Governments create and issue regulation to reach a public policy objective, such as protecting lives, minimising the impact of economic activity in the environment, or informing consumers. Well-designed, high-quality regulations can not only help achieve these goals, but generate more benefits than costs for society.

The 2012 OECD Recommendation of the Council on Regulatory Policy and Governance states that OECD members should “Conduct systematic programme reviews of the stock of significant regulation against clearly defined policy goals, including consideration of costs and benefits, to ensure that regulations remain up to date, cost-justified, cost-effective and consistent and delivers the intended policy objectives”. This report contributes to this objective by assessing regulation of freight transport in Mexico, and whether they represent obstacles in the pursuit of their underlying policy objectives. Therefore, other elements of governance, such as institutional design or integrity issues, are not part of the scope of this report.

Transport by road is the most important mode of transport in Mexico in terms of production, volume and employment. More than half of Mexico’s international trade by value is carried by road, most of it across the border with the United States. The most important regulatory instruments for road transport refer to a safety, weight and size dimensions, import of used vehicles and emissions. Road transport faces important challenges: the resources available for enforcement should be increased; the regulation in preparation to regulate hours of service should be completed and adopted as a matter of priority; emissions standards should be introduced in the regulation for imported second hand vehicles; and any change on the limits of weigh and dimension should be based on empirical evidence that should allow for a cost-benefit analysis of the proposed changes.

Rail services represent the main transportation mode for a number of sectors in Mexico, in particular the automotive industry in relation to international production linkages with the United States. The current regulatory framework grants exclusivity rights in the provision of rail freight transport services through concessions, and concessionaires need to negotiate about compensations for interconnection services and access rights. Prices for freight, passenger and auxiliary services are set freely, and the rail network was privatised so as to promote competition. However, a number of shippers have claimed that railway rates are too high. The rail system has important challenges: to develop capacity to collect and analyse the data needed to form judgements on issues of competition; to establish timelines for the development of analytical capacity for determining conditions for the use of trackage rights; to enhance efforts to gather and report available information to assess performance and evaluate possible public policy changes.

Demand for air freight is largely driven by the economic climate, and as a result, air freight transport in Mexico has grown broadly in line with both GDP and the number of passengers carried by airlines. Regulatory challenges facing by the air freight sector concern, amongst others: i) landing and take-off slot allocation at congested airports: Mexico should facilitate the implementation of auctions for primary slot allocation or replace the auction mechanism with international standards on airport slot allocation; ii) transposition of international regulations into national one: Mexico should publish aviation standards immediately in their original language in the Official Gazette, with acknowledgement that they are legally binding until replaced by official translations; iii) limits to market development imposed by restrictive air service agreements: Mexico should pursue a policy that seeks open skies agreements with other nations, in order to accrue benefits in trade and tourism of expanded air service.

Mexico has 117 ports and terminals that handled 288 million tonnes of goods in 2013. Four ports are considered to be national hubs: Manzanillo, Lazaro Cardenas, Altamira and Veracruz. The SCT has the legal attributions to granting concessions, permits and authorisations for building, establishing, administrating, operating and exploiting works and goods in ports, maritime terminals and port installations. Challenges include: to develop an integrated logistics strategy for the main four Mexican ports to increase the volume of containers that could be carried on railroads; to increase port efficiency by: establish a dedicated areas free of border controls for coastal shipping; to introduce a specific regime to facilitate transhipment; to open customs and other inspection agencies more often 24 hours per day; to develop policies to simplify port gate operations; and to consider opening up the maritime cabotage market.

In Mexico, several government agencies share the responsibility of managing traderelated cross-border regulatory requirements. The regulatory reforms that have been introduced across the various border management agencies are designed to reduce red tape, improve co-ordination and facilitate the movement of freight. However, difficulties are being experienced in the implementation of the regulations. Challenges include: full functionality of the single window VUCEM system; to undertake a review of risk management practices on inspections by border management agencies; to develop national standards and operating procedures in order to achieve national uniformity of practice, to co-ordinate management and investment in road border crossing facilities so that priority gates for registered carriers are accessed by reserved lanes sufficiently long to bypass queues for non-priority gates.