VERACRUZ BOX TERMINAL OPERATOR CONTINUES NEGOTIATING DISCOUNTS

VERACRUZ BOX TERMINAL OPERATOR CONTINUES NEGOTIATING DISCOUNTS

The new container terminal operator here at Mexico's busiest waterfront is continuing to negotiate volume discounts with steamship lines, but management has not decided whether it will actually reduce tariffs based on throughput.

International Container Terminal Services Inc. of Manila and Mexican engineering giant Grupo ICA took over the container terminal on Aug. 25. Their joint venture, known as Internacional de Contenadores Asociados de Veracruz, immediately raised handling fees by roughly 80 percent.But in a dockside interview late last week, senior management for International Container Terminal Service defended the rate increases and said talks would continue over volume discounts.

"We recognize that shipping lines who have volume do look for discounts, but we haven't formulated any policy," said Geoffrey J. Pegg, a Manila-based senior vice president who has spent the past month in Veracruz setting up operations.

The new operators have met with Transportacion Maritima Mexicana (TMM), Mexico's largest steamship line, and other carriers. But no decisions have been made.

"If you have a large volume or throughput, usually you have a discount. We're conscious of that. In fact we're analyzing things like that," said Mr. Pegg.

The problem, he said, is that under Mexican law there can be no special treatment for certain carriers.

"That means you have to come up with a system that is equitable to all users. This is what we have to think very carefully about," Mr. Pegg said. So if we do come up with that it will have to come up with a system where discounts are linked to throughput" for everybody.

The executive dismissed complaints from steamship lines that the sharp increases are hurting their bottom line. Pricing remained at peso levels relative to the dollar before the Dec. 20 devaluation that was followed by a 100 percent drop in value against the dollar, he said. Ship lines had seen their earnings remain constant in dollars but their port costs halved.

That view was shared by Angel Gonzalez Rul, the director of Veracruz's autonomous port authority.

"It is important not to forget that there has been a devaluation in Mexico of 100 percent and that our prices were in (pre-Dec. 20) pesos," he said, noting increases are in line with other tariff increases at the port. "But if we compare with whatever other international port, we are still much lower than international levels, which average between $220 and $250."