Security adds to Mexican fuel logistics costs

Security measures such as private guards and satellite tracking systems protect Mexican tank truck companies from theft but also increase logistics costs, despite a government crackdown on fuel thieves, one transporter said.

Fuel thieves have moved to attack more points along the supply chain, even after an aggressive government campaign starting in late 2018 curbed the illegal practice, said Edgar Martinez, commercial director of transporter Grupo Unne, during the Argus Mexican Fuel Forum today.

"We in Grupo Unne have implemented a satellite tracking system that works 24/7 to guarantee the complete delivery of products to fuel stations," Martinez said. "We can no longer depend on government actions alone."

The route from the Gulf port of Veracruz — where most fuel imports arrive from the US Gulf coast — to Puebla in central Mexico is the region with the highest rate of fuel theft. Other theft-prone routes include the highway between Matamoros and Reynosa on the way to the high-demand industrial region around Monterrey. The northeastern Gulf zone of Ciudad Madero and Ciudad Victoria are also hot spots, while in the central Bajio area of Salamanca and Celaya products are stolen from both trucks and pipeline between refineries and distribution centers.

Drivers avoid these routes completely at times as they have been beaten, shot or even killed in trying to deliver fuel, he said.

Besides satellite trackers, operators have also hired private security to guard convoys, sometimes working alongside the national guard. But deliveries have to continue with or without government protection, Martinez said.

"We have to be more creative, more efficient and less costly to meet new customers demands," Martinez said. "This is just starting and the number of [retail] brands and their demands will continue to grow."

To protect against any type of fuel skimming from trucks, transporters have added more accurate measurement devices that ensure that fuel loaded must match the volume being delivered.

Yet these additional anti-theft mechanisms, while effective, add to logistics costs and to final pump prices for consumers.

While not a direct cost of insecurity, retailers had to invest a large part of their Ps20bn ($998mn) in spending in 2020 to change or update fuel pumps to include required software better suited to detect fuel skimming or theft, according to retail fuel association Onexpo.

State-owned Pemex's financial losses alone from fuel theft increased in the third quarter by 5.6pc to Ps1.096bn from Ps991mn in the third quarter of 2019.

By Sergio Meana