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Mexico Gas Shortages – Challenges for Cargo Transportation
January 20th, 2017 Van Bethea
As we ended the Christmas holidays and entered into 2017, protesters blocked roads surrounding the Mexican and U.S. border due to the dramatic gas price hikes in Mexico. Some protesters burnt tires while others turned violent as businesses were looted and ransacked, and fuel delivery trucks were hijacked and destroyed. Over a thousand people, including police officers, were arrested during the first week of January alone.
The gas price announcement was made public on the first of January and called for the drastic adjustment of fuel prices to real market value rather than the significantly lower gas prices historically established through previous governmental gas subsidies. The news broke just as long lines were forming at gas stations, as the national oil company (Pemex) was unable to supply fuel due to oil refining problems and shortages. Many felt that this was the straw that broke the camel’s back.
Protests, now termed ‘gasolinazo’, have spread dramatically while truck and taxi drivers have joined angry citizens to block main highways into Mexico City, causing transportation companies and trucking companies to cancel service. The owner of a major Mexican gas station entity has warned officials that it may have to close all of its gas stations due to security concerns.
In addition to fuel price issues, fuel shortages have drastically affected the economy of Mexico. With the increased demand, there has been widespread fuel theft by organized crime groups and breaks in supply chains.
All of these factors have a direct impact on companies operating and transporting products and goods from Mexico into the U.S. I have personally seen a significant increase from corporate clients requesting escort security, real-time route planning and GPS monitoring for cargo transportation to safeguard their trucks from protester demonstrations or hijackings.
The cost of transportation will increase. However, the concern on the minds of many government officials and corporate executives is how fuel hikes will affect the availability and price of food. It will cause a serious problem if the cost of living dramatically outweighs a minimum wage worker’s ability to meet their basic needs.
Those companies operating in Mexico with in-country or cross-border transportation requirements must place a priority on re-evaluating their security contingency plans and risk mitigation procedures in light of increased fuel prices and economic anxiety. The responsible solution will be for these companies to partner with trusted risk mitigation professionals who have a proven track record in conducting vulnerability assessments and the necessary resources to provide long-term travel risk management solutions throughout Mexico