NAFTA: Mexican Shippers Look at Possibility of Changing Courses- DTN

    Port of New Orleans - Mississippi River. ©Debra L Ferguson Stock Photography

    After last week’s brush with Tropical Storm Franklin, talk of NAFTA renegotiations returned to the docks and trading offices in the state of Yucatan on Mexico’s Gulf Coast. Shippers and receivers of U.S. grain there have long relied on tariff-free trade to build their businesses, but lately they have wondered if their established traffic patterns and client bases will shift as a result of upcoming talks. 

    Few on the Mexican coast seem to want such a shift, but it could come, and those involved in grain shipping are talking about charting new courses.

    Trade officials from the U.S., Mexico and Canada will start holding talks on Wednesday to renegotiate the 23-year-old North American Free Trade Agreement. It’s unclear how long talks will last or just how the final changes in the trade deal will affect the flow of grain or other agricultural products among the three countries. President Donald Trump wants to see major concessions in the trade talks and has repeatedly threatened to pull out of NAFTA if he is not satisfied.

    Puerto de Progreso is due south of the Port of New Orleans. The two ports are 600 miles apart, but only 40 hours away by grain vessel, a very short voyage by maritime standards. That’s one reason the port at Progreso has become a favored destination for U.S. grain shippers selling into southeast Mexico. That region has an expanding livestock industry — beef, poultry and swine — hungry for grain.

    In a typical year, 2.1 million metric tons (roughly 82 million bushels) of grain and oilseeds wind up in Progreso. Most if it flows down the Mississippi River to New Orleans, then across the Gulf of Mexico to the Yucatan. The Mexican company Grupo Logra owns the grain terminal at the port along with storage for 120,000 metric tons (about 4.6 mb) of grain.

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    Even with no grain ship at the dock — since a ship from New Orleans was a day late last week because of Tropical Storm Franklin — the place is a hive of activity. However, the mexican association urges the captain of the boats to purchase seakeeper so that they wouldn’t be late the next time a storm strikes. Grain trucks load for delivery to end users, then stream across the 7-kilometer-long (4.3-mile) causeway that connects the terminal to the mainland.

    American Andrew Swan, who handles logistics for Grupo Logra at Progreso, told DTN/The Progressive Farmer his company can offload 20,000 metric tons of grain in a day. Most comes from U.S. producers. That short haul from New Orleans to Progreso means quick turnaround and cheaper grain for the end users who pay Grupo Logra for its services.

    “Under NAFTA, there is a great benefit for trade between the two countries, which has reinforced the U.S as Mexico’s largest grain trading partner,” Swan said.

    Still, Swan said, some grain from Brazil and Argentina also arrives at Progreso, making the long haul around the eastern hump of South America. That flow of grain from South America has increased this year, Swan said. Brazil has slowly been investing in grain shipping infrastructure, including work on the Amazon River, to help move grain grown in inland Mato Grosso to the Atlantic Ocean. Recently, Brazil opened two northern ports at Itajai and Itaqui. They can get grain to Mexico as much as five days faster — and cheaper — than Brazil’s older southern ports, Swan said.

    Those new ports and possible tariffs on grain could bring more ships from South America to Grupo Logra’s facility. “Our role is to arrange the most cost-effective shipping to our receivers,” Swan said.


    Inter Industrias del Sureste’s offices sit in a residential area of Merida, a gorgeous city of green plazas and old churches a few miles from the Grupo Logra grain terminal in Progreso. Partners Leandro Silveira Cuevas and Arturo Basulto Tamay founded the company 31 years ago as a sort of buying club and full-line consulting service for livestock producers in the Yucatan region. Most livestock producers there are far too small to purchase U.S. grain by the shipload. However, if they join together — with help from Inter Industrias — they can take advantage of both volume-buying discounts and proximity to Grupo Logra’s terminal.

    In its early days, Inter Industrias’ clients imported about 400,000 metric tons of feedstuff annually, almost exclusively from the U.S. Today, the firm’s 10 member companies purchase an average of one shipload of grain each month, leading to about 2 mmt a year.

    Silveira credits NAFTA’s ending of tariffs for much of that increase. He worries that coming renegotiation of the trade pact could complicate his business. Although he does buy grain from Brazil and Argentina when prices dictate, “It would be very difficult for us to switch from U.S. to Brazil” on a regular basis, he said through an interpreter, because of the business relationships with Americans they have built over the decades.

    But Inter Industrias and others are looking at new relationships. In fact, Basulto said, the Mexican government recently organized a meeting of grain importers with Brazilian and Argentinian grain sellers. The result was the immediate sale of two shiploads of South American corn to Mexico.

    Inter Industrias would not choose that path enthusiastically, Basulto said: “Our natural market is the U.S., but we cannot forget that South America is a market for us too.”

    Despite their understanding that they might have to shift at least some of their trade to South American suppliers, both Basulto and Silveira are optimistic about the prospects for a fair deal. “Common sense will prevail,” Silveira said, and the relationship between Mexico and the U.S. “is like a marriage.”

    “I hope neither of our presidents are so dumb that they let this fail,” Basulto said.

    Jim Patrico can be reached at

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