Mexico’s ports are sometimes viewed as potential low-cost gateways for Asian cargo moving to the U.S., but Manzanillo, Lazaro Cardenas, Veracruz and other gateways are so busy handling Mexico’s growing trade with Asia and Europe that the U.S. market is still a mere afterthought.
Mexico’s ports handle only about 8 percent of the North American container trade, although they are growing much faster than ports in the U.S. and Canada. Container traffic at Mexican ports increased 15.8 percent in 2011, compared with 4.3 percent at U.S. ports and 4.6 percent at Canadian ports, according to numbers published by The Journal of Commerce and its sister company PIERS.
The sweet spot for Mexico’s global trade is the region encompassing Mexico City, Guadalajara and Monterrey. That region accounts for 75 percent of the country’s gross domestic product.
So when international marine terminal operators announce major development projects, they’re targeting that productive region in the interior of Mexico that is the center of much of the country’s manufacturing.
APM Terminals, for example, plans to begin construction this fall on a $900 million container terminal at Lazaro Cardenas. The $300 million first phase of the project is scheduled for completion in 2015, and is geared toward the Mexico City-Monterrey corridor.
Philippines-based ICTSI plans to build a container terminal in Manzanillo to be developed in phases, with a projected annual capacity of 2 million 20-foot-equivalent container units at full buildout.
Other international terminal operators in Mexico include Seattle-based SSA Marine and Hong Kong’s Hutchison Port Holdings. In addition to handling containerized imports and exports, Mexico’s ports are big exporters of raw materials.
Mexico’s ports and inland infrastructure do a good job of handling current cargo volumes, but with the container trade growing at a healthy clip of 1.5 to 2 times GDP, the pace of development must pick up to accommodate future growth, said Gene Seroka, president of the Americas at APL, the container shipping arm of Singapore’s NOL Group. In addition to road and rail development, Mexico needs more inland container yard development, he said.
When the discussion turns to Mexican ports as gateways for the U.S. market, the maritime sector generally focuses on Lazaro Cardenas. With its direct rail link to the border operated by Kansas City Southern de Mexico, Lazaro Cardenas could become a gateway for U.S. imports moving by intermodal rail to the Southwest and Midwest. However, very little Asian cargo has moved into the U.S. through Lazaro Cardenas.
Still, with continuous growth in the Mexico-U.S.-Canada trade under the North American Free Trade Agreement, there is a strong foundation for north-south traffic, so using Lazaro Cardenas as a gateway to the U.S. Southwest and Midwest has potential. “We are interested in it for our company,” Seroka said.
The Mexican government in 2008 announced a request for proposals to construct a massive $5 billion port complex at Punta Colonet, about 150 miles south of San Diego in Baja California. Plans for the port were developed earlier in the decade when it was generally assumed the ports of Los Angeles and Long Beach soon would bump up to their capacity.
The Punta Colonet plans, however, fell victim to the 2008-09 recession, which produced excess capacity at U.S. West Coast ports. The need for a Mexican gateway serving the U.S. also diminished as the U.S. ports increased their efficiency through the use of technology and modern operating techniques.
“It’s just not seen as being a good investment,” said Walter Kemmsies, chief economist at infrastructure engineering company Moffatt & Nichol. At least for now, Mexican ports are viewed as serving primarily the Mexican market, but with a population of 112 million and a thriving manufacturing economy, port and infrastructure development projects are needed, Kemmsies said.
Mexico is a major player in the automobile industry, with many of the large U.S., Asian and European automobile manufacturers having a presence there. This produces a healthy two-way traffic between Mexico and its trading partners, with auto parts being imported and finished vehicles exported.
Mexican ports also offer potential as transshipment hubs for trade between Latin America and Asia. The impetus for transshipment first came from congestion issues in Panama, but Mexican transshipment is being looked at more seriously now on its own merits, Seroka said. APL has tested some Mexican ports as transshipment centers, he said.