Demand and supply shocks derived from COVID-19 on the freight transportation system in Mexico

Abstract

PurposeThis paper's purpose is twofold. First, based on a case study, it aims to comprehend the consequences of COVID-19 on the demand and supply shocks of the freight transportation system in Mexico. Second, it seeks to provide an integrated perspective of four transportation modes, which would help prepare public policies for future global pandemics.Design/methodology/approachAnalyzing the impact of the COVID-19 pandemic on the freight transportation system, which affects national and global economies, is essential to drawing valuable insights for the future. To facilitate international comparative analysis, conducting case studies at a country level was deemed necessary. As a result, a case study was conducted in Mexico using an integrated approach involving four transportation modes.FindingsTo manage disruptions in freight flow during uncertain conditions, a comprehensive perspective on the four modes of transportation and data-driven decision-making is crucial. Under this context, three initiatives can be identified: 1) establishing a National Center for Intelligence in Logistics to improve data-driven governance; 2) appointing the “Integrated Transportation Corridor Management Manager” (ITCMM) function to coordinate multiple authorities with different acting in critical freight transport corridors, and 3) creation of a digital tool based on millions of GPS data to monitor freight flows, allowing for collective intelligence among logistics actors.Research limitations/implicationsThis research's limitations are related to using non-standardized databases to gather information on four transportation modes. However, this limitation is also an interesting discovery. Mexico is becoming a strategic logistics hub between North America and Latin America, especially under the “Nearshoring” trend. Unfortunately, the lack of an integrated public policy in logistics and transportation reduces Mexico's capacity to deal with disruptions and its economic competitiveness.Practical implicationsThis research has identified practices that could be crucial in improving public policies to optimize shipping routes and reduce wait times while minimizing disruptions caused by unforeseen events. A concrete example is the digital platform called “eraclitux,” a computer tool similar to an Enterprise Resource Planning (ERP) system companies use. This tool can enable a “Control Tower” that monitors freight flow in transportation corridors under the supervision of “Integrated Transportation Corridor Management Managers.” The tool can make reactive and predictive decisions that help to enhance the logistics value provided by transportation infrastructure.Social implicationsThe importance of a well-coordinated and integrated public policy for freight transportation was identified to ensure better performance during disruptions. Delays in the flow of goods can significantly impact the supply of essential items such as food and medicine, ultimately affecting the population's quality of life.Originality/valueNumerous studies have been conducted to determine the extent of vulnerability and the impact of COVID-19 on freight transportation. However, most of these studies assume a developed market context or a single-mode transportation approach, which only applies to some situations. To gain a comprehensive understanding of how pandemics-induced demand and supply shocks affected freight transportation in developing countries such as Mexico, this paper offers insights from a four-transportation mode perspective. Mexico is facing a challenging Nearshoring trend in manufacturing, making it a significant logistics node between North and South America.