New US/Mexico Air Freight agreement will also impact domestic market

A new trade agreement has been reached that should drastically improve air freight options for many cities that provide the most air connections to Mexico and indeed onto much of Latin America. While the agreement is framed around strengthening international economic ties between the US and Mexico there ought to also be positive repercussions for a number of US domestic air freight/air cargo markets that will benefit from an increased selection of carriers for selected city pairs. Specifically a release from the U.S. Department of State said that, under the agreement, “cargo airlines, for the first time, will have expanded opportunities to provide service to new destinations that were not available under the current agreement.”

Passenger and air freight carriers will both have expanded opportunities to offer brand new services that are not available under the existing agreement. In addition to the international city pairs if new additional airlines enter markets that they had previously not served, a natural expansion of hub and spoke services is sure to follow. The new agreement is set to remove the limitations currently in place limiting the number of carriers that are able to serve specific US/Mexico city pairs which could also positively impact some connecting services deeper into Latin America and also within the US market. As a result it's likely that new carriers will enter some of the busiest markets.

Larger airports in states such as Florida, Texas, California and Arizona are likely to see the most changes although the expansion would also impact existing large hubs such as Chicago, New York, Atlanta, Denver and others. It will be some time until the effect can be properly measured but it stands to create more air freight options to and from Mexico but as importantly here in the United States.

The new agreement is just over a year away from moving into place with a commencement date of January 1, 2016. There are still some specific elements of the agreement to be finalized but the conversion of this market to bring unlimited carrier market access could have strong economic and air freight impacts shortly thereafter. In conjunction with the changes it's natural to anticipate further growth to air freight tonnage via Los Angeles, Miami, Dallas, Houston and Phoenix to name just a few obvious beneficiaries.

The timing of course is not coincidental as the changes come at a time when commercial activities between the US and Mexico are improving. According to the DOT our trade with Mexico and Canada under the NAFTA agreement increased more than 8% in September (year-to-year) to now reach $102.2 billion as manufacturing continues to grow. Read more at the Department of Transportation website.