New president, emissions standards hit Mexican truck market

Flavio Rivera, president of Daimler Mexico, speaking at a press event in Puerto Vallarta last week. ( Photo: Linda Baker )

Puerto Vallarta — A wave of changes impacting freight markets started to roll into Mexico this past weekend.

On December 1, Andrés Manuel López Obrador, the country’s first left-leaning president in more than two decades, was inaugurated — and transportation businesses are nervous, especially over his threat to ax a Mexico City airport expansion. 

President Trump signed off on the new NAFTA replacement accord, but the pact’s fate is uncertain as Congress still has to approve the deal. And new emissions standards for trucks in Mexico are set to go into effect January 1, even though the fuel infrastructure is not equipped to meet demand.

“Mexico faces a lot of challenges,” said Daimler Mexico president Flavio Rivera during a press event held in Puerto Vallarta last week. Nevertheless, “I am convinced this transitional stage is going to give us huge opportunities for our country, and we are ready to face them.” 

Fuel costs, labor gaps and an aging fleet contribute to the challenges. Diesel prices have increased by 92% in the past six years, Rivera said. There is a deficit of about 20,000 drivers, he estimated. 

The average age of the country’s 450,000 trucks is 17 years, and 69% do not comply with Mexico’s current EPA04 emissions standards, much less the new ultra-low sulphur diesel standard to be imposed next year, Rivera said.

The Mexican truck market is among the most competitive in the world, with 13 nameplates competing for a slice of market share. Daimler Trucks North America owns manufacturing facilities in Saltillo, Coahuila and Santiago Tianguistenco.

Business is solid and growing. Daimler’s Classes 6-8 market share is now 40%, up from 24% in 2014, Rivera said.

He attributed the growth in part to enhanced customer service and the parent company’s CASE strategy, a moniker that wraps in connected, autonomous, shared services and electrification technologies.

“These are the four elements that will start in Mexico,” Rivera said. “Are they completely available now?  No, but we will be starting step by step. The wave is coming.”

In January, Daimler will introduce the Mexican take on the New Cascadia, the company’s most advanced, fuel efficient tractor trailer. 

Rivera said 17% of the market is interested in new technologies, and that models like the New Cascadia will position Daimler among the “avant-garde.”

Technical innovation will also address what he identified as the sector’s biggest issue: “The challenge we have for our transportation services and for our country is the truck renovation. We need to remove these trucks and use new ones.”

Rivera said fuel represents 57% of the cost of operating a truck. Diesel prices in last six years have increased 92%, he said.

During the press event, Rivera engaged in a Q&A with Fernando Paez, owner and CEO of Monterrey-based trucking company Olympic Transport. “The diesel sold in Mexico now is not low on sulfur,” Paez said. “That is a challenge.”

So is continued uncertainty around NAFTA, although the agreement is not expected to have an impact on Daimler’s Mexico facilities, Rivera said.

Following a flat period in the beginning of 2018, the transportation sector appears to be on the upswing, Rivera said. The market didn’t start to move until the second semester, “when the industry took a new dynamic” after the election.

But what that dynamic is isn’t totally clear. “On December 1st we have a new president of the Republic, and we start a new stage,” Rivera said. “We’re going to see how industry is standing. We are willing to work and keep working.”

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Linda Baker, Staff Writer

Linda Baker is a FreightWaves staff reporter based in Portland, Oregon. Her beat includes early-stage VC, freight-tech, mobility and West Coast emissions regulations.