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Apparel Imports Largely Unaffected by Mexico Air Cargo Migration

The landscape of air freight entering and exiting Mexico is about to change in the near term—and it could have implications for companies importing cargo from the North American nation.

In an effort to ease chronic congestion at Mexico City International Airport (MEX), the Mexican government reached an agreement with some airlines to move all cargo-only flights to nearby Felipe Angeles International Airport (NLU), approximately 30 miles from the city’s capital center.

Carriers are expected to transition cargo operations from MEX to NLU by July.

The good news for apparel and textile companies is that their supply chain will be largely be unaffected by the cargo-only ban at MEX.

Less than 1 percent of textile and garment exports exit the country via Mexico City Airport, according to Jena Santoro, supply chain risk intelligence manager, Americas for Everstream Analytics.

“The majority of textile exports from Mexico go to the U.S., and most of those are being transported from maquiladoras (duty free factories) in northern and northeastern states of Mexico over the border into the country,” Santoro said.

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Other top importers of Mexican textiles and garments including neighboring Latin America markets like Guatemala, Nicaragua and Colombia, as well as Canada, are all within driving range of Mexico, mitigating much of the impact on textile importers in those countries.

“If they’re in that less than 1 percent bracket, even if those textiles have to be rerouted via container shipments or rail or road, it’s fine, because it’s not it’s not going to go bad [like perishables],” Santoro said. “They’re not going to lose the cargo. As far as industries of products go, textiles and garments can be shipped pretty much by any means.”

The ban would not affect airlines that operate both passenger and cargo flights such as Lufthansa, with Santoro emphasizing that any cargo that typically moves in the belly of passenger planes is not being impacted by the migration.

For cargo-only flights, the impact on wider air cargo supply chains would still be significant due to the short notice as well as the lack of capacity of other airports to accommodate a larger influx of cargo flights, according to Santoro.

“If there are carriers that operate mostly cargo-specific flights, they should be moving those flights to the new airport and keeping their cargo in passenger planes untouched,” she said.

Industries that will need to pay more attention to the cargo-only ban at Mexico City Airport include industrial precious metals, industrial machinery, auto parts, medical devices and pharmaceuticals—all of which Everstream identifies as reliant on the airport to fly goods in and out into other countries.

“Knowing this July deadline is coming and it’s coming quick, carriers need to be thinking about how they can transition those operations so that they don’t come to middle or end of June, without having made any arrangements and only trying to push back to the government’s timeline,” Santoro said. “Don’t panic right now, but be strategic about your preparations because you will be panicking three months from now if you haven’t done anything, yet.”

DHL is the first and largest carrier that agreed to move cargo flights to NLU. The logistics giant has a new $55 million facility at the airport, with its DHL Express unit flying daily scheduled flights six days per week from Cincinnati with a capacity of 40 tons of cargo.

By June, the company says it will expand to three daily flights to NLU, including two from Cincinnati and one from Guatemala.

The infrastructure project has been on Mexican President Andres Manuel Lopez Obrador’s radar for a while, as his administration wants to reduce flight saturation at MEX, the country’s biggest airport. Last August, all airlines at MEX agreed to temporarily reduce flights at the hub from 61 per hour to 52 during peak hours, starting Oct. 31.

These changes are notably occurring after Mexico was downgraded in May 2021 to a Category 2 aviation rating by the U.S. Federal Aviation Administration (FAA) on safety concerns, meaning Mexican airlines cannot launch new routes to the U.S. Mexico struck an agreement with the FAA to be able to move international flights to NLU without counting it as a new route.

In January, Lopez Obrador first issued the proposal to move cargo-only flights out of MEX, giving cargo movers 90 days to exit the space. But he later extended the migration deadline to 180 days after backlash from the aviation industry branded the timeline as unattainable.

Mexico’s National Chamber of Air Transport warned at the time that even that deadline isn’t enough, suggesting that the migration should take about a full year.

“Moving the exclusive cargo service to other terminals in a hurry will significantly affect the proper functioning of the supply chain, reducing the competitiveness of our industry and impacting hundreds of direct and indirect jobs that cargo operations at MEX generate,” said the agency in a January statement.

“Even though this is still very early stage for what’s happening in Mexico City, there’s already been a big lesson learned just in seeing the reactions by carriers and the pushback. It has to be a gradual process,” Santoro said. “All of the supportive infrastructure needs to be also on the same timeline. You can’t finish the airport, but not have the warehousing or not have the roads complete. It needs to sort of be a full picture of infrastructure development, for it to be successful.”

For the longer term, Lopez Obrador is hoping the project will make Mexico a more attractive global hub in the supply chain, according to Santoro. The country already has solidified its standing within Latin America. According to data from the Latin American & Caribbean Air Transport Association (ALTA), Mexico is the leading country in the region in terms of international cargo capacity, with 28 percent of the total.

“A big part of why President AMLO decided to do this in the first place is to increase Mexico’s standing as an international trade partner, to have the main commercial center service by not one, but two, international airports,” Santoro said, using a nickname for the Mexican leader. “In Mexico’s mind, the hope is that there isn’t sort of a negative connotation with this, even though a lot of people may think it’s being done in a disorganized way. The hope is that eventually long-term gains will show that Mexico is this great international trade partner because the ease of logistics is so much better than working with somebody else.”

Santoro said that this kind of strategy may be mirrored in other emerging economies that are on the brink of being a major trade hub, or trying to reach the level of the U.S. and the E.U. She also identified China as a potential area where more cities are looking to expand their air cargo capabilities, thus potentially shifting some trade volume out of larger hubs like Shanghai, Shenzhen and Ningbo.