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 Puerto Vallarta Real Estate | November 2006 
Mexico Beginning to Court Investors for Baja Megaport
 Diane Lindquist - SD Union-Tribune
Mexico has begun the process of developing a $9 billion megaport and railroad in Baja California to transport container goods from Asia to the United States, a high-ranking Mexican official said this week.
Speaking to a gathering of global shipping company representatives Tuesday, Mexican port director Angel González Rul said that a meeting of potential corporate investors recently in Mexico City kicked off the effort that would have private firms build and operate the port and rail line.
“We expect to attract the kind of investment that will generate jobs and growth for the betterment of our country,” Gonzalez told about 250 people at Terminal Operations Conference 2006, a three-day meeting for officials of international shipping firms.
The meeting focused on the decreasing ability of North American ports, railroads and trucking operations to handle the growing volume of goods coming from Asia, especially China. Shipments from that region to the United States are growing by 15 percent annually and are expected to double by 2020.
The problem is particularly acute on the West Coast, where the ports at Los Angeles and Long Beach are expected to reach capacity by 2010.
“There's a rising paranoia about capacity,” said James R. Brennan, a partner in transportation consulting firm Norbridge Inc., based in Concord, Mass.
Gonzalez said Mexico's port-rail project would relieve the West Coast congestion, handling each year about 8 million 20-foot equivalent units, or TEUs, the standard measure for container cargo.
Previous discussions of the Mexican project have put it at Punta Colonet, 150 miles south of the border. But, in an interview, Gonzalez said Colonet is only “one possibility.”
“Near Ensenada we have two or three locations,” he said, declining to identify them.
The Colonet location has become problematic because a group of investors has been granted mineral rights to the ocean floor at the port site and says it plans to extract iron and titanium.
Negotiations between the group and the government broke down when the holders of the mineral rights scuttled a potential agreement by asking that the accord grant it and shipping firm SSA a portion of the port project.
To officially begin the port-rail development, Mexico hired New York-based Mercer Management Consulting to meet with potential corporate bidders and gather input about how the deal should be structured, Gonzalez said. Another meeting will be held in Mexico City in mid-January.
“This process will take around six months,” Gonzalez said. “After that we will decide the best way to proceed.”
He declined to say exactly when the port and rail projects would be put up for bid. Winners would get a multiyear concession to build and operate the port and rail line.
Begun under President Vicente Fox, the development is expected to move forward under Felipe Calderón, who becomes Mexico's president tomorrow. Gonzalez said the change in administrations will not have a major impact on the timing of the project.
“The people can change, but the vision is the same,” he said. “We have a long-term vision about the integrated port system in Mexico.”
Among potential investors are port terminal operators, shipping companies, and rail firms. Gonzalez didn't know whether the bidding solicitation will require that bidders form themselves into groups that would include pairings of terminal developers and rail firms or whether the projects would be bid separately.
“It all depends,” he said. “We know there are six or seven big enterprises that could take on a project like this.”
Gonzalez said that the bid also will address development of a city at the port site to support the transportation hub. Baja California officials have said the region could become home to 225,000 residents within a few decades.
Other conference speakers also emphasized the need to build more container cargo port capacity on North America's West Coast.
“Trade doubles every 10 years. And we're looking for a 7 percent annual increase on the West Coast,” said Bill Ralph, senior transportation consultant for R.K. Johns & Associates in New York.
An expansion at the Port of Prince Rupert in Canada could help show the feasibility of the Mexican port-rail development project, he said. The expansion will allow the Pacific port near Vancouver to handle 2 million TEUs per year by 2010.
Plans are to move double-stacked cargo containers on a rail line from the port across Canada and into the United States to terminals in Chicago and other Midwest locales that have facilities for redirecting the freight by rail, truck and sometimes water.
“That could be the model for the future, and that bodes well for Mexico also tapping into that interior U.S. market,” Ralph said.
Diane Lindquist: (619) 293-1812; diane.lindquist@uniontrib.com |
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