ProLogis (PLD), a leading global provider of distribution facilities, recently came out with its research report on the rapid strides made by Mexico regarding the expansion and modernization of its interstate highway system. The research report, titled “Mexico’s Evolving Network of Modern Interstate Roadways,” explored the infrastructure improvements achieved by the country in accordance with the ‘National Infrastructure Program’ launched in 2007.
The National Infrastructure Program 2007-2012 ascertains the objectives, goals and actions that the federal government had embarked upon to increase the coverage, quality and competitiveness in the infrastructure sector for the sake of national development.
The Program aims to build state-of-the-art infrastructure facilities across the country to generate more and better jobs and attain sustainable human development. The projects include modernization and construction of new highways and rural roads along with a wide scope of other developmental projects across varied sectors of the economy.
The Program recognizes that infrastructure is an indispensable requirement for Mexico’s development and intends to lower transportation costs with easy access to distant markets. The program also seeks to improve the social and economic conditions of the country by providing the economically backward communities with increased opportunities by breaking the isolation and social exclusion of their communities, promoting education, health and housing facilities, and increasing income possibilities.
The research report by ProLogis underscores the progress achieved by Mexico in implementing its infrastructure program, and analyzes its effectiveness in facilitating the integration of disjointed local economies into a national economic powerhouse. The in-depth study analyzes the market statistics gathered from various sources including indigenous reports prepared by ProLogis market officers through primary research, industry data, and reports by brokerage companies and data providers.
The research study revealed that the federal government has made substantial progress in its concerted effort to improve infrastructure facilities of the country despite the 2008-09 global financial crisis and worldwide economic slowdown that necessitated some minor adjustments. At year-end 2010, Mexico was well on schedule to complete its road-building program by 2012.
The report also divulged that when complete, Mexico’s modernized federal highway network will offer greater mobility to the masses and will have a direct positive impact on its economic prosperity in the long run. The erstwhile central region of the country around Mexico City was kept fairly isolated from the manufacturing hubs located near the U.S.-Mexico border.
Furthermore, the entire northwest corner of Mexico remains virtually secluded from the rest of the country. With the new network of interstate highways, Mexico will endeavor to get rid of this problem through increased connectivity of the coastal cities, central and northern region.
ProLogis owns and manages interest in over 2,400 distribution facilities, service offices, and properties spanning 435 million square feet (including properties under development) of space. The company leases its industrial facilities to over 3,800 customers, which mostly include manufacturers, retailers, transportation companies, third-party logistics providers and other enterprises with large-scale distribution needs.
ProLogis integrates international scope and expertise with a strong local presence in markets to ensure accurate and seamless flow of goods to appointed destinations. The distribution facilities of the company function as processing centers for goods for its customers, enabling them to store adequate inventory to meet increased demand and mitigate the risks from a possible breakdown in the supply chain.
We maintain our ‘Neutral’ recommendation on ProLogis, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a Neutral rating and a Zacks #4 Rank (short-term ‘Sell’) for First Industrial Realty Trust Inc. (FR), a competitor of ProLogis.
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