WAREHOUSING


OVERVIEW

 Insufficient warehouse capacity is one of the severest constraints in the Mexican logistical

system. Currently, Mexico has just under two million square meters of storage facilities, less

than one quarter of one percent that available in the U.S. Moreover, operating expenses in

warehouses average 50 percent higher than in the U.S. (Farver). The higher operating costs

reflect the need for investment and improvements in inventory management systems. It may also

reflect insufficient competitive pressures to operate efficiently. The industry is highly

concentrated. The largest 10 account for 90 percent of general deposit warehouse capacity, and

largest firm, Almacenes Nacionales de Deposito (ANDSA), alone accounts for 62 percent.

 General deposit refrigerated warehousing is in particularly short supply. For example,

in Mexico City the authors were able to locate only two firms, with a combined refrigerated

capacity of less than 2,000 cubic meters. As a result, virtually all firms wishing to hold

commodities requiring refrigeration must own their own facility.19 This severely limits smaller

firms and firms desiring to enter new markets without making large investments in facilities.

 A serious and not widely recognized problem associated with the shortage of refrigerated

storage is that transportation vehicles commonly are used for temporary storage. For example,

at Mexico City's central market (Central De Abasto CD. De Mexico) refrigerated trailers are

commonly held for 24 hours. As most Mexican refrigerated carriers have close to a one-to-one

ratio of trailers to tractors, this means that the tractor and driver are also idled. Among produce

buyers, there is some reluctance to change this system due to a widely-held belief that product