Mexico 3PL Market Growth Analysis - Market Size, Share, Forecast Trends and Outlook Report (2024-2032)

Mexico 3PL Market Outlook

The Mexico 3PL market size reached around USD 17.76 billion in 2023. The market is estimated to grow at a CAGR of 5.8% during 2024-2032 to reach a value of USD 29.32 billion by 2032.

Key Takeaways

• 3PL providers are leveraging Mexico's FTAs and USMCA for efficient cross-border logistics.

• During January-March 2023, the United States and Mexico traded goods amounting to USD 263 billion, making Mexico the United States’ biggest trading partner.

• Mexico's strategic location, robust infrastructure, and favourable business environment favour the Mexico 3PL market growth.

Third-party logistics or 3PL service providers offer outsourced logistics services, which include management, storage , and shipping of goods. A 3PL service provider may provide a single service, such as transportation or warehouse storage, or a bundle of services capable of handling supply chain management.

Mexico has 14 free trade agreements (FTAs) with nations including the United States, Canada, Japan, and Australia as well as the EU. The reduced tariffs and taxes on the transport of goods have reduced the transportation and shipping costs for 3PLs.

The surge in nearshoring, fuelled by global supply chain disruptions, U.S.-China tensions, and the USMCA, propels demand, particularly in Monterrey and border markets of Mexico. About 75% of 2022’s manufacturing demand is linked to nearshoring, encompassing Tier 1 and 2 near-shoring representing direct international demand and local supplier demands. The current trend of nearshoring is anticipated to persist and aligns with companies relocating production closer to the U.S. consumers, benefitting the 3PL market in Mexico.

Figure: Nearshoring Demand by Area of Origin; 2023

Figure: List of Free Trade Agreements (FTA)

Key Trends and Developments

Significant transportation infrastructure; presence of trade agreements, growing manufacturing sector; and technological advancements; are positively impacting the Mexico 3PL market growth

Mexico 3PL Market Trends

Mexico has 14 free trade agreements (FTAs) with countries including the US and Australia, and the reduced tariffs and taxes on the transport of goods have reduced the shipping costs for 3PLs. During January-March 2023, the United States and Mexico traded goods amounting to USD 263 billion, making Mexico the United States’ biggest trading partner.

Mexico’s manufacturing sector draws the highest foreign direct investment (FDI) and accounts for 18.5% of country’s GDP. Its lower labour costs and skilled workforce have strengthened Mexico’s automotive, electronics, and aerospace manufacturing, making it desirable for businesses who want to outsource their manufacturing processes, aiding the demand for 3PL services.

Undergoing a significant expansion, Mexico's ports are expected to increase their annual capacity by 50% through the addition of new container terminals. The upgraded infrastructure is designed to accommodate larger vessels, enhancing overall efficiency in cargo handling. The modernisation initiatives are geared towards transforming Veracruz into a globally recognised logistics hub, incorporating automation systems, expanded storage facilities, and enhanced road and rail connectivity to streamline the movement of cargo.

According to the Secretariat of Economy’s Tariff Information System via the Internet (SIAVI), the market size of Mexico’s medical devices and equipment was USD 28.68 billion in 2022. An expanding medical and pharmaceutical sector in Mexico is raising the cruciality of 3PL firms to provide a range of services to companies, related to supply chain management.

Market Segmentation

“Mexico 3PL Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Based on end-use industry, the food and beverage sector dominates the Mexico 3PL market share

Mexico has emerged as a preferred location for global companies looking to establish manufacturing facilities outside Asia. Proximity to markets is a key advantage for the food and beverage industry, allowing businesses to efficiently reach new markets without significant transportation costs. Nearshoring to Mexico can benefit businesses dealing with perishable goods, ensuring quality and freshness.

Mexico's automotive manufacturing sector, hosting major players like Fiat Chrysler, Ford, GM, and Toyota, has been pivotal in its economy. As South America's leading automotive manufacturer, it produces nearly 4 million units annually of which, over 80% is exported.

Companies are capitalising on shelter corporations and the IMMEX Program, allowing duty-free importation of raw materials. The growth in electronic manufacturing is attributed to the rising number of available engineers and design specialists.

Based on service, domestic transportation management holds a significant share in the Mexico 3PL market

Key e-commerce platforms in Mexico, including Mercado Libre, Amazon, and Walmart use 3PL services. The expansion of e-commerce in Mexico provides a boost to value-added warehousing services including packaging, kitting, returns, and warranty management.

Domestic and international transportation management uses sophisticated technology, including predictive data to effectively manage thousands of shipments across different carriers and transportation modes. The use of geolocation technologies allows customers to track merchandise in real-time.

In July 2023, GEODIS unveiled a new multi-user warehouse and distribution centre in Mexico City to support omnichannel operations, including e-commerce, retail, and wholesale. Pallet racking for simple inventory movement, a mezzanine for enhanced capacity and operational flexibility are some of the features of this new omnichannel warehouse.

Competitive Landscape

The market players are competing against each other by strategically offering a variety of services including transportation, warehousing, picking, packing, and inventory forecasting

Other notable players operating in the Mexico 3PL market include Ryder System, Inc., Penske Truck Leasing Co., L.P., CEVA Logistics SA, WH Forwarding SA de CV, and GXO Logistics, Inc., among others. Manufacturers are upgrading their product portfolios and incorporating the latest capabilities to innovate their offerings and meet the evolving demands of consumers.

Mexico 3PL Market Analysis by Region

Mexico's manufacturing sector continues its dynamic growth, spurred by increased production across various states. In 2021, notable growth rates were observed in states like Oaxaca, Hidalgo, Tabasco, Veracruz, and Tamaulipas, alongside larger producers such as Nuevo Leon, the State of Mexico, and Guanajuato. Economic Census 2019 data reveals Hidalgo's economic landscape, with retail trade, other services excluding government activities, and temporary accommodation and food preparation and drinks leading in economic unit concentration. The growing manufacturing activities and the subsequent demand for efficient storage and logistics services support the Mexico 3PL market expansion.

Mexico benefits from nearshoring through sharing a 2000-mile-long border with the world’s largest economy, the United States, and being a resource-export-oriented economy. Thriving Northern metro regions in Mexico, including Juarez, Hermosillo, Chihuahua, and Monterrey, benefit from excellent infrastructure connecting them within 300 miles to major American cities like San Diego, Los Angeles, Phoenix, Tucson, Albuquerque, El Paso, San Antonio, Austin, Corpus Christi, and Houston.

El Bajio, Mexico's pivotal industrial hub, encompasses Queretaro, Guanajuato, Aguascalientes, and San Luis Potosi, offering manufacturers access to 80% of the Mexican market and 70% of industrial establishments within a 3-hour radius. Focused on automotive, aerospace, defense, and household appliance manufacturing, El Bajio offers a sophisticated transportation network.

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Mexico 3PL Market Report Snapshots

Mexico 3PL Market Size

Mexico 3PL Market Trends

Mexico 3PL Market Regional Analysis

Mexico 3PL Companies