Collaboration needed to stem Mexico port delays

Collaboration needed to stem Mexico port delays

Veracruz will have seven cranes by the end of the year to speed offloading, and connections with two railroads. Photo credit: Shutterstock.com.

MEXICO CITY — Mexico’s port terminal operators expect less congestion and fewer cargo delays as this year’s peak ocean shipping season unfolds, but more work needs to be done to standardize procedures across ports and improve road and rail links leading inland, marine terminal executives said at the JOC Mexico Trade Conference this week. 

“We need to better coordinate efforts with railways [and] customs brokers,” Francisco Javier Orozco Mendoza, CCO for Hutchison Ports Mexico, said during a panel discussion on port productivity. Hutchison Ports opened a new terminal in Veracruz in June, receiving its first container vessel June 30. The $1.2 million expansion gives Hutchison two terminals at Veracruz.

By the end of the year, the terminal operator expects to have seven cranes operating at the port, but the interchange to rail and road transportation needs to be smoother, Orozco said. “We have very aggressive competition in terminals and [shipping lines], brokers and freight forwarders, but there are some segments where we need more capacity, especially in railways,” he said.

The need for better connections among ports, railroads, and trucking and logistics companies was a theme of the two-day trade conference. That need was made clear when supply chains were disrupted by the closure of a number of customs lanes processing trucks at the United States border in April, choking the pipeline that Mexican exporters rely on to reach US customers.

But the need for more container-handling capacity at Mexican ports, and better connections to inland distribution centers, is becoming clearer as port volumes increase on Mexico’s east and west coasts. Rising volumes last year contributed to multi-day delays that frustrated shippers trying to route freight through Mexico to the United States.

The Veracruz expansion is the most prominent of 25 port upgrades that were planned by the government of former president Enrique Peña Nieto at an estimated cost of $5 billion in private and public money. The investments were designed to provide a maritime system that can cope with the country’s rising cargo volumes and rapidly growing manufacturing sector.

Security ‘of utmost importance’

Service interruptions occur for reasons from capacity issues, port congestion, and security concerns. “Security is of utmost importance. The situation is discouraging investment, and importers are afraid of importing more products because of the level of theft that’s prevalent,” said Emmanuel Sanchez Ochoa, executive director of freight forwarder Albatrans Mexico.

Veracruz will be the first Mexican port served by two railroads, Kansas City Southern de México and Ferrosur, when the expansion is complete. Orozco and other speakers at the conference said ports are working to improve their ability to offload vessels more quickly and move containers through marine terminals, but work needs to be beyond the terminal, too.

“The main challenge will be to give certainty and transparency about what will happen to their freight to the end-customer,” said Martin Hurtado, CFO at APM Terminals Lazaro Cardenas. APM Terminals, he said, is working with Mexican customs brokers, ocean shipping lines, and others in the supply chain to “give the same message to the end customer.”

Communication among all partners in the supply chain has been weak, and sometimes rare, the terminal executives admitted. Delays, they said, are not simply the fault of marine terminals. Poorly prepared documents play a role, delaying cargo in Mexican Customs, said Sanchez. “We have to work as a team, as a community, and that includes the shipper,” he said.

Shippers, however, point to delays and disruptions in getting goods out of ports and then moving them along intermodal rail and truck routes. Sanchez acknowledged difficulties transferring containers. “From the time the container leaves the vessel, it needs four or five days for clearance, if we have available land equipment,” he said.

The delays mean drayage drivers are waiting for business, and not completing turns. “When it takes longer for us to unload, the business is not appealing to the drivers anymore,” Sanchez said. “They want to drive more to earn more money, so this is a vicious circle. When we delay this load, we are affecting the whole supply chain.”

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: willbcassidy@ihsmarkit.com.