Image by Geografo01 - Own Work, CC0

One of the world’s biggest logistics companies is setting its eyes on a new goal: opening DP World Mexico. 

Last week, reporting by the Wall Street Journal brought forth an interesting possibility. DP World, the Dubai-based logistics company—focused, primarily, on port administration—is set on building a large infrastructure project in Mexico. Though the project is still just on the idea phase, it is a great signal for Mexico’s future role in the logistics world.

The announcement itself came from a series of comments from Sultan Ahmed bin Sulayem, who serves as CEO and chairman of DP World. Speaking with the Wall Street Journal, Sulayem announced the company is currently in conversations with the Mexican government to invest in Mexican ports, particularly in a port with ample land surrounding it to build additional industrial facilities.

So, why Mexico? There are really two reasons why DP World is no favoring the Latin American country. 

First and foremost, Mexico has slowly risen to become one of the most important countries to international commerce—and this pattern is most likely to continue in the near future. In the past, companies had sought to locate their supply chains in countries that offered a number of benefits from skilled employees to reduced labor costs, making logistics an international endeavor. But now Western nations are trying to undo this pattern given heightened fears of supply chain disruptions and the possibility that, in the near future, ideological tensions might separate them from China, which currently serves as the world’s manufacturing factory. The new trend is to move supply chains closer to their end consumers—a process commonly referred to as “nearshoring”. 

Given Mexico’s proximity to the US, plethora of free trade agreements, and an already heavily industrialized economy, the country has become the epicenter of this trend. Perhaps the clearest sign of nearshoring came earlier this year when Mexico surpassed China as the top exporter to the US thus making it the most prominent partner to the largest economy in the world.

Now some might take this data point and argue that Mexico’s rise was, in part, due to  the US investing less in China rather than betting explicitly on Mexico. Yet trade data from the last couple of months suggests the exact opposite pattern. Mexican exports to the US have increased at a much faster pace than imports. In July of 2023, for instance it was estimated that Mexico exported goods valued at $37.3 million to the US just within that month. By July of this year, that number had grown to $44.8 million. That is, in the span of a year, the value of monthly exports has grown by 20.1%.

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So, simply put, Mexico is slowly becoming a key player in logistics due to nearshoring. One that DP World can’t ignore if it hopes to maintain its position as a premier port and logistics operator.

The second reason behind the growing interest from the Dubai-based state-owned company is more pragmatic in nature. For years, DP World has attempted to enter the US market but has faced serious opposition from the country’s government. Most notoriously, in 2006, the company stopped an ambitious attempt to acquire operating positions in a number of US ports after a vote in the House Appropriations Committee signaled a clear political willingness to allow the acquisition.

Ever since, DP World has expanded its reach across the Americas without successfully operating ports within the US. As of the time of writing this piece, the company owned 17 ports or terminals within the American continent—both North, Central, and South America, with some facilities in the Caribbean as well. Yet, as the map below shows, there is a clear gap in access when it comes to the US market. While DP World operates at five different points in Canada and an additional point in the Dominican Republic, these points are still far from having a clear entry to the US.

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That is where Mexico comes in. Through the country’s existing rail infrastructure and booming trucking industry, both of which offer direct transport to the US-Mexico border, DP World could easily offer an entry to a once restricted market.

To Mexico, this investment comes at a time of great national interest in logistics. The country’s new president Clauda Sheinbaum—set to take office this week—has made a number of key promises to expand logistics capabilities. Amongst them is the intention to duplicate the amount of cargo Mexico currently handles by rail and investing in a number of ocean ports to increase commerce. Perhaps the most prominent of these projects being the Tehuantepec Isthmus Interoceanic Corridor, a major investment program that connects the Pacific Ocean to the Gulf of Mexico through a rail system capable of competing with the Panama Canal. Although the investment site has yet to be announced, some experts in the Mexican press have already speculated that the port of Salina Cruz—the start of the Tehuantepec Isthmus—could well be the focus of DP’s interest.

It is worth noting just how prominent a player DP World has been in international commerce to highlight how big these news are to Mexico—more so as the country aspires to play a more prominent role in global logistics. According to data in DP’s own website, the company owns terminals at six of the 15 largest container ports in the world.

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Where the investment to take place, Mexico would further consolidate its position in global supply chains through the support of one of its key players. Although it is still early to tell, these early announcements are already good news to the country and a further signal of how  a changing geopolitical world is also having an impact on global logistics.