Mexico competes with BRIC nations for supply chain investment
January 19, 2012
While the BRIC nations continue to attract investment, supply chain analysts urge caution and diligence.
“Emerging markets have never been so important to the global economy,” said John Manners-Bell, Chief Executive of Transport Intelligence (Ti). “However operating in these markets requires a great deal of attention and preparation as the business environment is often highly challenging. The Agility Emerging Markets Logistics Index highlights many of these challenges and points towards the markets that will deliver the greatest opportunities.”??
In the Ti survey, Brazil holds steady at third – but infrastructure remains a challenge. The nation ranks third behind China and India and saw an overall score increase driven by improvements in its market compatibility and market size and growth. Although Brazil’s infrastructure score remains weak, ?investment is set to intensify in the run up to both the 2014 World Cup and 2016 Olympic Games. ??
Brazil placed third in the survey, when respondents were asked to rank countries with the biggest potential to become a major logistics market in the future.?
The Ti survey also contained new information on Mexico, which clings onto top 10 status in this year’s Index.
Analysts note that it has seen a continuous decline in its score due to high levels of crime and violence caused by drug-related trafficking. As a consequence, the country’s score for market compatibility, already much lower than other same-size economies, declined further. Mexico’s geographical location and strong connections with the U.S. have been major advantages for the country and its investment potential, however.
James R. Giermanski, Chairman of Powers Global Holdings, Inc. and President of Powers International, LLC, an international transportation security company, told SCMR that the risk of doing business in Mexico is still significant.
“I have learned that U.S. businesses in general do not know the intricacies of doing business on the border,” he said.
Giermanski, who is a recognized expert in global supply chain and container security by the World Bank and the World Customs Organization, added that U.S. shippers may not understand the impact and control of Mexican customs brokers.
“This is particularly true in regard to the use of drayage, and the risks associated with drop lots where Mexican long-haul truckers leave and store trailers and containers to wait for the drayage or transfer carrier to pick them up for movement into the United States,” he said.
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