September 26, 2008 Port Of Progress

Volume 11 | Issue 5

One of the most important commercial ports on Mexico’s pacific coast, the Port of Ensenada expands its capacity to respond to the increasing

Located in the state of Baja California, the Port of Ensenada was created on June 1994 after the passage of the Law on Ports in 1993, with the objective of decentralizing Mexico’s ports. The port administration operates with utilities and resources achieving financial self-sufficiency, a result of income transfers, port charges and provision of services. The port administration’s objectives are administering, supervising, controlling and promoting goods, services and activities inside the port’s compound.

Port activities and services are granted in concession to private operators. Operators are responsible for building the infrastructure, purchasing the equipment and implementing the necessary processes to offer efficient services. A $22 million expansion investment in the ports of Ensenada and Sauzal for dredging works and the acquisition of land reserves has been approved for 2008. The director general of the port administration in Ensenada, Carlos Jauregui Gonzalez stressed that the Port of Ensenada has received the highest approved budget among all the ports in Baja
California in more than a decade.

EXPANSION AND INVESTMENT

Part of this investment includes dredging to expand the depth of the navigation channel and the dock from 14 to 16 meters, in order to receive ships of greater capacity. This new infrastructure will allow the port to receive ships of the fourth generation of 65,000 TRB and 4500 TEUs (twenty-foot equivalent units), opening new windows to receive cargo currently handled by the ports of Long Beach and Los Angeles. Also in the works are expansion of the Maritime Customs facilities; a compound controlled and the construction of a building for the port administration and harbormaster.

The port has experienced an increase in passengers of 12 percent over 2006, totaling 665,480, while arrivals increased 14 percent with a total of 293. Containerized cargo reflected a slight decrease of -.01 percent with a total of 127,271 TEUs, while the total general cargo movement increased 3.5 percent, or 3,503,567 tonnes in 2007.

The Port of Ensenada is looking to capture additional business, which in turn, requires building an efficient infrastructure to support foreign trade, and watching a market that continues to show increases in transaction volumes A large number of transnational companies have expressed interest in handling goods through the port, promoting foreign trade in the region and contributing to the development of port infrastructure.

It is considered a strategic port, fully integrated into the production chains of its sphere of influence and segmented into three ports that foster social and economic development in the region. It is in desirable proximity to the U.S. and, in addition to cargo, provides conditions for the development of fisheries, industrial and trade sectors in the region through El Sauzal. Ensenada itself is an attractive and strategic port for tourism and water activities and cruises in Pacific North America.

Despite the promotion of the port system in Mexico and the support of the federal government, there are still some problems to deal with, such as implementing measures to correct the customs legislation for covering the disadvantages between customs agencies. Mexican ports on the whole have faced a dramatic increase in cargo movement (containerized cargo in particular) since the enactment of NAFTA in 1994. There has also been an exponential increase of imports from Asian countries.

REACTING TO CHINA

The increase in traffic coupled with the privatization of railroads in 1998, which brought the participation of international railroad corporations, switched the focus of Mexican logistics. It also opened up the sector to companies with capital to invest in infrastructure and equipment. Port authorities and operators are looking at the forecasted saturation of U.S. West Coast ports as an opportunity to land cargo from China that is going to the U.S. or Canada. They are investing to expand capacity to be prepared for this opportunity.

The federal government and the government of the State of Baja California are developing a plan to build a multi-billion-dollar portin Baja California to accommodate the ever-increasing trade from Asia. They have identified Punta Colonet, located 50 miles south of Ensenada, as the best location to build a new port. The location is currently lacking infrastructure and population, both of which will increase with the construction of the port.

This project is proposed in response to the inability of current ports to handle the amount of cargo processed. Shipments from Asia have increased 15 percent annually and are expected to double by 2020 with China alone responsible for over 50 percent of the increase. Forecasts indicate that the largest American ports, Los Angeles and Long Beach, won’t have the capacity to deal with all of the shipping needs, increasing costs and decreasing efficiency. American importers, Asian exporters, and global shipping companies have all been pushing for port expansion on the Pacific coast.

The port at Punta Colonet, if built, would be exclusively focused on container movement for cargo coming from Asia for the American market. The port is projected to process a million containers annually, with a potential increase to six million within the next 15 years. It would be built over 27,000 acres, making it larger than Los Angeles or Long Beach. The cost for this project is estimated at U.S. $4 billion, and is being pushed by Hutchinson Port Holdings, a Hong Kong based company, which is the world’s largest terminal developer and operator.

Aside from the port itself, there will be a giant creation of infrastructure, including roads, rail, airport, public and private housing, a power plant, a natural gas receiving center, and a desalinization facility among other projections. These projects are estimated to cost over $20 billion. Current plans do not considerer using federal funds for this project, as the Mexican government would look for private investors, foreign and domestic, interested in getting a concession to build and operate this port and would grant another concession for the construction and operation of the railroad from the port to Yuma, Arizona.

The Mexican government sees this project as an opportunity to increase its competition with American ports. Currently Mexico’s largest port on the Pacific processes less than one million containers annually, dwarfed by the over 12 million containers processed by Los Angeles and Long Beach alone. Mexico also sees the port at Punta Colonet as a great opportunity for job production. A total of 5,000 workers will need to be brought in to start the project, tripling Punta Colonet’s current population, with an estimated 250,000 living in the area by the year 2025. This activity will make the area an attractive port of call for many in the coming decades

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