December 14, 2015 10:00 AM, EST

Mexico's Trucking Challenges Include Aging Equipment, Poor Road Network

PUERTO VALLARTA, Mexico — The trucking industry of the United States’ southern neighbor remains plagued by poor infrastructure, high diesel prices and an average fleet age of about 17.9 years.

Combined with a shortage of qualified drivers and an absence of enough safety regulations, these challenges can make operating in Mexico extremely difficult, even for the nation’s most sophisticated firms, said fleet executives and Stefan Kurschner, president of Daimler Trucks Mexico. 

“The [Mexican] economy is doing OK, but it should be doing better,” Kurschner said here Dec. 10 at a briefing with North American journalists.

He estimated annual growth at 2.6% to 2.8% but said emerging economies such as Mexico’s should be posting at least 4% growth.

He lamented the fact that more than 173,000 commercial vehicles on Mexican roads are over  21 years old.

“You can imagine what that does for road safety, the environment and also the economy,” he said.

Mexico operates under the equivalent of the U.S. Environmental Protection Agency’s 2004 emissions standards.

Updated standards are under discussion among Mexican government regulators, with implementation expected before the end of the decade.

Possible standards could mimic EPA 2007 or 2013, but the absence of ultra-low-sulfur diesel in the country is a significant hurdle that will need to be addressed.

“We are far from the requirements needed for EPA ’07 or even EPA ’13,” he said.

The sulfur content of diesel in Mexico can be as high as 700 parts per million, compared with the 15 ppm ULSD dispensed in the United States.

“This is, of course, something that keeps us awake at night because we would like to know . . . what the government is planning,” Kurschner said.

A lack of fueling infrastructure also remains an obstacle to more Mexican fleets exploring the use of natural gas, he added.

Diesel in Mexico is about 40% more expensive than U.S. prices, which, combined with a generally poor road network, results in rising operating costs, said Alex Theissen, director of logistics for Femsa Logistics.

He was joined by Ramon Medrano, director general of Frio Express, and Miguel Gomez, owner of Fletes Mexico.

The fleet executives shared similar tales of how problems from diesel theft from fuel tanks to unsafe owner-operators driving too many hours due to lack of HOS rules add to their financial challenges.

They agreed the driver shortage is a problem due in part to a lack of enough available training schools. However, the issue is being compounded by some drivers near the U.S.-Mexico border being poached by U.S. carriers offering higher wages.

The media briefing here was in part the continuation of a push by Daimler and other truck makers to encourage the modernization of the Mexican fleet. Last month, Freightliner signed an agreement with Canacar, Mexico’s main national trucking association, to provide discounts, extended warranties and other incentives for fleets who purchase new or slightly used trucks.

Kurschner said Daimler’s market share in Mexico through November in Classes 6-8 was 30.6%, up 7 percentage points from a year earlier. He said a change to competition laws in Mexico prevents them from providing more precise figures.

Kenworth Trucks Co., with its long established presence in country, remains the market leader.

Kurschner outlined a number of steps Daimler has undertaken during his two years at the helm in Mexico to strengthen its presence.

First, he said, was the introduction of the DD15 engine into the Freightliner Cascadia model.

“We really changed the perception of our product,” said Kurschner, adding that about 90% of Cascadia orders are spec’d with the DD15.

Another critical operational change, Kurschner said, was the shift to 100% peso pricing for all Freightliner products.

The strengthening of the U.S. dollar has created concern and uncertainty for Mexican fleets ordering trucks and parts. However, the financial change allows them to know the invoice price will remain constant.

Kurschner said the company is the only truck maker that has so far made the change to the peso.

Adding regional managers to focus on fleets’ specialized needs due to the nation’s diverse geography and road conditions, as well as expanding its parts network and roadside emergency service options, were among other steps Kurschner said were contributing to the company’s gains.

Kurschner also expressed pride at the buzz Daimler generated at last month’s Expotransporte by displaying its version of the SuperTruck.

Expotransporte is the largest Spanish-speaking truck show, which takes place in odd-numbered years in Guadalajara, Mexico.

The event marked the first time SuperTruck has been showcased outside the United States. The vehicle was unveiled at the Mid-America Trucking Show in March, and also featured at American Trucking Associations’ Management Conference & Exhibition this fall.

Daimler also is tapping into the nation’s love of auto racing by sponsoring truck racing events using the Freightliner M2 models.