shipping Chinese cargo to Mexico through Shanghai which accounted for over 50% of all ports considered—not a surprising fact when considering Shanghai is the busiest port in the world. It was followed by Ningbo with 21.9% of routes analyzed and Qingdao with 13.81% of routes.

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We considered four types of containers for this study: 20ft standard containers (20GP), 40ft standard containers (40GP), 40ft high containers (40HQ), and 40ft non-operational reefers (40NOR). In the figure below, we share the average price for shipping each of these containers from Asia to Mexico. As the graph shows, the cheapest container is the 20dft standard container followed by a 40ft non operational reefer. Not surprisingly, 40ft containers are higher in value as they offer more volume—although, it is worth noting that a 40ft high is the exact same price as a standard 40ft container despite having more volume.

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The above graph also suggests a very important fact about the price of shipping cargo. The price of shipping is not proportional to the volume benign shipped. Although a 40ft container is more expensive as a whole than a 20ft container, they are actually much cheaper when you consider the actual volume. We can extrapolate this from the previous figures. A 40ft container has double the volume of a 20ft container yet it costs just 10% more in shipping fees.

A better way to consider the actual cost of a shipping container from Asia to Mexico would be to look at the dollar value per volume of each container. That is, the USD per cubic meter of each container being shipped from Asia to Mexico. As we show in the figure below, once you consider the volume of each container, it is considerably cheaper to use 40ft containers than 20ft containers. Similarly, it is cheaper to use 40ft high containers than 40ft standard containers as they cost the same but have more volume (67.6 cubic meters vs 76.3 cubic meters).

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Data thus far has focused on the abstract routes connecting Asia and Mexico. However, there are great cost savings opportunities if we consider the actual ports being used to ship cargo to Mexico. In the map below, we plotted the average price to ship a container from the top asian ports to Mexico—irrespective of container type. As the map shows, the most expensive origin port when shipping to Mexico is Qingdao with an average cost of $2,100 per container. In second place we find Shanghai with an average cost of $1,870.8 per container, followed by Busan with $1,570.8 per container, Ningbo with $1,525.6, and, finally, Hong Kong with $1,503.6.

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The above map already has some meaningful insights in terms of potentially favorable routes when shipping from Asia to Mexico. The clearest example would be to ship cargo from Nimgbo rather than Shanghai, since the two ports are close neighbors—less than a two hour drive from one another. Just by shipping from Ningbo instead of Shanghai, a company could save up to $300 per container. A similar argument could be said of shifting cargo from Qingdao to Shanghai or Ningbo which would save $400 or $700 per container respectively—although, Qingdao is eight hours away from Shanghai, likely resulting in considerable transportation fees as a result of the re-route. 

Furthermore, as we saw in terms of aggregate data, there are clear differences in the cost of shipping when considering different container types. In the figure below, we break down the cost of shipping from all five ports considered by container type. Again, we see the same pattern where 40ft containers are slightly more expensive than their 20ft counterparts despite having double the volume. In all cases, it costs the same to ship a 40ft high container and a 40ft standard container.

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There are also some variations when it comes to the destination port in Mexico albeit to a much smaller degree. In the figure below, we compare the cost to ship cargo from Asia to the ports of Manzanillo and Lázaro Cárdenas in Mexico. As the graph shows, it is slightly cheaper to ship to Manzanillo than Lázaro Cárdenas. However, the difference is so small that it might be offset by transportation costs if Manzanillo happens to be further away from the desired destination. Once more, we see that it is only slightly more expensive to ship using a 40ft container than a 20ft container.

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We also looked at the difference in costs by carrier. In so doing, we actually found the greatest source of variance for companies shipping cargo. As shown in the figure below, costs in shipping can vary by as much as $1,000. ZIM, the most expensive carrier, had an average cost per container of $2,453.33—irrespective of container type. Meanwhile, YML—the cheapest carrier for Asia-Mexico trade—charges just $1,462.68. 

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Now, it is worth noting that there is great variance of costs when it comes to the type of container provided by each carrier. In the figure below, we break down the cost to ship a container by its type. Broadly speaking, the pattern where 40ft containers are slightly more expensive than 20ft containers holds for most carriers–only Maersk and WHL break this rule having the same price for both types of containers. However, the price of a non operating reefer varies drastically with come companies like YML charging significantly less while PIL, EMC, ONE, and MSC all charge more.

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The above research helps understand one of the fastest growing trade corridors in the world: that between Mexico and China. Moreover, it demonstrates that, by looking at aggregate data, companies can better plan for the best route to meet their supply chain needs. As a result, they can find the cheapest container to use or the most cost-effective route for their needs. In the end, it’s all about how you use data to make your logistics operations more efficient.

At Desteia, we believe all operators should have full data visibility when making decisions—be it by structuring internal data or tapping into external data sources. If you’d like to see how better data visibility could help your company, make sure to schedule a call with one of our experts!