Express Delivery Mexico Express Delivery
According to data from the Mexican Association of Couriers and Parcels (Asociación Mexicana de Mensajería y Paquetería or AMMPAC), Mexican express delivery companies transported 67 million pieces in 2018. About 80 percent of local providers offer door-to-door service, while the remaining 20 percent provides complementary services such as intermediary transport and parcel tracking. In Mexico about 190 million shipments are made per year, representing MXN 220 billion (approximately USD 11.3 billion) in expenditures for logistics, operation and storage. The courier and parcel delivery market alone has an estimated value of MXN 73 billion (approximately USD 3.8 billion), of which 77 percent is national and 33 percent international.
International express delivery services have grown even faster than domestic service, averaging double-digit growth annually. Analysts forecast the industry overall will grow in Mexico 15–20 percent through 2021; however, the largest companies will grow at a higher rate due to their current strengths and capacity to invest in infrastructure and technology.
Around 2,700 courier and parcel delivery companies currently operate in Mexico. They compete for a market of approximately MXN 67 billion (USD 3.5 billion), providing local, regional, and international coverage. Competition is strong and varied in terms of supply, prices, and guarantees. Still, local courier companies complain that they do not face a level playing field when providing international services. They particularly cite terms negotiated under the original NAFTA—granting equal access to Mexican motor carriers entering the United States—which have not transpired. There are signs of some consolidation, as the number of courier firms shrank from a high of nearly 3000 in 2018, though revenues are growing at a rate of 20 percent per year.
Express Delivery Investments
According to AMMPAC, recent investments in technology and infrastructure have driven the sector’s expansion. To match the growth of foreign providers, Mexican companies have invested significantly more than their foreign competitors. The total domestic and foreign investment in the sector is impressive. In 2017 and 2018, DHL, UPS, and FedEx increased their presence in Mexico with more e-customer shipping centers; however, the local firms Estafeta Mexicana, RedPack and others continued to invest in technology, infrastructure, fleet modernization, points of sale, operating centers, and customer service. These investments come on top of more than USD 2.15 billion invested by these companies between 2013 and 2017. The goal of these companies is to differentiate based on their ability to know in real time the location of the package and to harness big data intelligence to minimize the level of misdirected shipments, incorrect routes, and losses and damage to packages. For example, the national incidence of package losses and damages is two percent.Extension of Express Delivery Services
Another reason for the growth of the sector is the incorporation of a wider range of services. Companies are competing aggressively on shorter and guaranteed delivery times, efficiencies through route consolidation, customs clearance expertise, geographic scope in cities served, and service reliability through technological improvements such as satellite tracking. Altogether, this competition has increased domestic penetration for same day or overnight service to more than 50 key Mexican cities.Several sectors have particularly benefited from expansion of express services. These include computers, spare parts, high-value products, and industries using just-in-time supply chains such as high technology, automotive, pharmaceuticals, textiles, and manufacturing. Consequently, these sectors have been key to driving ever-greater cargo volumes through express services.
Future Express Delivery Trends
For a variety of reasons—from the extent of rural areas to high security costs protecting shipments from organized crime—Mexico is a country with relatively high logistics costs in contrast to labor costs and customer demand for ever lower pricing. To support further growth of the sector, AMMPC is calling for progress on several challenges. These include improvements in the legal framework for express delivery and progress in combatting organized crime.In the short term, the sector will continue to work on a wider range of integrated logistics solutions beyond transportation. It will also seek improvements in customer service, improved communications tools, and faster response times to requests. The sector further plans to tailor services to the diversity of industries that most demand express service, from banking services, textiles, and apparel to electronics, pharmaceuticals, and cosmetics. Each sector wants specific solutions, and all demand increasingly shorter delivery windows of two to four hours.
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