Mexican ports are gearing up for a promising future and multipurpose ports such as API Mazatlan are hoping to gain a larger piece of the Mexican and world market share. Bob Cavallo reports.
At one time shipping to ports in Mexico meant lots of red tape, inefficient service and substandard equipment. In 1992 the Mexican government through its agency Puertos Mexicanos announced that it would sell management concession for nine Mexican ports to private buyers. Mazatlan was one of these ports. In the 16 years since privatization, these ports have become high profit businesses with the capacity to offer importers and exporters competitive prices and excellent service.
The Administracion Portuaria Integral De Mazatlan, S.A. De C.V. or API Mazatlan was created to run the port of Mazatlán in 1994. Mazatlan is strategically located between the Panama Canal and the United States. API Mazatlan is considered to be an independent company within the Ministry of Transportation of the Mexican federal government. As a government concession, API Mazatlan, must be financially self sufficient, maintain prudent reserves and reinvest in infrastructure and maintenance. API Mazatlan is considered the port operator and service provider for all port activities in the city of Mazatlan. The port is important both locally and globally.
CENTER OF ACTIVITY
API Mazatlan provides services at internationally competitive prices. Its objectives are diverse and challenging; It must manage, develop and promote activities related to maritime commerce, tourism, industry, and business. The port handles a wide variety of products such as petroleum, chemicals, agricultural produce, automobiles, building supplies and manufactured goods. Since 2005 the port has seen a large increase in the shipment of merchandise in containers. Today API Mazatlan handles merchandise in transit to or from more than 30 countries, and is an important port of call for cruise ships and home to a large deep sea fishing fleet. The new terminal for Baja Ferries which transports people and cars to and from Baja California to the mainland is located here.
API Mazatlan employs 50 people directly and the port provides employment for over 1500 people. Annual revenues for 2007 were 165 million Mexican pesos or just over US$16 million. Major Pacific ports like Manzanillo, Lázaro Cardenas and Ensenada still move the lion’s share of Mexican and U.S. bound cargo but Mazatlan is in an excellent position for future growth. Currently its most important activity is to serve the domestic markets of northwest Mexico, however API Mazatlan has targeted production centers like Monterrey, Hermosillo and Guadalajara as future customers for export goods.
In 2007 API Mazatlan’s operations in the port reached approximately 271,566 tons of cargo in containers. In shipping measurements the port handled 29.363 TEUs (20-foot equivalents, a standardized maritime industry measurement used when counting cargo containers of varying lengths).
A wider range of imports meant a rise of 11.7 percent in total imports over 2006 for a total of 145,897 tons. In volume the increase was 42.7 percent. Exports accounted for 125.668 tons. In 2007, however, exports fell 22.7 percent over the previous year. This decrease was largely because of the collapse of the international chick pea/garbanzo bean market. Local farmers in Sinaloa produce more than six million tons of the world’s supply and unfortunately the garbanzo market experienced a period of upheaval in 2007. The port of Mazatlan ships these beans to countries in the Mediterranean basin.
Mazatlan like many other privatized Mexican ports offers many advantages. First the ports are far less congested than U.S. ports. Second, although workers are unionized in Mexico, the labor costs are nearly 75 percent less expensive than U.S. prices. Finally if a company plans to assemble or package a product in Mexico, then shipping directly to Mexico rather than through California is quicker and more cost effective. Alex Cassarrubias, Marketing Manager of API Mazatlan, explained the case of a toy packaged with a piece of candy. The toy was manufactured in China but packaged in Mexico. Because importation regulation concerning food and packaging from Asia was not applicable, the retail outlet delivery time was reduced by several weeks. Years ago an imported product might have made its way from California to Mexico but this is no longer the case. In fact today the opposite is far more likely. The Mazatlan port offers speed, price and customs advantages.
Mazatlan is located on the Pacific Coast of Mexico just across from the southernmost tip of Baja California. The Spanish founded the city in 1531 and when silver and gold were discovered in the surrounding hills, the city prospered. Historically the city’s port grew with the wealth of the mines. When silver and gold were shipped to Spain, the Gulf of California became dangerously populated with pirates. In the 1800s, German immigration brought greater wealth and the port grew as a fundamental part of the city. Today the city has a population of nearly 400,000 people and is a popular seaside vacation destination for American tourists.
The port is on a long peninsula that encloses the harbor. The access canal is 2,500 meters long and 12 meters deep. The pier is 1,420 meters long and has separate areas designated by function and use. The local fishing fleet area is located at the entrance. Mazatlan is a traditional fishing town both with commercial and deep sea fishing activities. Tuna, swordfish, and shrimp are the typical catches. Mazatlan is also famous for sport fishing, with thousands of sailfish and marlin tagged and released each year. It also is home to Latin America’s largest fleet of commercial shrimp vessels. The fishing boats have their own fueling area and repair station further inside the port. The commercial fishermen store their daily catch in the refrigeration units inside the port.
In addition, agricultural products such as meat chicken and turkey for export are safely stored here. In addition, because of a recent agreement with the local government apples and grapes can now be imported directly from Chile through the Mazatlan customs area.
The second area is reserved for the Baja Ferry terminal. Ferry boats take passengers and their cars to and from Baja California several times per week. In 2007 nearly 100,000 passengers used this service. In 2008 larger capacity ferry boats will begin making the crossing from La Paz to the mainland. The newest ferry, the Chihuahua Star, will be able to transport just over 1,000 passengers per trip.
Cruise ships also make a call at this Pacific port. Nearly 200 ships arrived in 2007 with 425,091 passengers stopping in Mazatlan for shopping and sightseeing. A separate entrance for cruise passengers was recently established to make the port area safer for these travelers. Plans for the future include cruise extensions to Puerta Vallarta, and Topolobampo. La Riviera Mexicana Cruises as well as international lines such as Norwegian Cruise Lines, Royal Caribbean Cruises, Princess Cruises and Disney Family Cruises all plan to stop at Mazatlan in 2008.
The third area is reserved for the automobile industry. The Vehicle Area is used by the car import sector. Nearly 55,000 vehicles were imported from Korea, Japan, Brazil and Argentina in 2007. Manufacturers such as Daimler Chrysler, Ford Mexico and Hyundai Motors use Mazatlan to import their vehicles to North America and Mexico. Many of these cars are imported for the Mexican domestic market while others are later shipped overland to the United States and Canada. There was an 18-percent increase in automotive activity in the port in 2007. Approximately one million tons per year pass through Mazatlan.
The Mexican national petroleum company, PEMEX, controls a specialized area in the port, where it distributes fuel for the seagoing vessels as well as fuel for the local Mazatlan community. PEMEX recently announced it was renewing its tanker fleet to guarantee hydrocarbons supply to Mexico’s coast via maritime transport from the Salina Cruz refinery in Oaxaca State to Pacific ports Rosarito, Lazaro Cardenas, Acapulco, and Mazatlan.
GATEWAY TO THE USA
Before Mexico privatized its major ports in mid 1989, the ports were slow, inefficient and conflictive. They lacked the infrastructure and capacity to handle large cargo volumes. The investment from the private sector in infrastructure and training enabled these ports to lower cost, increase cargo handling speed. Mexico’s Pacific ports are quickly becoming key points along the North America Super Corrider trade route.
As the trade from Asia increases it is obvious that California’s ports do not have the capacity to handle the additional volume. Mexican ports may become the strategic link to key Asian markets. Under new Mexican laws, merchandise can move from Asia to a U.S. or Canadian destination without going through Mexican customs inspection. Customs inspections would be performed only at the final destination saving time and money. Mexico has much to gain if its ports become a viable alternative to Los Angeles, Long Beach or Seattle. The West Coast of Mexico is considered a prime option for future expansion.
Alex Cassarrubias reflected on the future of API Mazatlan. “It is quite possible that a significant percentage of merchandise from China or India may pass through an industrial area of a Mexican port for reshipment to the USA. Since the East Coast of the United States is the most populated, merchandise would have to go through the Panama Canal or go overland by train or truck. The newly constructed Mazatlan Durango Highway ensures the port the highway capacity for future growth. Export trade with the east may also increase as China searched for raw materials from Latin America.”
The port at Mazatlan has always been a significant factor in the community’s prosperity. Today under API Mazatlan’s management, the economic activity of the port is one of the driving forces in the local economy and a significant factor in the sustainable development of the entire region.