Striving for cooperation, not competition

By Peter A. Buxbaum, AJOT

A low-key but potentially important meeting took place in Mexico last month between officials of the ports of Los Angeles and Long Beach and the Mexican Secretariat of Communications and Transport. The southern California ports have seen some of their traditional Asian import cargo diverted to Mexican ports during times of cargo bottlenecks as well as on a regular basis, thanks to lower labor costs in Mexico.

Los Angeles and Long Beach say they don’t necessarily see this as a bad thing, but rather as a safety valve that allows some relief for their overcrowded facilities. They would like to view Mexican ports as part of a regional port system and to establish short-sea shipping ties with those ports. But Mexican port officials may have something more grandiose on their minds.

Whether the Mexican ports can become real competitors with southern California is a matter that is still years away. But several things are known now: existing Mexican ports have significant capacity potential; Mexico plans to build a new state-of-the art megaport 150 miles south of Tijuana; and a group of US states would like to establish a corridor of rail and highway connections from the Mexican Pacific coast north to the Canadian border that could attract cargo that would bypass Los Angeles and Long Beach.

‘We went to talk about short sea shipping,’ said Art Wong, a spokesperson for the Port of Long Beach, ‘and to work out protocols to make it feasible for bigger ships to unload here and to move cargo to Mexico. This meeting was an initial step about what that might involve.’

The Port of Long Beach does not view Mexican ports as a competitive threat, Wong added. ‘They have a small fraction of the cargo we handle,’ he said. ‘They are still developing those ports and by the time they get under way we will have had still more growth. If the Mexican ports take a small percentage of our volume, we would welcome it.’

Theresa Adams Lopez, a spokesperson for the Port of Los Angeles, added that the ports are not working on any specific projects with the Mexicans at this time. She noted, ‘There will be a conference in November to discuss issues on a broader scale.’

A memorandum of understanding, signed separately by Mexico’s Secretariat of Communications and Transport with each of the southern California ports emphasized enhancing waterborne trade opportunities, cooperating on security and infrastructure issues, creating dialogues on short sea shipping and strategic alliances, holding regular visits, and participating in business forums and workshops on issues related to the ports’ business.

It is hard to imagine that Mexican ports could pose a competitive threat to Los Angeles and Long Beach. And yet, Mexican Pacific Coast ports have experienced strong growth in recent years, not all of which can be attributed to Mexican domestic cargo. Containers handled at the Port of Lazaro Cardenas, for example, grew by almost 6,000 percent between 2003 and 2005, according to the Los Angeles Business Journal, from 2,670 to 160,000. The port is now in the process of expanding its capacity to 2.2 million teus per year. The port has 6,000 acres at its disposal, the LABJ reported, allowing it to handle over six million containers in five years. A new megaport project is proposed at Punta Colonet, in Baja, California, about 150 miles south of Tijuana.

The Port of Ensenada, 70 miles south of Tijuana, handled 123,000 containers in 2006, but is expected to grow significantly after the rail lines are built to the US border. Costco Wholesale Corp., the national warehouse retailer, has diverted goods through Ensenada during past labor disputes, according to published reports.

The CANAMEX Corridor

Meanwhile, a consortium of western US states is pursuing a project which could create a cargo corridor north from the Mexican Port of Guaymas, all the way to the Canadian border. The CANAMEX Corridor Project is a joint project of Arizona, Neva